 "IPO")
JNK India IPO details: The Rs 649.5-crore initial public offer (IPO) was off to a slow start on Tuesday. Till 1:30 PM, the issue was subscribed 18 per cent, led mainly by retail investors (31 per cent subscription).
The portion reserved for non-institutional investors (NII) was subscribed 8 per cent, while the portion reserved for QIBs has not received any bids so far.
JNK India IPO is a book-building IPO which includes fresh issue of 7.6 million shares worth Rs 300 crore, and an offer for sale (OFS) of 8.4 million shares for Rs 349.47 crore.
The three-day IPO, which opened today, April 23, and will close on April 25, 2024, has a price band of Rs 395 to Rs 415 per share. Investors can bid for the IPO in lots of 36 shares and multiples thereof.
Here is all you need to know about the JNK India IPO:
About the company: JNK India Limited is a company that designs, builds, supplies, installs, and commissions reformers, cracking furnaces, and process fired heaters.
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The company has completed projects in Andhra Pradesh, Assam, Bihar, Karnataka, Kerala, Maharashtra, Tamil Nadu, and West Bengal, and has implemented projects globally, including in Nigeria, and Mexico.
JNK India has also diversified into flares and incinerator systems, and has been developing capabilities in the renewable sector with green hydrogen.
JNK India IPO price band: The price band for the IPO has been set as Rs 395 to Rs 415 per share.
JNK India IPO dates: The IPO will run between April 23-25, 2024. The allotment of JNK India IPO shares will likely happen on Friday, April 26, 2024.
JNK India listing: The shares of JNK India are expected to debut on the NSE, and BSE on Tuesday, April 30, 2024.
JNK India IPO GMP: The grey market premium (GMP) for JNK India is Rs 15 as of April 23, 2024. At the higher end of the price band, it is a premium of 3.6 per cent.
JNK India Financials: At the end of the financial year 2022-23 (FY23), net profit of JNK India stood at Rs 4.64 crore, up from Rs 3.60 crore (FY22), and Rs 1.65 crore (FY21).
The company's revenue from operations for these years was Rs 40.73 crore, Rs 29.63 crore, and Rs 13.77 crore, respectively.
JNK India's net worth has also increased steadily to Rs 12.22 crore in FY23 from Rs 7.22 crore in FY22, and Rs 3.68 crore in FY21.
JNK India peer comparison: Listed peers of JNK India include Thermax Ltd, and Bharat Heavy Electricals Ltd (BHEL). The price-to-earnings (P/E) of Thermax is 113x, while that of BHEL is 186x.
The return on networth (RoNW) is also healthy for JNK India at 47.7 per cent as against 12.24 per cent for Thermax, and 1.79 per cent for BHEL.
JNK India Subscription: Should you apply?
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JNK India has done well during the previous three fiscal years. The business has carved out a niche for itself in the heating equipment category and has seen growth in both its top and bottom lines over the periods under review.
As of December 31, 2023, it had an order book valued at Rs 845 crore. The IPO valuation of 43x P/E appears fairly priced.
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JNK India is well placed to capitalise on the Global as well as Indian capex unfolding in the oil and gas, petrochemicals and fertiliser industries.
With the heating equipment industry having limited players due to high entry barriers, JNK India has been able to command strong Ebitda margins of 17 per cent and generate return on capital employed (ROCE) of 40 per cent in FY23.
JNK has delivered growth and return ratios which are superior to comparable companies while its valuation is at the lower end of the range.
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JNK India has 27 per cent market share in the Indian Heating Equipment market and is well positioned to capture industry tailwinds with a large total addressable market (TAM) of Rs 63,000 crore and Rs 6,600 crore in waste gas handling markets worldwide over FY24-29 as per F&S industry report.
JNK India is also venturing in the renewable sector with green hydrogen with onsite hydrogen production, hydrogen fuel stations and solar photovoltaic, which forms part of the green hydrogen value chain.
JNK India wants to grow inorganically in acquiring technology and know-how with an aim to enhance their presence in newer product categories and deepen their penetration in the target markets.
We expect the order book to see improvement with new businesses and improved prospects for the oil-gas and fertiliser sectors.
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We believe there is no peer having a product-line similar to the JNK. At the higher price band, JNK India is demanding an P/E multiple of 49.8x, which is at a significant discount to the peer average. Thus, considering the niche product profile and medium-term growth prospects, we are assigning a 'Subscribe' rating for the issue.
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At the upper price band of Rs 415, JNK India is available at a P/E of 37x (FY24 EPS annualized), which appears to be reasonably priced compared to peers.
With India's thriving oil & gas and hydrogen industries, coupled with the company's strong financial track record, impressive clientele, and ambitious expansion plans, it's poised for substantial growth.
