JNK India IPO opens today: Should you subscribe to the ₹650-crore issue?
Summary
Most analysts have assigned a ‘Subscribe’ rating to JNK India’s IPO, considering the company’s robust order book, global parentage, skilled and experienced promoter.
The ₹650-crore initial share sale of JNK India Ltd. kicked off for subscription on Tuesday (April 23) and will close on April 25. Ahead of the IPO opening, the heating equipment maker has mopped up about ₹195 crore from anchor investors like Goldman Sachs, Natixis International Funds, Kotak Mutual Fund, HDFC MF, among others.
Shares of JNK India were commanding a premium of ₹15 in the grey market today.
However, it is important to note that grey market premiums are just an indicator of how the company’s shares are stacked up in the unlisted market and are subject to change rapidly.
JNK India IPO review
Most analysts have assigned a ‘Subscribe’ rating to the issue, considering the company’s robust order book, global parentage, skilled and experienced promoter.
SMIFS Limited: Subscribe
JNK India with its 27% market share in the Indian heating equipment’s market is well poised to grow from the rising demand in the industry, said SMIFS Limited in its research note.
The brokerage has recommended a ‘Subscribe’ rating to the IPO, as it believes with a robust orderbook and JNK’s intention to further diversify revenue growth by addressing industries like renewable energy, the company is looking at a strong double digit growth in its top line and bottom line by FY26.
Reliance Securities: Subscribe
The broking firm has a ‘Subscribe’ tag to JNK India IPO as the company has a global parentage, skilled and experienced promoter’s holding respective backgrounds in their line of business are the added advantages.
Reliance Securities expects the order book to see an improvement with new businesses and improved prospects for the oil-gas and fertilizer sectors.
Anand Rathi: Subscribe-Long term
According to Anand Rathi Research, JNK India has an established track record with a diverse customer base and is well-positioned to capture industry tailwinds.
The company also has demonstrated financial performance with a robust order book reflecting revenue visibility for last three fiscals, it said.
“At the upper price band, the company is valuing at P/E (price-earnings) of 49.38 times, EV/EBITDA 33.13 times with a market cap of ₹2,308 crore post issue of equity shares and return on net worth of 47.71%,” the brokerage said.
It also believes that the IPO is fairly priced and recommends a ‘Subscribe-Long term’ rating to the IPO.
Offer details
The company has fixed a price band of ₹395-415 per share for its ₹650-crore IPO, which closes on April 25. Investors can make bids for 36 shares in one lot and multiples thereafter.
The issue includes fresh shares worth ₹300 crore and an offer-for-sale (OFS) of up to 84.2 lakh shares by its existing shareholders and promoters.
The OFS consists of up to 11.2 lakh shares by Goutam Rampelli, up to 24.3 lakh by JNK Global, up to 44 lakh by Mascot Capital and Marketing and up to 46.8 lakh shares by Milind Joshi.
Considering the upper end of the price band, the IPO size will be ₹650 crore and the post-issue market capitalisation is expected to be around ₹2,300 crore.
As much as 50% of the offer is reserved for qualified institutional buyers, 35% for retail investors, and the rest 15% for non-institutional investors.
The net proceeds from the IPO will be utilised for funding the working capital requirements and general corporate purposes.
IIFL Securities and ICICI Securities are the lead managers to the IPO, while Link InTime India is the registrar.
Basis of allotment will be on April 26, refunds and credit of equity shares will be on April 29. The shares of JNK India will list on the exchanges on April 30, according to the IPO schedule.
Business overview
JNK India manufactures heating equipment for process industries such as oil refineries and petrochemical plants. The company handles everything from design to installation, serving both the domestic and international markets.
It is one of the well-recognised heater companies in India, having a market share of approximately 27% in the segment, in terms of new order booking in financial year 2023.
Its biggest rival in India is Thermax Ltd. It has also expanded into flares, incinerator systems, and is planning to venture into the renewable sector with green hydrogen.
Also Watch | In an interview with CNBC-TV18, Arvind Kamath, Chairperson of JNK India and Dipak Bharuka, CEO of JNK India discussed more on the IPO and the way ahead.
Financials
For FY23, JNK India posted a revenue of ₹407 crore, compared to ₹296.40 crore a year ago. The company’s net profit for the fiscal came in at ₹46 crore as against ₹36 crore last year. As of the nine months ended 2023, the total debt of the company came in at ₹56.73 crore.
As of December last year, the company’s order book totalled ₹845.03 crore, with 86% from India and 13.71% from overseas.
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