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Salient features of the IPO:

• JNK India Ltd. (JNK), one of the leading manufacturers of heating equipments, which mainly finds application in the oil refineries and petrochemical plants, is coming up with an IPO to raise around Rs. 650cr, which opens on 23rd Apr. and closes on 25th Apr. 2024. The price band is Rs. 395 - 415 per share.

• The IPO is a combination of fresh issue (Rs. 300cr) and OFS portion (Rs. 332.6 - 349.5cr). The company will not receive any proceeds from the OFS portion. From the fresh issue net proceeds, the company will be utilizing Rs. 262.7cr for funding the working capital requirement. Residual proceeds will be used for general corporate purposes.

• Few of the promoter & promoter group (P&PG) entities are participating in the OFS and offloading 0.795cr shares. While one of the individual public shareholder is offloading 0.047cr shares. Consequently, post-IPO, the P&PG and public shareholders will have 67.97% and 32.03% stake in the company, respectively.

Key competitive strengths:

• Established track record with a diverse customer base

• Well-positioned to capture sector tailwinds through demonstrated capabilities over time

• Diversifying product portfolio to cater to varied sectors

• Demonstrated financial performance with a robust order-book reflecting revenue visibility for last three fiscals

• Skilled and experienced promoters & management team with committed employee base

Risk and concerns:

• General slowdown in the global economic activities

• Unfavorable government policies & regulations

• Sectoral revenue concentration risk

• Subdued expansion in new business verticals

• Working capital intensive operations

• Difficulty in maintaining the profitability

• Unfavorable forex rate

• Competition

Below are the key highlights of the company:

• Incorporated in 2010, JNK is engaged in the business of manufacturing process-fired heaters, reformers & cracking furnaces (together, referred as “Heating Equipment”), which finds application in sectors like oil & gas, petrochemical and fertilizer. The company also manufactures flares & incinerators systems, which are critical for emission control. Based on the domestic order-booking, JNK has around 27% share in the Indian Heating Equipment market in FY23.

• Since inception, it has working closely with JNK Global (formerly known as JNK Heaters Co. Ltd.), which is involved in the design, manufacturing, installation of process-fired heaters. JNK Global is the only industrial-use process-fired heater producer in Korea and is ranked amongst the top-3 industrial-use process-fired heater producers globally. JNK Global is also one of the corporate promoters of the company (with a pre-IPO shareholding of 25.79%) and is participating in the OFS by partially offloading its stake. Post-IPO, it will have 18.06% stake in JNK.

• The relationship between the company and JNK Global is both independent and collaborative in nature. JNK mainly participates independently and acquire Heating Equipment projects, while for certain projects; it collaborates with JNK Global as a joint engineering & implementing partner.

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