KRN Q3 FY26 earnings call.
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Revenue
₹153 Cr
verified against source
Revenue YoY
33%
reported change
EBITDA
₹31 Cr
latest reported figure
Source
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record provenance
Actual signal trajectory
Where this quarter sits.
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What the record says.
KRN Heat Exchanger reported a strong Q3 FY26 with consolidated revenue of ₹155 crore (+33% YoY), EBITDA near-doubled to ₹31 crore, and PAT up 65% YoY to ₹23 crore. The new HVAC facility is ramping well, adding 40+ new customers in the quarter, with the official inauguration scheduled for March 11. Bus air conditioning has commenced supplies to one OEM, targeting 15% of India's ₹1,000 crore market next year with a >20% gross margin profile driven by backward integration. Data center revenue contribution rose from 7% to 15% of topline, with management guiding it could reach 50% of total heat exchanger orders over 3-4 years. Export focus remains on US and Europe, where KRN offers 15-20% landed cost advantage over local suppliers, with a new lab enabling coil optimization. The primary risk is raw material volatility—copper constitutes 40-50% of BOM—though quarterly price pass-through mechanisms and 2.5-month inventory buffers provide near-term insulation. Working capital may remain elevated for 1-2 quarters as new product inventory builds.
Colored figures show movement against the previous available record.
Guidance to track
- The newly built HVAC facility is in ramp-up stage with formal inauguration on March 11. Management maintains its guidance of reaching 20% capacity utilization in the current fiscal year and 50% next fiscal year, with near-full utilization thereafter.
- Currently contributing 15% of topline (up from 7% last year), management expects data center to command 50% of India's total heat exchanger orders within 3-4 years, supported by new facility infrastructure and lab testing capabilities.
- With the ₹1,000 crore bus air conditioning market growing 20-25% annually, management targets 15% market share of total India topline from bus AC next year, with gross margins exceeding 20% due to backward integration.
Risks flagged
- Analyst Rajat from Fortune asked two direct questions on the Spear acquisition cost and the ₹160 crore bus AC revenue target. Management answered neither directly—stating cost cannot be disclosed and revenue guidance is 'on the right track' without confirming the ₹160 crore figure. This represents an evasive response to a material forward-looking commitment.
- Working capital is expected to remain elevated for 1-2 quarters as the company builds minimum inventory levels for new product lines including bus AC components, bar-plate, and refrigeration, on top of existing heat exchanger inventory requirements. Domestic supplier alternatives for copper tube and aluminum foil still undergoing quality and pricing validation.
- Management acknowledged that the order book is rolling-based (one month firm order, rest forecast) rather than project-based. While large data center orders are now larger in single-PO size, the inherently short-cycle nature limits long-term revenue visibility and makes the business sensitive to any customer pullback.
- The consolidated effective tax rate dropped to 12% in Q3 vs. 28% year-ago, driven primarily by deferred tax calculations. This makes reported PAT growth appear stronger than underlying cash earnings quality, though the company cited inventory gains and backward integration as operational margin drivers.
Key quotes
- Major data center [heat exchanger] customers—all except one we are already supplying to—and for the one remaining we are L1 in bidding and expecting to start this quarter.
- We added almost 40 new customers in last quarter. 10 to 15 only belong to bus air conditioning. Some big OEMs—we did the NDA but supply not started yet—so hopefully within this quarter we will be able to supply to two or three big OEMs as well.
- We always keep two and a half month inventory on hand and 20 days to one month under transit. So directly it does not impact us—even we are receiving some gain only—and we change our copper LME, aluminium LME on quarter basis.
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