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BACKGROUND

JNK (JNK India) manufactures Heating Equipment (process fired heaters, reformers and cracking furnaces) that is required in process industries such as oil and gas refineries, petrochemicals and fertilizers. Over the years, JNK has diversified into flares and incinerator systems and has been developing capabilities in the renewable sector with green hydrogen.

Objects and Details of the Issue:

Total issue size is Rs. 649 Cr comprising of Rs. 300 Cr from Fresh Issue and Rs. 349 Cr from Offer For Sale. Net Proceeds from the Fresh Issue shall be utilized towards funding working capital requirements.

Investment Rationale:

High entry barriers in the process fired heaters market

Support from JNK Global aids JNK India

Well-positioned to capture industry tailwinds through its demonstrated capabilities over time

Diversifying product portfolio to cater to varied industries

Healthy order booking and robust ROCE

Valuation and Recommendation:-

JNK is well placed to capitalize on the Global as well as Indian capex unfolding in the oil and gas, petrochemicals and fertilizer industries. With the heating equipment industry having limited players due to high entry barriers, JNK has been able to command strong EBITDA margins of 17% and generate ROCE of 40% 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. Based on favourable industry structure with limited competition and strong pipeline of orders, we are positive on JNK and recommend to Subscribe to the IPO.

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SEBI Registration number is INH000001766