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JNK India Ltd
Industry: Heating Equipment

Date: 22nd April, 2024

Source: Company Filings, CSEC Research

JNK India Ltd

Issue Highlights
ISSUE DETAILS
JNK India Ltd is a book built issue of Rs. 649.47 crores. The issue is
Price Band Rs. 395 to Rs. 415 per share
a combination of a fresh issue & Offer for Sale (OFS).
• The Fresh Issue consists of 72,28,916 (~0.72 Cr) shares, Face Value Rs. 2 per share

aggregating to Rs. 300 Crores at the upper end of the price

1,56,49,968 shares
Total Offer Size
band at Rs. 415 per share.
(aggregating up to Rs. 649.47 Cr)
• The OFS consists of 84,21,052 (~0.84 Cr) shares aggregating up
to ₹349.47 Crores at the upper end of the price band at Rs. 415 72,28,916 shares
Fresh Issue
per share. (aggregating up to Rs. 300.00 Cr)

8,421,052 shares
Objects of the Offer are: : The net proceeds of the fresh issue are Offer For Sale (OFS)
(aggregating up to Rs. 349.47 Cr)
proposed to be utilised in the following manner:
Issue Type Book Built Issue IPO
Particulars Amount (Rs. Cr)
Minimum lot 36 shares
Funding of working capital requirements 262.70
General corporate purposes [●] Listing on NSE, BSE
Total [●]

Indicative Timeline On or before

23rd 25th
Finalization of Basis of Allotment Friday, April 26, 2024

Unblocking of Funds Monday, April 29, 2024

April 2024 to April 2024
Credit of shares to Demat Account Monday, April 29, 2024
ISSUE OPENS ISSUE CLOSES Listing on exchange Tuesday, April 30, 2024

Date: 22nd April, 2024

Data Source: Company filings & CSEC Research
JNK India Ltd

Outlook
IPO Reservation

QIB Shares Not more than 50.00% of the Net offer

• Anticipate potential listing gains of 20% to 25%.
• Revenue cagr of 72% from FY21 TO FY23 and PAT cagr of 68%. HNI Shares Not less than 15.00% of the Offer
• ROE% for 9MFY23 > 30%
Retail Shares Not less than 35.00% of the Offer
• As per reports, JNK India has 27% of market share in the Indian heating
equipment market in terms of new order booking in FY23.
• Increasing demand of heating equipment from the Indian refineries, Lot Size
petrochemicals and fertiliser segments to the extent of Rs. 27,089 Crores Application Lots No of Shares Amount (Rs.)
from FY24 till FY29 (i.e., Rs. 4500 Crores annually).
Retail (Min) 1 36 ₹14,940

Retail (Max) 13 468 ₹194,220

Key Performance Indicators
S-HNI (Min) 14 504 ₹209,160
Market Cap (Post Issue) (Rs. Cr) 2,308
S-HNI (Max) 66 2,376 ₹986,040
PE Ratio (Post Issue*) 43.6
B-HNI (Min) 67 2,412 ₹10,00,980
EPS (FY23) 9.5

ROE% (9MFY24) 31.79% Shareholding

ROCE% (9MFY23) 34.73% Pre issue 94.65%

*Post Issue PE calculated on the basis of FY23 EPS

Post issue 67.13%

Date: 22nd April, 2024

Data Source: Company filings & CSEC Research
JNK India Ltd

Company Overview

• Overview: Incorporated in 2010, JNK India is a manufacturer of heating equipment including process fired
heaters, reformers, and cracking furnaces. They primarily serve oil and gas refineries, petrochemical plants,
and fertilizer manufacturing sectors. The company provides comprehensive services in thermal designing,
engineering, manufacturing, supply, installation, and commissioning of specialized Heating Equipment.
• Geographical presence: JNK India has completed significant projects across various Indian states such as
Andhra Pradesh, Assam, Bihar, Karnataka, Kerala, Maharashtra, Tamil Nadu, and West Bengal. They have
also established an international presence in with projects in Nigeria, Mexico, Oman, Algeria, and Lithuania.
Further, they currently have ongoing projects in Gujarat, Odisha, Haryana, Rajasthan in India and globally in
Oman, Algeria, and Lithuania.
• Client Base: Some of their key clients include Indian Oil Corporation Limited, Tata Projects Limited, Rashtriya
Chemicals & Fertilizers Limited, Numaligarh Refinery Limited, and various global EPC companies. As of
December 31, 2023, JNK has served 21 Customers in India and 8 Customers overseas. Further, 7 out of the 12
oil refining companies in India, are its customers and the company has supplied or are in the process of
supplying Heating Equipment to 11 of the 24 operating oil refineries across India.
• Manufacturing Capabilities and Facilities: A major facility of the company is located in Mundra, Gujarat
located in a Multi-Product Special Economic Zone, focusing primarily on exports. The Mundra facility spans
approximately 20,243 square meters with an installed annual capacity of 5,000 metric tonnes for
manufacturing and modularization. All products are custom-made as per client specifications and comply
with applicable standards, utilizing both in-house and third-party manufacturing setups.
• Orders Value: They hold orders worth Rs. 845 crore as of December 31, 2023.

Date: 22nd April, 2024

Data Source: Company filings & CSEC Research
JNK India Ltd

• Financial Performance: JNK has demonstrated steady growth in both top-line and bottom-line figures over the reporting periods. From FY21 till FY23, the revenue from
operations grew at a cagr of 72% and PAT grew at a cagr of 68%.
• Product Diversification: The company has expanded into manufacturing flares and incinerator systems. They are also developing capabilities in renewable energy
sectors, particularly green hydrogen. They are working on projects involving onsite hydrogen production, hydrogen fuel stations, and solar photovoltaic systems as part of
the green hydrogen value chain.
• Safety and Compliance: JNK India has received recognition for safety compliance from multinational industrial conglomerates, including certificates of appreciation for
'Safety Compliance and Campaign Performance' and four million safe man-hours without a lost-time incident. The company possesses all necessary certifications such
as ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018.
• Collaboration with JNK Global: The company maintains a strategic partnership with JNK Global, a KOSDAQ listed company, which holds a 25.79% share as of the latest
prospectus. This partnership enhances both operational capabilities and market access.
• Growth Potential: JNK India is well-positioned to capitalize on upcoming industry tailwinds with an estimated demand for Heating Equipment from Indian industries
(refineries, petrochemicals, and urea-based fertilizers) expected to reach approximately ₹27,089 Crores between Fiscal 2024 and Fiscal 2029. The global demand for
process fired heaters is also anticipated to grow significantly due to rising refinery and petrochemical capacities worldwide.

Date: 22nd April, 2024

Data Source: Company filings & CSEC Research
JNK India Ltd

Risks

• Dependency on Contracting Customers for Revenue: JNK India Ltd. significantly relies on Contracting Customers like Tata
Projects Limited and JNK Global for a large portion of its revenues. As of December 31, 2023, orders from Contracting Customers
constituted approximately 45.83% (₹387.26 Crores) of the total Order Book value of ₹845 Crores. A majority of the company's
revenues are derived from JNK Global, the company’s corporate promoter, which also provides technological support for
certain projects. In FY24, JNK Global contributed 27.08% of the revenue.
• Vulnerability to Industry Capex Fluctuations: JNK India's business is heavily reliant on the capital expenditure of the oil, gas,
petrochemical, and fertilizers industries. Fluctuations in global crude oil prices, influenced by geopolitical or market conditions
such as the Russia-Ukraine conflict, can adversely affect capital expenditure plans of these industries, thereby impacting the
company's revenue and financial stability.
• Risks Associated with Outsourced Manufacturing: As an asset-light company, JNK India outsources most of its fabrication
work to third-party fabricators. This reliance presents multiple risks, including potential quality control failures, operational
disruptions, or non-compliance with laws by third-party fabricators, which could adversely affect project timelines and product
quality.
• High Working Capital Requirements: The company has high working capital needs, which are critical for operational
sustainability. As of the end of December 2023, the working capital turnover ratio was 1.50, indicating significant capital is tied up
in operations.
• Competitive Market Environment: JNK India operates in a competitive sector with high entry barriers. Despite this, competitors
offering lower-cost or technologically superior products could erode market share. The company's ability to innovate and
maintain cost-effectiveness is crucial for retaining its competitive edge.
• Low Capacity Utilization at Key Facilities: As on December 31, 2023, the Company had two leased premises from where they
undertook in-house fabrication process apart from engaging with third party fabricators. Both such facilities were used for
limited purposes. The first premise is situated at a multi-product special economic zone at Mundra, Gujarat which is used only
for exports and has a capacity utilization of 6.38%, 44% and 33% as on 9MFY24, FY23 and FY22.

Date: 22nd April, 2024

Data Source: Company filings & CSEC Research
JNK India Ltd

FINANCIALS

Income Statement Balance Sheet

Particulars (Rs. Cr) 9MFY24 FY23 FY22 FY21 Particulars (Rs. Cr) 31-Dec-23 Mar-23 Mar-22 Mar-21

Revenue from Operations 253.4 407.3 296.4 137.7 Equity And Liabilities

Other Income 3.4 4.2 0.7 0.7 Share Capital 9.7 9.6 9.6 0.6

Total Income 256.8 411.5 297.1 138.5 Reserves 158.9 112.6 62.6 36.2

Expenses 186.5 338.0 242.6 112.4 Borrowings 84.8 60.8 34.0 21.8

EBITDA 70.2 73.5 54.6 26.0 Other Liabilities 200.1 154.8 162.2
66.5
Depreciation 4.0 6.6 3.0 1.9 Total Equity And Liabilities 453.4 337.8 268.3 125.1
EBIT 66.2 66.9 51.6 24.2

Finance Cost 5.5 4.2 3.8 1.3 Assets

PBT and Exceptional Items 60.7 62.7 47.8 22.8 Fixed Assets 24.1 20.7 20.1 3.5
Exceptional Items - - - -0.0 Cwip 1.4 - - -
PBT 60.7 62.7 47.8 22.8 Cash & Cash Equivalents 36.6 47.2 25.7 27.2
Tax 14.5 16.3 11.8 6.3 Other Assets 391.3 269.9 222.5 94.4
PAT 46.2 46.4 36.0 16.5 Total Assets 453.4 337.8 268.3 125.1
EPS (In Rs.) 9.5 9.5 7.5 3.4

Date: 22nd April, 2024

Data Source: Company filings & CSEC Research
 JNK India Ltd

Notable Ratios & Metrics

Particulars 9M FY24 FY23 FY22 FY21
Order Book (Rs. Cr) 845.03 868.27 543.46 143.58
EBITDA Margin (%) 27.72% 18.05% 18.41% 18.89%
Net Profit Margin (%) 18.24% 11.38% 12.14% 11.96%
Return on Equity (ROE%) 31.79% 47.71% 66.03% 56.96%
Return on Capital Employed (ROCE%) 34.73% 57.17% 83.25% 71.90%

Revenue classified based on: Geography (Within India and Outside India)
9MFY24 FY23 FY22 FY21
Particulars
Amt (Rs. Cr) % Amt (Rs. Cr) % Amt (Rs. Cr) % Amt (Rs. Cr) %
Revenue from the Indian market 206.92 81.7% 126.51 31.1% 72.99 25.3% 49.92 36.5%
Revenue from overseas market 46.47 18.3% 280.05 68.9% 215.81 74.7% 86.88 63.5%
Total 253.39 100% 406.55 100% 288.80 100% 136.80 100%

Revenue classified based on: Customer Category (Contracting Customers and End Customers)
9MFY24 FY23 FY22 FY21
Particulars
Amt (Rs. Cr) % Amt (Rs. Cr) % Amt (Rs. Cr) % Amt (Rs. Cr) %
Contracting Customers 138.43 54.6% 295.40 72.7% 221.44 76.7% 91.89 67.2%
End Customers 114.96 45.4% 111.15 27.3% 67.36 23.3% 44.91 32.8%
Total 253.39 100% 406.55 100% 288.80 100% 136.80 100%

Revenue classified based on: Product Wise (Heating Equipment, Flares, Renewable Energy etc.)
9MFY24 FY23 FY22 FY21
Particulars
Amt (Rs. Cr) % Amt (Rs. Cr) % Amt (Rs. Cr) % Amt (Rs. Cr) %
Heating Equipment 235.19 92.8% 335.97 82.6% 261.20 90.4% 121.59 88.9%
Flares, Incinerators and Others 18.20 7.2% 70.58 17.4% 27.60 9.6% 15.21 11.1%
Total 253.39 100% 406.55 100% 288.80 100% 136.80 100%

Date: 22nd April, 2024

Data Source: Company filings & CSEC Research
 JNK India Ltd

Revenue classified based on: Customer Segment (Oil Refineries. Petrochemicals, Fertilizers, etc.)
9MFY24 FY23 FY22 FY21
Particulars
Amt (Rs. Cr) % Amt (Rs. Cr) % Amt (Rs. Cr) % Amt (Rs. Cr) %
Oil and gas 253.26 99.9% 314.65 77.3% 282.87 95.4% 127.89 92.9%
Petrochemical 0.10 0.0% 65.87 16.2% 5.68 1.9% 3.74 2.7%
Fertilisers - 0.0% 0.83 0.2% 0.13 0.0% 5.01 3.6%
Other 0.04 0.0% 25.95 6.4% 7.72 2.6% 1.09 0.8%
Total 253.39 100% 407.30 100% 296.40 100% 137.72 100%

Peer Comparison

Return on Capital Employed Return o Equity (ROE%) for

Company Market Cap (Rs. Cr) PE Ratio EBITDA Margin for FY23
(ROCE%) for FY23 FY23

JNK India Ltd 2308 (Post Issue) 43.6 (Post Issue) 57.17% 47.71% 18.1%

Thermax Ltd 54,848 102 15.02% 12.24% 8.0%

Bharat Heavy Electrical Ltd

90,621 NA 3.15% 1.79% 1.0%
(BHEL)

Date: 22nd April, 2024 Data Source: Company filings & CSEC Research
JNK India Ltd

Industry Outlook

Heating Equipment Market: The heating equipment market, comprising process fired heaters, reformers, and cracking furnaces, is crucial for the oil & gas downstream segments.
Between Fiscal 2024 and Fiscal 2029, Indian refineries are expected to generate demand for heating equipment worth approximately ₹10,190 Crores, averaging about ₹1700 Crores
annually. This demand is projected based on the commissioning of 12 refinery projects with a total installed capacity of 76.2 MMTPA and a total capital expenditure of ₹309,885
Crores.

Petrochemicals Sector: For the petrochemical segment, 9 projects are slated to be commissioned, generating heating equipment demand of ₹16,441 Crores for the same period,
averaging about ₹2750 Crores annually. This is adjusted to 14% of the total capex, reflecting the high usage of cracking furnaces in approximately 80% of petrochemical plants.

Fertilizer (Urea) Sector: The fertilizer sector, particularly urea projects, also presents a significant demand for heating equipment, estimated at ₹458 Crores between Fiscal 2024 and
Fiscal 2029, approximately ₹75 Crores annually. This demand comes from 2 upcoming projects with an installed capacity of 1.4 MMTPA.

Overall Market Dynamics: The combined demand for heating equipment from refineries, petrochemicals, and fertilizers (urea) segments is estimated at ₹27,089 Crores for Fiscal
2024 to Fiscal 2029, approximately ₹4500 Crores on an annualized basis. Of this, 61% is expected from petrochemicals, 37% from refineries, and 2% from fertilizers.

Industry Growth Trends and Drivers

Refinery Sector: India is the third-largest oil consumer globally, with oil demand projected to reach 11 million barrels per day by 2045, doubling from 2022 levels. The refinery sector is
bolstered by growing demand for transportation fuels and petrochemical feedstock. In Fiscal 2023, India’s consumption of petroleum products increased by 10% year-on-year,
totaling nearly 223 million metric tonnes. There are 18 refinery projects expected to be operational by Fiscal 2031, adding a cumulative capacity of 124.0 MMTPA.

Petrochemicals Sector: The petrochemicals sector is vital for India's industrial growth and economic development. With per capita polymer consumption significantly below the
global average, there is substantial room for growth, driven by GDP growth and increased domestic and global demand. Government initiatives like Make in India and Production-
Linked Incentive (PLI) Scheme aim to boost domestic manufacturing and attract investments. Upcoming projects and policies are anticipated to stimulate significant investment in
the sector.

Fertilizer Sector: India’s status as a predominantly agricultural economy and its position as the most populous country underscore the critical need for increased agricultural
production. The government's focus on enhancing agricultural inputs such as fertilizers is evident, with a push towards reducing import dependency in urea. About four urea projects
are expected to be commissioned by Fiscal 2026, aiming to make India self-reliant in this critical agricultural input.

The Indian heating equipment market is poised for significant expansion driven by extensive infrastructural developments across the refinery, petrochemical, and fertilizer sectors.
For JNK India Ltd., this represents a substantial opportunity to capitalize on the increasing demand. With strategic initiatives and robust industry growth, the company is well-
positioned to leverage its technological capabilities and market presence to secure a larger share of the projected market demand, reinforcing its competitive stance in the industry.

Data Source: Company filings & CSEC Research

Date: 22nd April, 2024

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