KRN Heat Exhchager closed its IPO on September 28 while Diffusion Engineers will close on September 30. However, if you’ve not got the allotment of any of these issues and thinking of buying them post-listing in the secondary market, here’s a comparison of both the IPOs to bet on listing day.
Grey Market Premium
KRN Heat Exchanger’s shares were fetching a premium of almost 123% in the grey market. Meanwhile, Diffusion Engineers’ shares were attracting a premium of around 35% in the grey market. This simply indicates that KRN Heat Exchanger will double its investors’ money on the day of listing.
Key Risks in IPOs
KRN Hear Exchanger
- More than 30% of its revenue is derived from one customer – Daikin Airconditioning India and over 70% of the revenue is from 10 key customers.
- The PAT for the company in the past three financial years has been increasing at 54.52%. However, in case it is not able to sustain these levels, it might be a source of worry
Diffusion Engineers
- The company’s manufacturing units are consolidated in one single city. It operates from four manufacturing facilities all of which are located in Nagpur, Maharashtra.
Price Band
KRN Heat Exchanger’s IPO price ranged between Rs 209 to 220 per equity share while Diffusion Engineers set the band between Rs 159 to Rs 168 per equity share. Both companies playing on the strategy of keeping the share price around Rs 100 to lure retail investors.
Expert’s Take on IPOs
“KRN has established itself amnong the top players in fin and tube-type heat exchangers for the HVAC&R industry using non-ferrous metals like copper and aluminium. Being a first-generation entrepreneur with over 19 years of experience in manufacturing heat exchangers and refrigeration units has moved KRN from a single product to a multi-product company with long-standing business relationships with leading clientele and a multi-fold expansion in revenues in the coming years offers strong growth going ahead with consistent profitability. Hence, we recommend a “Subscribe” to the issue,” said Reliance Securities on KRN Heat Exhcnager in an IPO note.
“Diffusion Engineers specialises in manufacturing welding consumables, wear plates and heavy machinery for core industries. It provides repair and reconditioning services for heavy equipment and trades in wear protection powders and welding machines. Over the coming years, the company plans to enhance its service delivery by robust growth and operational efficiency. At the upper price band company is valuing at a P/E of 20.4x with a market cap of Rs 629 crore post-issue of equity shares and a return on net worth of 18.5%. On the valuation front, we believe that the company is fairly priced. Thus, we recommend a “Subscribe” rating to the IPO,” said Anand Rathi Research in an IPO note.
Subscription Details
KRN Heat Exchanger IPO was subscribed 213 times as of September 30 while Diffusion Engineers IPO was subscribed almost 50 times. The retail segment of the latter was booked 52 times and that of KRN Heat was booked 97 times.