JNK India Limited: Get Date, Price, Review and Details

JNK India Limited: About the company

JNK India Ltd. is in the business of manufacturing process-fired heaters, reformers and cracking furnaces (together, the “Heating Equipment”) that are required in process industries such as oil and gas refineries, petrochemical and fertilizer industries. The company has capabilities in thermal designing, engineering, manufacturing, supplying, installing and commissioning Heating Equipment and caters to both domestic and overseas markets. As of December 31, 2023, it has served 21 Customers in India and 8 Customers overseas. Notably, 7 out of the 12 oil refining companies in India, are its Customers and it has supplied or is in the process of supplying Heating Equipment to 11 of the 24 operating oil refineries across India.

Since its inception, it has been working closely with JNK Global a KOSDAQ listed company. The relationship between the Company and JNK Global is both independent and collaborative. While for certain projects the company participates independently and acquires projects in Heating Equipment, for certain projects it partners as a global joint engineering and implementing partner for JNK Global. JNK Global is also one of the Corporate Promoters of the Company with a shareholding of 25.79%.

JNK India Limited IPO Details:

Objects of the Offer:

The company intends to utilize the net proceeds towards the following objects:

• Funding working capital requirements; and
• General corporate purposes.

Key Strengths and Opportunities:

• Established track record with a diverse customer base: JNK India Ltd. is in the business of manufacturing process-fired heaters, reformers and cracking furnaces (together, the “Heating Equipment”) that are required in process industries such as for oil and gas refineries, petrochemical and fertilizer industries. It commenced operations in 2010 and has a successful project completion track record of over 10 years. It has successfully completed projects that were based in far-reaching locations, which included the projects in India at Numaligarh, Assam; Kochi, Kerala; Barauni, Bihar; and overseas at Lagos, Nigeria.
• Well-positioned to capture industry tailwinds through our demonstrated capabilities over time: Growing demand for transportation fuels and petrochemical feedstock are the primary growth enablers of the Indian refinery industry. There are 18 refinery projects expected to be commissioned by Fiscal 2031 with a cumulative capacity of 124.0 MMTPA. The company plans to leverage its knowledge of the industry, and engineering capabilities, extensive experience, established product portfolio and proven track record, it is well-positioned to capitalise on the upcoming demand of Heating Equipment.
• Diversifying product portfolio to cater to varied industries: Heating Equipments are required in process industries such as oil and gas refineries, petrochemicals, fertilizers, hydrogen and methanol plants, etc. JNK India Ltd. receives orders from domestic and overseas oil and gas refining, petrochemical and fertilizers companies. Its diversified customer base has helped us in expanding its markets and improve profitability.
• Skilled and experienced Promoters and management team with a committed employee base: The company is led by a qualified and experienced management team, with a deep understanding of the industry and its customers’ preferences and requirements. The promoters and directors, have extensive experience in the Heating Equipment industry and have been instrumental in the growth of the company. The promoters are supported by an experienced management team in the development and execution of projects in the process-fired heaters industry.

Risks:

• JNK India Ltd. derives a significant portion of its revenue from orders that are contracted to it by Contracting Customers. Any failure to obtain new contracts may impact its revenue from operations, cash flows and financial conditions materially and adversely.
• The company derives a majority of its revenues from its Corporate Promoter, JNK Global and uses its experience and technology support for select projects. Any kind of dissociation with JNK Global may have an adverse impact on the business, results of operations and cash flows. The revenue share of JNK Global stands at 27.08%, 54.39%, 73.85% and 54.53% for the nine months ended December 31, 2023, Fiscals 2023, 2022 and 2021, respectively.
• The availability and cost of raw materials may adversely affect the business, results of operations, financial condition and cash flows. The suppliers of raw materials are predetermined by its customers and most of the times it has to opt for the suppliers from a preferred list of suppliers provided by its customers, and thus if it experiences a significant increase in demand, or needs to replace an existing supplier, the company might not be able to meet such demand or find suitable substitutes, in a timely manner and at reasonable costs, or at all. Also, the company does not enter into any long-term contracts with its suppliers.
• The business is heavily dependent on the capital expenditure of oil and gas refineries, petrochemical and fertilizers industries as they are the primary customers for Heating Equipment. Any downside in the capital expenditure of these industries would create an adverse impact on the revenue from operations, cash flows and financial conditions

Financial Snapshot:

Watch Our Video on JNK India Limited IPO

Conclusion:

JNK India Ltd. manufactures process-fired heaters, reformers and cracking furnaces that are required in oil and gas refineries, petrochemical and fertilizer industries. The process-fired heaters market has high barriers to entry and there are only a handful of suppliers, despite a surge in demand. The market has high entry barriers as the engineering of industrial process-fired heaters requires a complex understanding of various oil products. If the operation of a process-fired heater is interrupted for even one day, users could incur significant losses, which is why suppliers undergo a thorough selection process.

As of December 31, 2023, the company 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 it has supplied or is in the process of supplying Heating Equipment to 11 of the 24 operating oil refineries across India. Some of the domestic Customers include Indian Oil Corporation Limited, Tata Projects Limited, Rashtriya Chemicals & Fertilizers Limited and Numaligarh Refinery Limited. On the financial front, the company’s revenue from operations, EBITDA and profit after tax have grown at a CAGR of 71.97%, 68.09% and 67.75%, respectively from Fiscals 2021 to 2023. Although not comparable on an apple-to-apple basis, in comparison with its peers the company’s valuation is reasonably priced. Considering these factors, we advise investors to subscribe to the IPO for the long term.