IPO listed on 30 Apr'24
JNK India Ltd
Minimum Investment
₹ 14,940 / 36 shares
Grey market premium
₹ 15 (4% premium)
Issue price
₹ 415
Listing price
₹ 621
Listing gains
206 (50%)
Listing on
Apr 30, 2024
Our Verdict:
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- JNK India Ltd maintains a strong foothold in the heating equipment market, distinguished by its varied product offerings. The firm boasts impressive EBITDA margins and return metrics that outperform those of its industry counterparts.
- From a valuation perspective, the IPO seems reasonably priced with a P/E multiple of 37.5x, calculated based on the projected FY24 earnings against the company's post-IPO equity.
- Given the firm’s impressive track record in terms of revenue and profit growth, limited competition, a strong pipeline of orders, and reasonable valuations, investors may consider subscribing to the IPO from a long-term perspective.
- Additionally, its promoter - JNK Global - is a major player in the industrial heaters market in Korea, ensuring a ready market and support for scaling up exports. The firm is also expanding into Europe and establishing offices in the Middle East and Africa.
About the company
Founded in
14 Jun'10
Managing director
Dipak Bharuka
- JNK India Ltd specializes in manufacturing process fired heaters, reformers, and cracking furnaces for the oil and gas refineries, as well as the petrochemical and fertilizer sectors. It boasts a clientele that includes 21 customers in India and 8 internationally, featuring notable domestic clients such as Indian Oil Corporation, Tata Projects, Rashtriya Chemicals & Fertilizers, and Numaligarh Refinery.
- Additionally, the firm is expanding its expertise into the renewable energy sector, focusing on green hydrogen. This includes developing onsite hydrogen production, hydrogen fuel stations, and engineering, procurement, and construction (EPC) for solar photovoltaic systems, all integral components of the green hydrogen value chain.
STRENGTHS
- Strong Market Position: JNK has expertise in supplying critical equipment to highly regulated industries, where there are few qualified suppliers. Holding ~27% of the market share in heating equipment, it supplies to seven out of the twelve oil refining companies in India.
- Impressive Financial Growth: JNK has shown a strong and consistent financial growth, with a Compound Annual Growth Rate (CAGR) of 72% in operational revenue from FY21 to FY23. This period also saw a significant 68% uptick in EBITDA and net profit.
- Superior Margins and Return Metrics: JNK distinguishes itself with an EBITDA margin of 18% and a net profit margin of 11% as of FY23, superior to its listed industry peers. It also boasts outstanding return ratios with a Return on Equity (ROE) of 48% and a Return on Capital Employed (ROCE) of 57%.
- Robust Order Book: JNK’s Order Book to Sales ratio has increased from 1.04x in FY21 to 2.13x in FY23, with the current order book valued at Rs 845 crore as of 9MFY24, ensuring strong revenue visibility.
- Investor-Friendly Company: JNK has maintained a generous dividend payout, issuing dividends of 100% for FY21 and FY22, and 15% for FY23, followed by another 15% for the first nine months of FY24. The company instituted a dividend policy in June 2023.
RISK FACTORS
- Substantial Working Capital Requirements: JNK has substantial working capital needs to manage its business operations. As of 9MFY24, the net working capital requirement was Rs 169 crore. Fluctuations in credit terms or payment conditions could negatively impact these needs. However, the firm has been prudently managing this capital without relying on debt, maintaining a low debt-to-equity ratio of 0.3 times.
- Dependence on Corporate Promoter: A significant portion of JNK's revenue (~54% in FY23) comes from its Corporate Promoter, JNK Global, and relies on their expertise and technological support for certain projects. Any disruption in this relationship could negatively affect the firm’s business performance and cash flows.
- Foreign Exchange Risk Exposure: JNK is exposed to foreign exchange risks that could negatively influence its financial outcomes. Revenues from international projects are primarily in U.S. dollars or Euros, with export revenue making up ~69% of the operating revenue in FY23.
Financials
Issue details
Issue type
Mainstream
Issue size
₹ 649.47 crore
Fresh Issue
₹ 300 crore
OFS
₹ 349.47 crore
Price range
₹ 395 - 415
Lot size
36 shares
Issue Objective
The net proceeds from the fresh issue are intended to be utilised towards:
- Funding working capital requirements; and
- General corporate purposes
Dates
Bidding open
23 Apr'24
Bidding close
25 Apr'24
Allotment date
26 Apr'24
Refund date
29 Apr'24
Listing
30 Apr'24
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2024 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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