Please find below notes from promoter interview and concall transcripts. Key highlights include 6x capacity expansion
• Manufactures fin and tube heat exchangers for HVAC applications which finds applications in cooling systems of Railways, Metros, Data Centers, Air chillers, logistics, cold rooms etc.
• Exchangers form 10% of RAC and may go up to 20% for complex products
• Commercial refrigeration industry is growing at 20-25% CAGR segment where company mainly operates (97% revenues towards commercial)
• 5 types of heat exchangers viz. shell and tube, spiral, plate, special and fin & tube
o Company is mainly into fin & tube and does copper to copper and copper to aluminium
• First to develop air condenser for bus ACs
• Setup new subsidiary and machines for air cooler, oil coolers and new machines
o Plate and bar exchangers
• Focus on export markets viz. US & Europe
• Exports have increased to 15% of revenues and plans to double exports
• Exports have 2.0x margins
• Annual turnover for finned tube heat exchangers is anticipated to grow from USD 133 Mn in 2022 to nearly USD 277 Mn by 2029, almost doubling in size
• Europe and Asia are planning China +1
• In USA, there is ADD on Chinese heat exchangers
o Forecast good export on back on repeat orders plus new product lines plus new customers
Analysis
• Historically gross asset turn has ben 5-6x and with incremental capex of INR 300 Cr which gets fully utilized by H1FY27
o Commercial production from Sep-25 and assume full ramp up in at max a years’ time
o Sep-26 should be operating at overall capacity utilization of 60-70%
• Changing export mix estimated to go up to 30-35% from current 20%
• Export orders have double margin of domestic thereby high chances of PE rerating with both topline growth and margin expansion
• Estimated revenues of c. INR 2,000 Cr revenues (6x asset turn on gross block of INR 340 Cr) with 20% steady EBITDA and 13-15% PAT margins
• In Mar’26, on 1 year forward multiple of 35-40x, estimated Mcap should be INR 10,000 Cr (250 Cr Pat times 35-40x multiple)
• 3x from current levels in 18-24 months’ time (Current Mcap is c. INR 3,650 Cr going to 10,000 Cr)
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