KRN Heat Exchanger and Refrigeration Ltd Q2 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Vivek Patel - Ficom Family Office - Analyst : Please pardon my question, as this is the first time I'm looking at the company. The first question was, what percentage of our revenue do we drive from the oil and gas sector? And if you're not doing it at this point in time, do we have plans to enter that segment?

Question: Vivek Patel - Ficom Family Office - Analyst : Okay, understood. And secondly, I just wanted to get your view on heat exchanger, segment or sector as a whole, not just fin and tube, but, heat exchanger as a whole. What do you think is the competitive intensity of this industry, when we compare it across, size, for example, intensity in less than 1 ton to 20 tons versus 20 to 100 tons and 100+ tons, for example. How do you think that that intensity is amongst these segments?

Question: Vivek Patel - Ficom Family Office - Analyst : Okay, and, other than the HVAC and industry, which other sectors do you think they will contribute to our growth over the next 3 to 5 years?

Question: Vivek Patel - Ficom Family Office - Analyst : Okay, and this last question if I can squeeze in about the exports, in the previous call you had mentioned export target, revenue share of 50% in 3 years' time. What I just wanted to know what would be your strategy to achieve that export revenue share and more importantly, what is our right to win in the international segment? Thank you.

Question: Deepak Dhar - Safaya Capital - Analyst : Okay, so just clarification, first up, you just mentioned that 20% growth for the next 10 years, right? So I mean we are talking about industry level or company level.

Question: Deepak Dhar - Safaya Capital - Analyst : For that particular segment?

Question: Deepak Dhar - Safaya Capital - Analyst : Okay, and any kind of AGR you looking at for at the company level, I mean next 3 to 5 years, what sort of AGR we are looking at?

Question: Deepak Dhar - Safaya Capital - Analyst : No, so I missed it. I didn't get it. So this year we're looking at 20%?

Question: Deepak Dhar - Safaya Capital - Analyst : Okay, for new capacity we are trying to utilize 20% in the current year and 50% in FY27.

Question: Deepak Dhar - Safaya Capital - Analyst : Okay. And what is our current capacity utilization?

Question: Deepak Dhar - Safaya Capital - Analyst : Okay, so the existing one, we are almost fully utilization level?

Question: Deepak Dhar - Safaya Capital - Analyst : Okay, and for the new one we are targeting 20% that you mentioned. And what was the CapEx that that got into this new capacity which made it success for us?

Question: Deepak Dhar - Safaya Capital - Analyst : And which month this got commissioned, the success capacity?

Question: Deepak Dhar - Safaya Capital - Analyst : And on the financial front, our gross margin saw a big improvement. So just wanted to understand what led to the improvement and how sustainable we see it.

Question: Deepak Dhar - Safaya Capital - Analyst : Okay, so this quarter it was around 32% rate, 31% or 32% gross margin.

Question: Deepak Dhar - Safaya Capital - Analyst : So EBITDA margin, I think this quarter was close to 20%. So that is sustainable. That's what you're mentioning.

Question: Deepak Dhar - Safaya Capital - Analyst : Okay. So we are talking about a margins and just one final thing on this acquisition front. Can you throw some light on it? I mean, revenue and margin details and what, how much we had to pay for this acquisition?

Question: Deepak Dhar - Safaya Capital - Analyst : Okay, so basically what you're trying to say, this acquisition is more from the perspective of technology know-how and think that we are getting, through the acquisition right now. They're not doing much revenue, but next year we are expecting some kind of revenue, jump up to happen from this.

Question: Deepak Dhar - Safaya Capital - Analyst : Okay, and I mean next year how much contribution can come from this acquisition?

Question: Deepak Dhar - Safaya Capital - Analyst : And the margin profile is similar to what we are getting is similar?

Question: Deepak Dhar - Safaya Capital - Analyst : That's very helpful, sir. I mean that would be from my side all the ways.

Question: Jayshree Bajaj - Trinetra Asset Managers - Analyst : For FY26, the UAE contributed to almost 47% of export revenue and followed by USA 20% and Canada 18.86%. So what specific investment, is planned for the North American market continuing its, strong contribution to sustain the growth momentum beyond Asia.

Question: Jayshree Bajaj - Trinetra Asset Managers - Analyst : Okay, and can you elaborate on your R&D initiatives and the role of (inaudible). REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 5:30AM, KRNH.NS - Q2 2026 KRN Heat Exchanger and Refrigeration Ltd Earnings Call

Question: Hardik Gandhi - HPNG Shares - Analyst : So are all stages, phases operational in the new subsidy? I think we had multiple phases in the new plant. So are they all operational?

Question: Hardik Gandhi - HPNG Shares - Analyst : So, and what was the reason for intercompany sales because I saw that although the standalone numbers top-line was way higher than the console numbers. So can you help.

Question: Hardik Gandhi - HPNG Shares - Analyst : So, going forward I'm assuming this will not be the trend.

Question: Hardik Gandhi - HPNG Shares - Analyst : Understood. And are we already experiencing the, additional margin, from the PLI scheme as well as the state government, scheme which we are benefiting from or we are yet to kick in.

Question: Hardik Gandhi - HPNG Shares - Analyst : Understood. And just on the ramping up side, are these, given that such big expansion we have done. Are we seeing any big player entering our segment, or second is, are we seeing the future? Are we very positive about our future demand, at least for the new capacity at least in the next 2 to 3 years?

Question: Hardik Gandhi - HPNG Shares - Analyst : Understood. Thank you so much. So just a small last question from my end. I think from the copper bought out parts as well as from the imports we were looking to source them locally from the new, I think so two new vendors were there domestically who started production. So are we going to do that and, reduce our, working capital days for the inventory, or we are still going to import only.

Question: Shubham - RV Investments - Analyst : As you said that we have extended our capacity 6 times, so can you give some guidance in terms of revenue for the coming years?

Question: Shubham - RV Investments - Analyst : Okay, and can I know the current capacity of the both the plants of the main company and the subsidiary. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 5:30AM, KRNH.NS - Q2 2026 KRN Heat Exchanger and Refrigeration Ltd Earnings Call

Question: Shubham - RV Investments - Analyst : I'm not asking about utilization. I'm asking about the manufacturing capacity in terms of volume.

Question: Mohit Chugh - Sublab Resort - Analyst : Hi sir. Mr. Yadav, greetings. This is Pratik Visai. So, my first question is, on the ramp up side of the new facility we had this question last quarter also where, probably we have been riding about 20% capacity of the new plant itself in FY26 this current financial year. So, I know you don't give guidance, but if I do a rough math of around INR1800 core revenue potential from the new capacity which leads to around INR350 core revenue from the FY26 itself. And the existing facility already generating around INR450crore. So is it fair to assume that FY26 will be a year of around INR750 crore to INR800 crore revenue for our company.

Question: Mohit Chugh - Sublab Resort - Analyst : Right, no, you have, certainly answered, about it, but I'm sorry to press again on it because Your capacity, which is probably 6/6 of the last capacity and at a time when the last capacity was INR300 crore, I mean we were generating around INR300 crore from the, older capacity so from that itself I am, trying to infer that, what will be the ramp up, potential for the new capacity in FY26. So sorry to press again on it, but, that's how I was calculating it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 5:30AM, KRNH.NS - Q2 2026 KRN Heat Exchanger and Refrigeration Ltd Earnings Call

Question: Mohit Chugh - Sublab Resort - Analyst : Secondly my question is on standalone versus console number. I think it has been asked earlier also, but I have a follow-up on the question. That are consolidated revenue is lower than the standalone revenue. Believe that the subsidiary sales this quarter was very low. That is why, the purchase which subsidiary has done from the parent company has been canceling out and yet other console numbers are lower than the standard numbers.

Question: Mohit Chugh - Sublab Resort - Analyst : It means probably a subsidiary has buy, bought, raw materials from the parent company, but subsidiary has not done material sales, and that is why net revenue is, coming down.

Question: Mohit Chugh - Sublab Resort - Analyst : The recent acquisition which we have done. So, I just wanted to understand, because if you look at the company's website and, try to understand what the company has done so far in its history of existence, it seems that the revenue of the company is not material. So, first of all, is that assumption fair? And then, secondly, how much revenue potential do you see given the technology we are buying from the company? And will it give us an entry to raising coaches passenger coaches segment also, from this acquisition. If it utilizes for that.

Question: Mohit Chugh - Sublab Resort - Analyst : So it is fair to conclude that, revenue from this acquired company is not very high, as you said, because of working capital, constraints it has in the past. But probably technology which you are getting is the value here in this acquisition.

Question: Shivkumar Prajapati - Ambit Investment - Analyst : My first question is, did you book any inventory loss or inventory gain during this quarter? And if you can help me understand. If suppose, we take 20% of the margin as a median, so will you be able to share the split between the products offering a higher margin than 20% of products offering lower than 20% kind of margin.

Question: Shivkumar Prajapati - Ambit Investment - Analyst : So, will you be able to share the breakup of other expenses?

Question: Shivkumar Prajapati - Ambit Investment - Analyst : In this quarter, I, came to the point that you have mentioned the INR26 crore, was still unutilized towards the project whereas the proceeds from IPO has already been utilized. So can you explain where did we utilize this fund.

Question: Shivkumar Prajapati - Ambit Investment - Analyst : What would be your outstanding order book and how many new clients we added during the quarter and did we enter any new geography or are you planning to enter some new geography?

Question: Shivkumar Prajapati - Ambit Investment - Analyst : Okay, understood, sir. And what was your outstanding order book right now?

Question: Shivkumar Prajapati - Ambit Investment - Analyst : UAE forms our media portion of our export. So what is driving growth in UAE? I mean which segment?

Question: Shivkumar Prajapati - Ambit Investment - Analyst : Understood, sir. Understood. And sir, like now we are, presenting most of the heat exchanges. So, can you explain the margin profile of this kind of heat exchanges like if you can speak more of a roll bond or the bar and heat exchanges. So what sort of, margins, does these products offer?

Question: Shivkumar Prajapati - Ambit Investment - Analyst : My last question. So, it's from the annual report. So just went through it and I saw that, the freight and carriage inward as a percentage of, other expenses it was around 22%, for FY25, whereas for FY24 it was, close to about 14%. So, there was a sharp jump in this freight and carriage inward. I understand most of our raw materials are imported, but still, it's a big carry time within these two years. So can you explain the difference why.

Question: Ajay - - Analyst : Congratulations. Sir, encouraging to see the new facility getting ramp up. Sir, my question is the higher uptake mainly, like, increased volume from existing customer, or are we successfully penetrating like newer market or securing new customer addition? And is it like the growth has been driven by traditional applications like all these products like VHVAC or in the new emerging high growth sectors like data center where you mentioned like maybe India has announced like a significant size of unfortunately. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 5:30AM, KRNH.NS - Q2 2026 KRN Heat Exchanger and Refrigeration Ltd Earnings Call So is it like the newer growth is being driven by this high growth area and on that, data centercom which you made like 50,000 grow approximately. So what would be the addressable market for PR and what sort of market are we targeting to serve that market?

Question: Ajay - - Analyst : Sir, so on the data center side, is there any technological advantage that we have or any mode that we have, which maybe that allows us to like maybe forecast such a higher market share in the market. So if you can. And like any technological difference which we have between like maybe a normal HVAC for industrial set system and that for the data center system like is there any technological difference.

Question: Ajay - - Analyst : Got it. And sir, like, because we project the facility to ramp up, so maybe if you can, like, going forward and maybe next 1 or 2 years, how is the mix that we are seeing like between Fan and the bar and plate and then the bus it back. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 5:30AM, KRNH.NS - Q2 2026 KRN Heat Exchanger and Refrigeration Ltd Earnings Call So, if any, sort of, mix which you can maybe provide because margins are higher on the, bar and plate and the bus air conditioning. So, what sort of mixture we envisage going forward?

Question: Ajay - - Analyst : No, sir, my question was on the, product mix like, going currently because we have the sheet metal evaporator coil condenser coil, so these are existing products and then we have the newer products like bar and plate where we already got the, approval and then we expect ramp up in this like Q4. So, going forward in 12 years, like, I wanted to know, how are we projecting. The revenue mix of the company in terms of the existing product category the newer products like bar and plate and the acquisition like for bus HVAC which we have recently done so any sort of product mix which you can share any even so revenue.

Question: Ajay - - Analyst : Got it. And sir, like just one question on because we like even in previous calls we have mentioned for a healthy EBITDA margins, but, previously because China had like, removed the export duty on Chinese exports for aluminum and copper coils. So, like, I just wanted to know some more thoughts on like how do you plan to manage these raw material fluctuations like, because even recently there has been some increase in the metal prices. So, what sort of confidence do you get to maintain, our 20% EBITDA margin because even in last one to quarter maybe because when our, utilization was low and the industry was maybe suffering, we had support from, margins. So I wanted to know more, from you like, what gives us this confidence on the margin guidance.

Question: Ajay - - Analyst : Got it. And sir, just one bookkeeping. So like because it has been like the standalone revenue is higher than the console. So is it for some sort of a backward integration with the standalone entity is acting as like manufacturer for the subsidiary or like maybe sheet metal. Is it something like that, or, it's just that we will just transfer the material as in how it is received on like whatever the cost, and that is why because in the standalone the margins are, just, lower compared to the consolidated margins. So is this some sort of backward integration.

Question: Yogesh Patil - Dolat Capital - Analyst : In this quarter due to FY26, we have reported a consolidated, revenue of INR150crore approximately how much was it from the new facility? Any idea in ballpark number if you could?

Question: Yogesh Patil - Dolat Capital - Analyst : What was the visa contribution from the new facility during the quarter.

Question: Yogesh Patil - Dolat Capital - Analyst : On a capital expenditure side, can you help us to bee the capital expenditure in terms of what is the nature of the cap, how much of the IPO pros are pending for the requirements, and what can we expect going forward for FY26 and FY27? So in the second half of FY26, what amount of cap one can assume and in FY27.

Question: Heta - Monarch AIF - Analyst : I have two questions. One is regarding the sole investments that we were, planning to take up in KRN and HVAC. So, by when would that be operational and what would be the cost advantage we would have because of that?

Question: Heta - Monarch AIF - Analyst : Okay. And so I just wanted to understand how would the working capital now shape up going forward, do we plan to keep higher inventory levels?