IGI Logo

A Niche Player in the Heating Equipment Segment

JNK India Ltd. (JIL) specializes in manufacturing heating equipment for various process industries such as oil & gas refineries, petrochemicals, and fertilizers. Incorporated in 2010, the company is one of the well-recognized heater companies in India, having a market share of approximately 27% in the segment, in terms of new order booking as of FY23. The company has successfully executed projects in India, Mexico, and Nigeria, with ongoing ventures across various Indian states and overseas locations. JIL's key clientele includes organizations such as Indian Oil Corporation, Tata Projects, and Rashtirya Chemicals & Fertilisers. As of December 31, 2023, the company has provided services to 21 customers in India and 8 customers abroad

• The projected demand for heating equipment from Indian refineries, petrochemicals, and fertilizer sectors between FY24 and FY29 is estimated at ?27,089cr, averaging approximately ?4,500cr annually, signalling favourable prospects for the company.

• JNK India collaborates closely with its corporate promoter, JNK Global, a KOSDAQlisted entity with a 25.8% share.

• Between FY21 and FY23, the company achieved a 72% CAGR in revenue, reaching ?407cr, and a 68% CAGR in PAT, totalling ?46cr. It also maintained an average EBITDA Margin of 18% and a PAT Margin of 12% during this period.

• The company boasts a return on equity (RoE) and return on capital employed (RoCE) of 38% and 39%, respectively, for FY23.

• By December 2023, JIL held an order book of about ?845cr, with 86% of orders from India and 14% from overseas, leading to a robust order book/sales ratio of 2.5x annually, highlighting strong revenue visibility.

• The company seeks to expand its reach into additional product segments while solidifying its position in designated markets. JIL is focused on expanding its clientele in pivotal global regions such as Europe and is actively developing renewable energy capabilities, including on-site hydrogen generation, hydrogen refuelling infrastructure, and solar photovoltaic systems.

• At the upper price band of ?415, JIL 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. We assign a “Subscribe” rating on a long term basis.

Purpose of IPO

The offering includes both a fresh issue of ?300cr and an Offer-for-Sale (OFS) component of up to 84.21 lakh equity shares valued at Rs.349cr. Out of the Net Proceeds, the company plans to allocate ?262.7cr to support its working capital needs for business operations in FY24, FY25, and FY26.

Key Risks

• The company's heavy reliance on JNK Global (54% of FY23 revenues) may pose financial risks without new projects. Yet, this dependence has dropped to 27% in 9MFY24.

• Capex downturns in the oil, gas, petrochemicals, or fertilizer sectors could heavily impact revenue, cash flows, and financial stability.

For More Geojit Financial Services Ltd Disclaimer https://www.geojit.com/disclaimer 

SEBI Registration Number: INH200000345