1. At a Glance
   In five years, KRN Heat Exchanger & Refrigeration Ltd has grown standalone revenues from ₹76 Cr (FY21) to ₹431 Cr (FY25), a 40 % CAGR, while PAT climbed from ₹2 Cr to ₹50 Cr. ROCE stands at 20.7 % and net debt is negligible. At a steep P/E of 110×, fair value is ₹150–200.
2. Introduction with Hook
   Imagine air conditioners whispering “ice-cold bliss” on scorching July afternoons—that’s KRN’s world. From humble Copper tubes to bespoke fin-and-tube heat exchangers for HVAC and refrigeration, they’ve ridden India’s cooling boom. But at ₹887 a share, investors must decide: are they buying durable engineering genius or paying for overheated expectations?
3. Business Model (WTF Do They Even Do?)

• Design & Manufacture: Fin-and-tube heat exchangers used in HVAC, refrigeration, process cooling.
• Product Range: Air-cooled condensers, refrigerant coolers, evaporators, custom thermal solutions.
• Clients & End-Markets: OEMs in air-conditioning, cold-chain logistics, railways, defence (approved vendor), white goods PLI incentives.
• Growth Drivers: Urbanization, retrofits of old systems, government PLI schemes, Indian Railways vendor approvals.

4. Financials Overview – Profit, Margins, ROE, Growth

• FY25 Revenue: ₹431 Cr vs ₹308 Cr (FY24) (+40 %)
• EBITDA Margin: ~17 % (FY25) vs 19 % (FY24)
• PAT: ₹50 Cr vs ₹40 Cr (+25 %)
• ROE: 16 % | ROCE: 20.7 %
• 5-Year Sales CAGR: 40 % (FY21–25) | 3-Year Profit CAGR: 69 %

5. Valuation – Is It Cheap, Meh, or Crack?

• CMP: ₹887 | P/E: 110× FY25 | P/B: 11.1× (BV ₹79.9)
• Peer Median: P/E ~60×, P/B ~2×
• Fair Value Range:
  • Earnings Approach: 20–25× FY25 EPS (~₹8.07) → ₹160–202
  • Book-Value Approach: 2–3× BV → ₹160–240
  • Blended Range: ₹150–200
• At current levels, KRN is priced for near-perfect execution of expansion and margin maintenance.

6. What’s Cooking – News, Triggers, Drama

• 31 May ’25: Commercial production began at new Neemrana plant—added capacity for white-goods exchangers.
• 15 May ’25: Received ₹141.7 Cr PLI incentives under white-goods scheme—major capex subsidy.
• 20 May ’25: Approved as Indian Railways vendor—potential recurring orders for HVAC on trains.
• 27 Feb ’25: Incorporated Thermotech Research Lab subsidiary—R&D hub for next-gen thermal solutions.
• Nov ’24: Acquired additional stake in KRN HVAC subsidiary—greater control over downstream distribution.

7. Balance Sheet – How Much Debt, How Many Dreams?

• Net Debt: ₹33 Cr | Net Debt/Equity: 0.07×—practically debt-free and ready to fund growth.

8. Cash Flow – Sab Number Game Hai

• Operating CF: +₹19 Cr (FY25)
• Investing CF: –₹272 Cr (capex for Neemrana & R&D)
• Financing CF: +₹244 Cr (equity infusion & PLI funding)
• Net Cash Flow: –₹9 Cr

9. Ratios – Sexy or Stressy?

• Debtor Days: 78 | Inventory Days: 108 | Payable Days: 60 | CCC: 127 days
• Working Capital Days: 186 days (elevated post-capex)
• ROCE: 20.7 % | ROE: 16 %
• Dividend Payout: 0 % (all profits reinvested)

10. P&L Breakdown – Show Me the Money

• Margin compression reflects ramp-up costs at Neemrana and R&D outlays.

11. Peer Comparison – Who Else in the Game?

12. Miscellaneous – Shareholding, Promoters

• Promoters: 70.8 % | FIIs: 1.2 % | DIIs: 6.3 % | Public: 21.7 %
• No. of Shareholders: 85,306
• ESG/Governance: New R&D subsidiary underscores commitment to innovation; zero debt flags conservative balance-sheet policy.

13. EduInvesting Verdict™
    KRN Heat Exchanger is India’s rising star in thermal solutions—debt-free, growth-armed with PLI incentives and fresh capacity. But at an eyewatering 110× earnings, the market’s betting on flawless scale-up, stable margins and seamless integration of Neemrana capacity. Our fair value of ₹150–200 implies that the current price is priced for magic. Real-world metrics will need to match hype: investors should track margin recovery post-capex and working-capital normalization before believing the sizzle.

✍️ Written by Prashant | 12 July 2025

Tags: KRN Heat Exchanger, HVAC, Refrigeration, Thermal Solutions, Stock Analysis, Fair Value, EduInvesting