Till a few months ago, a company called KRN Heat Exchanger and Refrigeration wouldn’t have been in too many conversations in investor and punter circles. Till it was set to go public in end-September, with an initial offer priced at ₹220. It listed on the National Stock Exchange in early October at ₹440 and was quoting at well over ₹600 a month later.
KRN is a maker of aluminium and copper heat exchangers, water coils and evaporator coils that are used in air conditioners and refrigerators. Headquartered in Rajasthan’s Neemrana, it gets a third of its revenue from exports to countries that include the United States, Italy and Germany. In fiscal year 2024, it reported net profits of almost ₹40 crore on sales of ₹308 crore.
Investors have bought into a company that is on a heady growth path, with a robust three-year compound annual growth rate of revenues and profits.
Cut to the SME stock exchanges, where a clutch of initial public offerings (IPOs) by little-known entities has made investors rich. Although a huge question mark hovers over the long-term prospects of many of these companies, their higher risk profile hasn’t dampened their short-term prospects. So, recent SME IPOs of companies like Afcom Holdings, Sodhani Academy of Fintech Enablers (which rather serendipitously condenses to SAFE) and Sahasra Electronic Solutions have yielded returns of 3x to almost 5x in two to three months.
Going by that record, many of these multibaggers appear like gems—at least so far—that investors have had the opportunity to add to their portfolio and enrich it. Few would have known much about these companies or even heard about them before they stormed the primary markets. But what if somebody had told you about KRN years ago, and that it was set to embark on a growth path with marquee clients from the West as well as the likes of Voltas, Kirloskar, Carrier and Daikin in India?
That’s the task Forbes India set out upon in this edition’s ‘Hidden Gems’ package of stories. The six companies the team has finally zeroed in on are those operating in sunrise sectors—think infrastructure, high precision components, solar panels—on a steady growth trajectory, and could well be IPO candidates soon.
Consider the flagship of the Hyderabad-headquartered Vishwa Samudra Group, Vishwa Samudra Engineering (VSE). Founded in 2016, VSE was largely focussed on the port-side activities of Krishnapatam Port of the Navayuga Group. When the Adani Group completed the buyout of the port in early 2021, the VSE founders turned their attention to building highways in Kerala. As Manu Balachandran writes, VSE is today building key stretches of Kerala’s 582-km highway network. For more on what the group has in the pipeline, which includes India’s first urban ropeway project in Varanasi, go to ‘Riding the Infra Wave’.
On the cover is the CEO of a little-known subsidiary of Tata group company Titan, focussed on manufacturing high-precision components and automation machines, which it also designs. Neelakantan P Sridhar is at the helm of Titan Engineering & Automation Ltd (TEAL), whose origins go back to 1990, when the parent company started in-house machine-building and automation to meet its captive requirement. By 2004, this outfit evolved into a precision engineering division and, in 2017, it transformed into TEAL.
Focussed largely on aerospace and automation solutions, Sridhar tells Forbes India’s Tech & Innovation Editor Harichandan Arakali that TEAL is on a journey of “greater degree of complexity, with a higher engineering element in it, putting parts together and building to spec”. For more on this fascinating company, go to ‘Global Automation, Engineered From India’.
Best,
Brian Carvalho
Editor, Forbes India
Email: Brian.Carvalho@nw18.com
X ID: @Brianc_Ed
(This story appears in the 29 November, 2024 issue
of Forbes India. To visit our Archives, click here.)