JNK India shines on debut: Should you buy, sell, or hold the stock?
JNK India shines on debut: Should you buy, sell, or hold the stock?
JNK India pleasantly surprised the market when its shares exceeded expectations in their debut trade, listing with a 50 percent gains on the bourses.
The listing gains are a throwback to the investor attraction the Rs 649.47-crore public offer garnered. The offer was subscribed 28.13 times with QIBs or qualified institutional buyers buying 75.72 times their quota, followed in terms of oversubscription by non-institutional investors and retail investors.
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Several analysts have a positive view on the stock, suggesting that there are multiple levers for growth for the company, which is involved in the business of designing and manufacturing processed-fired heaters.
“We recommend booking profits for allotted conservative investors while risk-taking investors can ‘hold’ JNK India for long-term perspective,” said Prashanth Tapse, senior vice president at Mehta Equities.
JNK India’s premium on listing is justified given its leadership in the niche market of heating equipment and cracking furnaces. Moreover, JNK India’s strategic expansion into waste gas handling and renewable energy systems reflects adaptability and a proactive approach to emerging market opportunities. “This diversification not only enhances its competitive edge but also positions the company for sustained growth in the future,” Tapse said.
Over the three years from FY21 to FY23, the company achieved an impressive return on equity (ROE) and return on capital employed (ROCE), averaging 53 percent and 58 percent, respectively. “Despite a slight decline in the nine months ending December 2023, where ROE and ROCE stood at 28 and 27 percent, respectively, the company’s financial performance remains robust,” said StoxBox research analyst D.R. Mudaraddi.
He added that JNK India benefits from its strategic collaboration with JNK Global, one of the promoters of the company, which also commands a 16 percent global market share. Moreover, the industry’s high entry barriers, characterised by stringent quality norms and high switching costs, fortify the company’s market position and limit competition.
Given the company’s promising prospects, Amit Goel, co-founder and chief global strategist of asset management firm Pace 360, has a similar view and believes that the company has carved out a niche in the heating equipment segment and has consistently demonstrated growth in both its top and bottom line.
In FY23, the company achieved a significant increase in revenue, reaching Rs 407.32 crore from Rs 296.40 crore in the previous year. The oil and gas segment accounted for 77 percent of total revenue. Net profit for the fiscal year amounted to Rs 46.36 crore, up from Rs 35.98 crore a year earlier.
Factors to aid growth
“The company has a healthy order book worth Rs 850 crore and a high TAM (total addressable market) in India and overseas provides revenue visibility,” InCred Equities said in a recent report.
JNK India can meet the domestic demand on its own, given that there is no peer having a similar product line. As for the overseas markets, it has a business collaboration with JNK Global, which is among the top three process-fired heater producers globally.
Analysts at Reliance Securities suggest that JNK India has the potential to garner strong order flows from its wide range of offerings. The company has diversified into product categories for various industries which could help it maintain a consistent order inflow, given its increased geographical presence in high-growth markets.
Set up in 2010, JNK India specialises in designing, manufacturing, supplying, commissioning and the installing process-fired heaters, reformers and cracking furnaces. The company has executed projects across states, including Andhra Pradesh, Assam, Bihar, Karnataka, Kerala, Maharashtra, Tamil Nadu and West Bengal.
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