JNK India Limited IPO Review

JNK India Limited IPO Review

JNK India Limited IPO brings attention to a company that is a leading firm in the field of engineering and technology, producing heating equipment, flares, and incinerators, among other related products. The company has emerged as a pioneer in sustainable development, driven by innovative technology and strong engineering capabilities. Established on June 14, 2010, JNK India Limited has over a decade of operational experience in the industry.

The major stakeholders are the promoters of the company, such as Goutam Rampelli, Dipak Kacharulal Bharuka, JNK Heaters Co. Ltd, Mascot Capital and Marketing Pvt Ltd, and shareholder Milind Joshi. JNK India is the Indian subsidiary of South Korean-based JNK Global, which has a market share of 16 per cent globally, including that of JNK India.

JNK India Limited was founded in Thane, Maharashtra, a city that is both an industrial powerhouse and strategically located near Mumbai, India's financial capital.

JNK India Limited was founded with the objective of helping to bring sustainable development using technology and engineering. The company's idea was to leverage JNK Heaters' technical expertise and capitalise on the opportunities for expandingrenewable energy systems in India, including onsite hydrogen generation and Solar PV-EPC.

JNK India Limited has, over the years, developed to cater to the increasing demand of heating equipment in the oil and gas, petrochemicals, and the fertilizers industries. The company provides an extensive amount of products and services which include process-fired heaters, reformers, cracking furnaces and all-round solutions of hydrogen energy, renewable energy and environmental projects.

JNK India Limited is a well-established company that is well established, has a vision for the future of the company, and is willing to make a contribution to the sustainable energy solutions of the world. Its transformation into a global technology solutions provider is a fact to its strategic efforts and the value it creates for its customers and stakeholders.

Competitive Strengths

The competitive advantages of the company are complex and are manifested in the reputation and the future perspective of the business.

Revenue, Sales, and Profit

The fiscal year ending March 31, 2023, indicates a sound financial performance by JNK India Limited. The revenue or turnover of the company is reported to be between 100 crore and 500 crore, which implies that it has a good presence in the market and the sales of the company are good. This financial expansion is further enhanced by a strong increment in the net worth of the company, which has increased by 69.63, showing the rising equity of the company and the financial strength of the company as a whole. There has also been a phenomenal growth of 30.97 in the EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortisation. This measure is very essential because it gives an indication of the company's profitability in its operations without the influence of non-operating costs and capital structure. Further, the total assets of JNK India Limited have been growing at 26.19 implying a good development of the resource base of the company and its capacity to generate future revenues.

The liabilities of the company have been increasing marginally at 0.68, and this is not really big in reference to the increase in assets, so we can say that the financial leverage is stable and the debt profile is being managed properly. Its debt-to-equity ratio is at 0.28, which is also a very healthy aspect of the financial leverage of the company and also indicates that it has not over-debted itself. The Return on Equity is quoted at 38.10, which is a reflection of the effectiveness of the company in terms of its ability to make profits out of the investments made by its shareholders.

Distribution Network and Geographical Reach

JNK India Limited has built a strong distribution channel and a wide area of coverage, which serves a wide range of customers. The activities of the company include manufacturing and supplying, installation, and commissioning of heating systems, flares, and incinerators, among other products. By March 31, 2023, JNK India Limited has reached out to 17 customers in India and seven abroad, which means a high level of domesticity and the expansion of the international presence. The domestic projects of the company extend to various states of India, such as Andhra Pradesh, Assam, Bihar, Karnataka, Kerala, Maharashtra, Tamil Nadu and West Bengal, with the company displaying a wide network distribution in India. Looking at the international front of operation, JNK India Limited has done projects in Nigeria and Mexico, among others and has current projects in Oman, Algeria and Lithuania, which further shows that it has international scope of operation. This growth is in line with the strategic market orientation of the company to the renewable energy market, specifically in solar PV-EPC and onsite hydrogen production relying on the technical know-how of its affiliate, JNK Heaters. Its quality and customer satisfaction are evident in the fact that the company is ISO-certified and has long-term ties with the customers, comprising seven of the twelve oil refining companies in India. The capabilities and competitive advantages of JNK India Limited are evidenced by its distribution network and geographical distribution capabilities.

Unique Features

JNK India is known to be a leading process-fired heater organisation in the country. They are into thermal designing, engineering, manufacturing, supplying, installing, and commissioning of complex equipment. They have served 17 customers within India and seven foreign customers, with a strong customer base in both India and abroad, having served seven customers out of the twelve oil refining companies in India. Innovation has also been witnessed in the fact that the company has ventured into the renewable energy market, which has positioned it in the third-best market in terms of renewable energy across the world. Since Fiscal 2022, JNK India has been building hydrogen production and Solar PV-EPC capabilities on-site, learning from the experience of JNK Heaters to enter the expanding renewable energy systems market. Their services in business are extensive, including feasibility studies, process design, basic and detailed engineering, project management, procurement, shop fabrication, quality control, field erection, supervision and start-up services. The mission and vision of JNK India are in line with their focus towards sustainable development using technology and engineering, where they value all projects, focusing mainly on safety, cost, quality and timely delivery.

Investment in Research and Development

JNK India Limited is a subsidiary of South Korea-based JNK Global, which is a manufacturer of critical heating equipment in the oil and gas industry, petrochemicals and fertilisers. Investment in research and development (R&D) is one of the signs of how the company puts its efforts into innovations and quality. Although the actual amount of investment in R&D is not publicly revealed, the growth dynamics and financial results of the company reveal that there is a high focus on developing its technological capabilities. The steadily increasing revenue levels and high profitability may indicate that JNK India Limited invests a substantial part of its profits in research and development to preserve its competitive advantage in the industry, where entry barriers are very high. Such a strategic emphasis on R&D is probably an explanation of the capability of the company to comply with the high standards of quality and address the transforming nature of the demands of the sphere when the global trend towards renewable energy sources poses new challenges and opportunities.

JNK India Limited IPO Details

• Issue Date: The issue date in an IPO, or initial offering date, is the date on which the stocks of a company are offered publicly. It is a major milestone during the procedure of an initial public offering and translates into the privatisation of a company. (Issue Date: April 23, 2024, to April 25, 2024).

  
  

• Listing Date: The listing date is the day that the shares of the company are listed and start trading on one of the stock exchanges. This is normally a few business days (3-6 days) following the date of issue, with such processes as share allotment and finalisation already done. It is on this date that investors who were given shares in the IPO process will be able to sell their shares, and other investors will be able to buy shares in the stock exchange at the market price. (Listing Date: Tuesday, April 30, 2024).

  
  

• Face Value of Shares: The face value of IPO shares, also referred to as the nominal value or par value, is a fixed or pre-determined price charged by the company and mentioned in the memorandum of association. It is the original capital invested by founders and is utilised to account for and control. In an IPO, the stock prices are usually sold above the face value, which consists of a premium depending on the market demand and the company's performance, which is determined by indicators. (IPO Face Value: [?]2 per share).

  
  

• Price Band: A price band of an IPO is the band of prices offered to the investors on which they can offer bids on the shares of the organisation going public. Price band is determined by the issuer and lead managers of IPO, and depending on a number of factors including the demand and supply of shares, financial performance and valuation of the company, and market conditions. (IPO Price: [?]395 to [?]415 per share).
  

• Lot Size: In an Initial Public Offering (IPO), the lot size is defined as the minimum quantity of shares that an investor can apply. It is a fixed number of shares that investors are required to offer bids on, and the applications should be in terms of multiples of this lot size. The lot size standardises the bidding process to be standardized and also aids in ensuring equitable distribution of shares to the investors. (Lot Size: 36 Shares).

  
  

• Total Issue Size: The total issue size is the aggregate number of shares that the company is selling to raise capital through an IPO. Such a number is calculated by the company and its advisors based on such factors as the amount of money they need to finance and the demand of the investors. The total issue size is then divided by the lot size to come up with the total number of lots available to be bought by investors. Reported Shareholders: (Total Issue Size: 16,015,988 shares (including up to [?]649.47 Cr)).

  
  

• Fresh Issue: Fresh issue of shares in an IPO is a new issue of shares sold to the public by a company for the first time with the intention of raising capital. As opposed to an Offer of Sale where current shareholders dispose of their shares to a new shareholder, a fresh issue leads to new funds being directly allocated to the company, which may be utilised in either expansion, debt repayment, or new projects. This is a dilution of the current shareholding but does not offer an exit option to the current shareholders. (Fresh Issue: 7,594,936 shares (totalling up to [?]300.000 Cr)).

  
  

• Offer for Sale: The amount and the nature of shares that the company is offering to the public are referred to as the offer for sale. The sale offer may be either primary or secondary, and even both. A primary offer of sale implies that the company is coming out with new shares and raising new capital. Secondary offer of sale implies that the shareholders who are already present are selling their shares and getting the money. Combination Offer to sell refers to the sale of new and currently existing shares. (Offers to Sale: 8,421,052 shares of INR 2 (including up to [?]349.47 Cr)).

  
  

• Type of Issue: The type of issue may be different in various markets and regulations. The fixed-priced IPO, Auction IPO, Book Building IPO, and Hybrid IPO are some of the typical IPOs. (Issue Type: Book BuildIssue IPO).

  
  

• Listing At: The process of listing is a part and parcel of the IPO. This is the day when the shares of the company actually commence trading in a stock exchange, e.g. the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE) in India. After being listed, the shares of the company can be bought and sold by any person with a brokerage account in the exchange. (Listing at: NSE BSE).

  
  

• Retail Shares Offered: This denotes the part of the total shares that are offered to individual investors, which is different from that offered to institutional investors such as banks or hedge funds. The regulatory authorities usually require a set percentage of shares that should be held by the retail investors as a strategy of encouraging wider involvement of the population in the capital markets. (Retail Shares Offered: 5,477,489 (35.00%)).

  
  

• QIB Shares Offered: The institutional investors (banks, mutual funds, insurance companies, pension funds, etc.) will be the QIBs, as they possess the expertise and financial resources to invest in the securities market. They are regarded as knowledgeable and advanced investors and have the capacity to examine the risk and returns of an IPO. QIBs are allowed to make bids up to 50 per cent of the total shares offered in the IPO through the profitability route, and 75 per cent of the total number of shares offered in the IPO through the QIB route. QIBs only need to pay 10 per cent of the amount that they bid at the time of application, and the remaining after the finalisation of the basis of allotment. (QIB Shares Offered: 3,129,903 (20.00%)).

  
  

• NII (HNI) Shares Sold: NIIs are non-QIB and non-retail investors. They consist of high-net-worth individuals (HNIs), corporate entities, trusts, societies, etc., that place their bids above resources of Rs 2 lakhs in shares in an IPO. NIIs have the option of bidding 15% of the entire shares in an IPO. NIIs are required to deposit 100 per cent of the bid price when they are making an application. NIIs do not bid at the cut-off price, which is the highest price at which the shares are allotted. HNIs are a subgroup of NIIs, and they place higher bids than the Rs 10 lakhs in an IPO. (NII Shares Offered: 2,347,497 (15.00%)).

  
  

• Anchor Investor Shares Offered: Anchor investor shares in an IPO are those shares allotted to the Qualified Institutional Buyers (QIBs) who agree to buy the shares prior to the initial selling of the securities at the IPO. These investors, who are frequently mutual funds, banks and insurance companies among other financial institutions,, are regarded as a vote of confidence in the IPO because of their reputation and subsequently the extensive research they perform prior to investing. These bids are at least one day before the opening of the IPO, and they are also subjected to the lock-in period after the IPO which is meant to stabilise the share price within the first trading period. The role of the anchor investor is important in establishing a precedent on the pricing and demand of the IPO, since it affects the perception of other prospective investors in the value and security of the IPO. (Anchor Investor Shares Sold: 4,694,989 (30.00%)).

JNK India Limited competitors

JNK India Limited is an industry that involves the designing, production, and installation of industrial heating equipment for different process industries. Although JNK boasts of a competitive edge as a result of its various abilities, they are not without the Indian market competition. Their competitor environment is as follows:

Main Competitor:

Thermax Ltd.: One of the Indian engineering conglomerates that specialises in industrial heating solutions. Thermax has a wide range of products that overlap with those offered by JNK, and as a result, it can be subjected to price competition in the case of tenders.

Other Potential Competitors:

As much as JNK perceives Thermax as their primary competitor, other companies may be its competitors based on the nature of the project.

These include:

Firms that sell similar fitness equipment: There are a handful of smaller or local firms that could have specialised in certain types of equipment that JNK sells. These companies might be rivals depending on the needs and budget of the projects.

Engineering, Procurement, and Construction (EPC) companies: EPC companies may outsource the production of some of their equipment to JNK, but may have their own preferred vendors or have the capability to fabricate some equipment internally, which will restrict JNK's involvement in some of their projects.

Conclusion

Conclusively, JNK India IPO is a good investment venture. The potential of the firm can be supported by its niche status in the Heating Equipment segment, steady increase in its financial performance, and a high order book of 845 crore as of December 31, 2023. JNK India is a good investment with moderate pricing that is pegged on the annualised FY24 returns and a wide spectrum of projects across local and overseas markets, which will yield interest to investors with medium and long-term returns. Nevertheless, like any other investment, any potential investor ought to think through their risk profiles and do due diligence before they can join the IPO.

Please Read the Detailed Review of the Blog Here.

FAQs

Q: What is an IPO?

An Initial Public Offering (IPO) is a process through which a privately held company offers its shares to the public for the first time and becomes a publicly traded company.

Q: How can I apply for an IPO?

You can apply for an IPO through various methods:

ASBA (Application Supported by Blocked Amount): In this method, your application money remains in your bank account until the basis of allotment is finalized.

UPI (Unified Payment Interface): You can authorize the blocking of funds in your bank account using UPI while applying for an IPO.

Q: What is ASBA?

ASBA stands for Application Supported by Blocked Amount. It allows your application money to be blocked in your bank account during the IPO bidding process. You continue to receive interest on the blocked amount.

Q: What is the difference between book building and a normal public issue?

Book building is a process where demand for securities is elicited and the price is assessed based on investor bids. In a normal public issue, the price is fixed by the issuer.

Q: Can I make payments through UPI for IPOs?

Yes, you can use UPI as a payment method for IPOs. The UPI platform blocks the funds for IPO applications after you approve the fund block mandate request.

Q: What is the minimum order quantity for an IPO?

The minimum number of shares you can apply for in an IPO is known as the minimum order quantity. It varies for each IPO.

Q: What is the cut-off price in an IPO?

The cut-off price is the price at which you bid for shares without specifying a particular price. It allows you to participate in the IPO without specifying a specific bid price.

Q: Can I revise my bids during the IPO process?

Yes, you can revise your bids multiple times before the IPO bidding period ends.

Q: Which banks offer the ASBA facility for IPOs?

Several banks, known as Self Certified Syndicate Banks (SCSBs), offer the ASBA facility. Some examples include HDFC Bank, ICICI Bank, Axis Bank, and SBI.

Q: How do I find IPO mandates on UPI apps?

You can check the list of UPI handles supported for IPO payments on the National Payments Corporation of India (NPCI) website. These handles allow you to apply for IPOs using UPI.

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