KRN Heat Exchanger Invests Rs 236 Crore in Subsidiary for Expansion

KRN Heat Exchanger and Refrigeration Ltd. has invested Rs. 236 crore in its subsidiary, KRN HVAC Products Pvt. Ltd., as part of its strategy and growth plan. The investment was made by subscribing to approximately 1.18 crore equity shares, priced at Rs. 200 each, including a securities premium of Rs. 190. The funds will finance the expansion of KRN HVAC’s manufacturing facility in Neemrana, Rajasthan.

The parent company emphasized that this aligns with the deployment of funds raised during its IPO in October 2024. Chairperson Santosh Yadav noted that the facility is under construction and is expected to begin production early next year.

Expanding in a Growing Industry

KRN HVAC Products, established in April 2023, is into manufacturing condensers, evaporators, and related products for the heating, ventilation, and air-conditioning (HVAC) sector. The investment will help the subsidiary cater to rising demand in a sector Director Ashok Holani described as “under-penetrated” in India.

With increasing adoption of air conditioners and refrigeration units, the demand for heat exchangers, an important component in these systems, is projected to grow. Holani added that the new facility will help KRN Heat Exchanger boost its production capacity and expand into international markets.

Stock Performance & Financial Updates

Despite the investment, KRN Heat Exchanger’s share price dipped over 4%, currently trading at Rs 760.80. Over the two months, the stock has risen 68%, while the BSE Capital Goods index gained 42.8% in the same period.

For FY24, KRN Heat Exchanger reported a 20.9% increase in net profit to Rs 39.1 crore, with revenue rising 24.6% to Rs 308.3 crore. However, in Q2FY25, net profit dropped to Rs 12.3 crore from Rs 16.1 crore year-on-year, and sales fell to Rs 91.1 crore.

Overall, KRN’s investment in its subsidiary shows that it is ready to scale operations and address the incoming demand. With the new facility ready to drive both domestic and international growth, the company is to secure a better hold in the  HVAC industry.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.