JNK India IPO Analysis: Should You Subscribe?

The initial public offer (IPO) of JNK India Ltd, which kicked off today, will close for subscription on Thursday, April 25. The heating equipment maker seeks to raise Rs 649.47 crore through its IPO, which comprises an Offer for Sale (OFS) of up to Rs 349.47 crore and a fresh issue of Rs 300 crore. The firm has announced a price band of Rs 395 to Rs 415 per share for its IPO. Prospective investors can bid in lots, with each lot consisting of 36 shares. To apply for the IPO, the minimum investment is set at Rs 14,940 (calculated as 36 x 415). 

According to market observers, shares of JNK India Ltd are currently trading in the grey market at a premium of Rs 15, i.e. a grey market premium (GMP) of 4% above its issue price of Rs 415. The public offer is anticipated to debut on BSE and NSE on the 30th of April, 2024.

JNK India Anchor Round

Prior to issue opening, on April 22, JNK India Ltd successfully secured Rs 194.84 crore by issuing 46,94,989 equity shares at Rs 415/share to anchor investors. This anchor round attracted participation from prominent funds such as Goldman Sachs, Allianz Global Investors Fund, Natixis International Funds, Kotak Mutual Fund, HDFC Mutual Fund, Nippon Life India, Mirae, DSP Mutual Fund, Edelweiss Trusteeship, LIC Mutual Fund, Bajaj Allianz Life Insurance Company and Aditya Birla Sun Life Insurance Company, among others.

JNK India Subscription Status

As of April 23, the first day of its IPO, JNK India Ltd's offering was 49% subscribed. Out of the total 1,10,83,278 equity shares available, the company received bids for 53,90,568 shares. The Qualified Institutional Buyer segment led with a 67% subscription rate, followed by the Retail segment at 48%, and the Non-Institutional Investors segment at 25%.

About JNK India Ltd

JNK India Ltd specializes in manufacturing process fired heaters, reformers, and cracking furnaces for the oil and gas refineries, as well as the petrochemical and fertilizer sectors. It boasts a clientele that includes 21 customers in India and 8 internationally, featuring notable domestic clients such as Indian Oil Corporation, Tata Projects, Rashtriya Chemicals & Fertilizers, and Numaligarh Refinery. 

Key Strengths

Strong Market Position 

Impressive Financial Growth

Superior Margins and Return Metrics

Robust Order Book

Investor-Friendly Company

Key Concerns 

Substantial Working Capital Requirements

Dependence on Corporate Promoter

Foreign Exchange Risk Exposure

Final Verdict: Subscribe

JNK India Ltd maintains a strong foothold in the heating equipment market, distinguished by its varied product offerings. Additionally, its promoter - JNK Global - is a major player in the industrial heaters market in Korea, ensuring a ready market and support for scaling up exports. The company is also making strides into Europe and setting up offices in the Middle East and Africa.

JNK India stands out with its strong EBITDA margins and return metrics, surpassing its industry counterparts. From a valuation perspective too, the IPO seems reasonably priced with a P/E multiple of 37.5x, calculated based on the projected FY24 earnings against the company's post-IPO equity.

Given the firm’s impressive track record, limited competition, a strong pipeline of orders, and reasonable valuations, investors may consider subscribing to the IPO from a long-term perspective.

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