Mumbai-based Heating Equipment Maker JNK India Limited files DRHP for IPO

Mumbai-based Heating Equipment Maker JNK India Limited files DRHP for IPO

Mumbai-based JNK India Ltd, is one of the leading Heating Equipment companies in India in terms of new order booking between Fiscal 2021 to Fiscal 2023 and has capabilities in thermal designing, engineering, manufacturing, supplying, installing and commissioning process fired heaters, reformers and cracking furnaces. The company has filed its Draft Red Herring prospectus (DRHP) with capital market regulator Sebi to raise funds through for its initial public offering (IPO).

The IPO with a face value of Rs 2 consists of fresh issue of up to Rs 300 crore and an offer for sale (OFS) of up to 8.42 million equity shares by Promoter and other selling shareholders.

The offer for sale comprises of up to more than 1 million equity shares by Goutam Rampelli, up to 8.67 lakh equity shares by Dipak Kacharulal Bharuka, up to 2.18 million equity shares by JNK Heaters Co. Ltd, up to 3.94 million equity shares by Mascot Capital and Marketing Private Limited, and up to 4.19 lakh equity shares by Milind Joshi.

The Offer is being made through the Book Building Process, wherein not more than 50% of the Offer shall be available for allocation on a proportionate basis to Qualified Institutional Buyers, not less than 15% of the Offer shall be available for allocation to Non-Institutional Investors and not less than 35% of the Offer shall be available for allocation to Retail Individual Investors.

The company, in consultation with the lead bankers to the issue, may consider a further issue of equity shares aggregating up to Rs 60 crore (“Pre-IPO Placement”). If such placement is completed, the fresh issue size will be reduced.

As per the DRHP, the proceeds from the Fresh Issue to the tune of Rs 275.72 crore will be used for funding working capital requirements and general corporate purposes.

JNK is amongst the prominent companies in India specializing in process fired heaters, commanding a substantial market share of approximately 27% within the Indian Heating Equipment market for new order bookings during Fiscal 2023, according to F&S Report in the DRHP. As on March 31, 2023, it had an order book of Rs 868.27 crore, six times more than Rs 143.58 crore in March 31, 2021.

Through its subsidiary JNK Renewable Energy Private Limited, the company is working on building capabilities in renewable sector with green hydrogen with onsite hydrogen production, hydrogen fuel stations and solar photovoltaic – EPC which forms part of green hydrogen value chain.  Recently, it has diversified into waste gas handling systems which includes flares and incinerators systems.

Within India, this company has executed projects in various regions including Andhra Pradesh, Assam, Bihar, Karnataka, Kerala, Maharashtra, Tamil Nadu, and West Bengal. Internationally, they've undertaken global projects in countries like Nigeria, Mexico and have ongoing projects in Gujarat, Odisha, Haryana, Oman, Algeria and Lithuania.

As of March 31, 2023, it has served 17 clients within India and seven abroad. Notable domestic customers encompass entities like Indian Oil Corporation Limited, Tata Projects Limited, Rashtriya Chemicals & Fertilizers Limited, and Numaligarh Refinery Limited. Additionally, overseas clientele includes a prominent engineering, procurement, and construction ("EPC") company in Europe, a major oil and gas exploration and production firm in Oman, and a Middle Eastern branch of a European EPC enterprise in the oil and gas sector.

Since its inception, the company has maintained a close partnership with JNK Heaters, a KOSDAQ-listed company. JNK Heaters also stands as one of the corporate promoters of the company, holding a 25.79% stake as of the current date mentioned in the Draft Red Herring Prospectus.

The company operates an in-house fabrication facility at the Mundra Special Economic Zone in Gujarat, and another facility at Jajpur, Odisha, spanning around 16,187 square meters with an annual fabrication and modularization capacity of 1,000 metric tonnes. Their ISO certification underscores their commitment to quality.

The leadership of the company, led by individuals such as Arvind Kamath, Goutam Rampelli, Dipak Kacharulal Bharuka, and Bang Hee Kim, having extensive experience in the Heating Equipment industry.

For the fiscal year 2023, the consolidated revenue from operations increased 37.42% to Rs 407.30 crore against Rs 296.40 crore a year ago, primarily on account of increase in the revenue generated geography-wise and product wise. Net profit increased by 28.84% from Rs 35.98 crore in fiscal 2022 to Rs 46.36 crore in fiscal 2023.

The Company receives 77.25% of its income from the oil and gas sector, while 16.17% originates from the petrochemical industry. The remaining portion of its revenue comes from the fertilizer sector and various other industries.

India ranks as the world's third-largest oil consumer, with an estimated oil demand projected to reach 11 million barrels per day by 2045. Foreseen demand for Heating Equipment from India's refineries, petrochemical, and fertilizer (urea) sectors during the period between Fiscals 2024 and 2029 is approximated at ₹ 270,890 million, roughly equivalent to an annualized sum of ₹ 45,000 million. Within this demand, petrochemicals, refineries, and fertilizers (urea) are anticipated to contribute 61%, 37%, and 2% respectively. Further analysis indicates that this demand distribution can be categorized as follows: 46% for cracking furnaces, 24% for low capital expenditure heaters, 16% for high capital expenditure heaters, and 14% for reformers, as indicated in a report by F&S.

IIFL Securities Limited, and ICICI Securities Limited are the book running lead managers and Link Intime India Private Limited is the registrar to the offer. The equity shares are proposed to be listed on BSE and NSE.