KRN Heat Exchanger Ignites Growth with Strong Q2 FY26 Performance

KRN Heat Exchanger and Refrigeration Limited has reported a robust performance for the second quarter and first half of the financial year 2026, marking a significant stride in its growth trajectory. The company, a specialist in manufacturing fin and tube-type heat exchangers for the HVAC&R industry, showcased impressive financial metrics driven by strategic expansions and strong market demand. The Q2 FY26 standalone total income surged by 126% year-on-year to INR 227.22 crores, while EBITDA grew by 69% to INR 29.60 crores. Net profit nearly doubled, increasing by 95% to INR 23.66 crores. On a consolidated basis, Q2 total income rose 67% to INR 154.46 crores, with net profit up 46% to INR 17.99 crores. This strong showing underscores KRN's effective execution and strategic positioning in a growing market.

Strategic Moves and Operational Scale-Up

The impressive financial results are a testament to KRN's proactive strategic initiatives and operational enhancements. A key highlight is the acquisition of the Bus Air-Conditioning division of Sphere Refrigeration Systems by KRN HVAC Products Pvt. Ltd., a wholly-owned subsidiary. This move is expected to significantly bolster KRN's transport cooling portfolio, expanding its presence in the automotive HVAC segment and integrating new technological capabilities. Management anticipates this acquisition alone will contribute approximately INR 160 crores in revenue in the next financial year.

Further reinforcing its foundation, KRN's subsidiary commenced commercial production at its new Neemrana plant on May 31, 2025. This state-of-the-art facility represents a substantial capacity expansion, almost six times the company's previous capacity. Management projects achieving 20% capacity utilization at this new plant in FY26, escalating to 50% in FY27. This expansion is crucial for meeting the escalating demand from both domestic and international markets, particularly in North America and Europe, which are key focus areas for export growth. The company also launched Thermotech Research Laboratory Private Limited, a subsidiary dedicated to advanced HVAC&R testing and training, which will also function as a third-party lab to offer value engineering and new product development services.

Financial Highlights (Consolidated)

Market Dynamics and Future Outlook

KRN operates within a dynamic HVAC industry, which is experiencing robust growth. The Indian HVAC market is projected to reach $30 billion by 2030, growing at a CAGR of 15.8%. This growth is fueled by rapid urbanization, increasing disposable incomes, infrastructure expansion, and a heightened focus on energy-efficient solutions. KRN is strategically positioned to capitalize on these trends, with management guiding for commercial air conditioning and overall HVAC growth in India to remain around 20-25% for the next decade. The company aims to achieve a 50% export revenue share within the next three years, focusing on the high-growth markets of North America and Europe.

Despite the positive outlook, KRN acknowledges certain challenges. The company's reliance on imported raw materials exposes it to supply chain disruptions and price volatility. High inventory levels also present a working capital management challenge. However, management is confident in its ability to maintain a sustainable EBITDA margin of approximately 20% and aims for a 12% PAT from the new facility, supported by incentives like the Production Linked Incentive (PLI) scheme and REITs, along with electricity savings and new income tax schemes.

Conclusion: Paving the Way for Sustained Leadership

KRN Heat Exchanger and Refrigeration Limited's Q2 FY26 performance reflects a period of strategic clarity and disciplined execution. The company is not only delivering strong financial results but also actively investing in capacity expansion, technological integration, and market diversification. With a clear vision for global footprint expansion and a commitment to product quality and innovation, KRN is well-positioned to reinforce its standing as a trusted global HVAC partner, ensuring sustained growth and value creation for its stakeholders.