Known for his knack for spotting winning microcap and smallcap stocks, Agrawal made a fresh move into the counter in the December quarter, as revealed by the company’s latest shareholding data.
This marks his debut in the stock, raising eyebrows and speculation about the company’s growth prospects.
Who is Mukul Agrawal?
Mukul Agrawal, a seasoned investor renowned for his sharp insights, blends offensive and defensive strategies to navigate the market.
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Known for his meticulous analysis, Agrawal adopts an aggressive investment approach while maintaining a balanced edge with two distinct portfolios—one for long-term investments and another for tactical trading opportunities.
Why did Mukul Agrawal buy stake in this company?
Data available on the exchanges shows that Mukul Agrawal has entered this counter by buying 1.6% stake.
As of December 2024, he held 10,00,000 shares of KRN Heat Exchanger.
While we do not know the exact reasons behind Agrawal’s decision to enter in this counter, here’s what we believe might have influenced the move:
Massive data centre opportunity
KRN Heat Exchanger and Refrigeration manufactures fin and tube-type heat exchangers for the heat ventilation air conditioning, and refrigeration industry.
The company caters to sectors such as oil and gas, chemical processing, power generation, refrigeration, and HVAC (heating, ventilation, and air conditioning), offering a wide range of heat exchangers including shell and tube, plate, finned tube, and air-cooled models.
With advancements in industries like electronics manufacturing services (EMS), semiconductors, and data centres, the demand for “keeping things cool” and cooling systems has surged.
KRN Heat Exchanger’s products are designed to maintain ultra-low levels of airborne particles, temperature, humidity, and pressure, catering to sectors where precision and contamination control are paramount.
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The company’s cooling technologies ensure quality and safety in production processes, making them indispensable to industries that prioritise cleanliness and sterility.
KRN’s major customers include industry leaders like Daikin and Schneider Electric, with Schneider contributing a significant portion of the data centre business.
Improving financials
The company successfully raised ₹340 crores in 2024 and was listed in October 2024. Following a successful listing, the company went on to report robust quarterly earnings.
During the September 2024 quarter, it achieved standalone revenue of ₹100 crores, a 39.4% year-over-year (YoY) growth.
Meanwhile, the net profit for the quarter surged 43% to ₹12.4 crores, with a net profit margin of 13.4%.
Over the past 3 years, the company’s sales and net profit have grown at a compounded annual growth rate (CAGR) of 60% and 151%, respectively.
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During the quarter, the company signed a ₹1,000 crore MoU with the Rajasthan government under the Rising Rajasthan initiative for future expansion plans. At present, Rajasthan accounts for 41% of the total business.
The company’s major business comes from domestic markets while close to 15% comes from exports.
What next?
During its recent earnings call, the company’s management conveyed optimism about reaching full capacity utilisation within three years of launching its new facility.
KRN HVAC, the company’s wholly owned subsidiary, is set to begin commercial production in April 2025, with plans to gradually scale up operations thereafter.
Addressing growth prospects in emerging industries, the management underscored the significant potential of data centres, which currently account for approximately 7% of its revenue but are anticipated to grow substantially in the coming years.
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Growing demand, along with the upcoming product launches including bar and plate heat exchangers and roll bond heat exchangers, are expected to diversify its revenue profile.
Nevertheless, investors should conduct thorough research, check corporate governance practices, and assess risk tolerance before making investment decisions.
KRN Heat Exchanger stock performance
In recent trading sessions, shares of KRN Heat have come under pressure as its three-month lock-in period ended.
From its peak price of ₹876 touched in December 2024, it has come down to ₹755 at present.
The stock rallied 10% on Monday following positive overall market sentiment and after the buying activity was revealed.
In the past 5 trading sessions, KRN Heat Exchanger share price has gained 15%.
The stock has gained 18% over the past month.
Since listing, the stock price has gained more than 70%.
Here’s a table comparing KRN with its peers –
Comparative Analysis
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Happy investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
