KRN Heat Exchanger and Refrigeration Limited — Q3 FY26 earnings call

Call held 9 Feb 2026

Management summary

KRN Heat Exchanger reported strong Q3 and 9M FY26 results, driven by robust demand and improved operational efficiency. The company is poised for further growth with the upcoming inauguration of its new manufacturing facility and significant progress in the high-potential Bus AC and Data Center segments. Management expressed confidence in its ability to manage raw material volatility and expand market share in key export regions.

Highlights

  • Consolidated Q3 FY26 total income grew 33% YoY to INR 155 crores, reflecting steady execution.

  • Consolidated Q3 FY26 EBITDA nearly doubled to INR 31 crores, and Net Profit grew 65% YoY to INR 23 crores.

  • New manufacturing facility is set for inauguration on March 11, 2026, expected to drive significant future growth.

  • Data center segment revenue contributed 15% of the top line in Q3 FY26, an increase from 7% last year, with strong order pipeline.

  • The Bus AC segment is ramping up, targeting INR 160 crores in revenue and 15% of the total India market share next year with gross margins over 20%.

Concerns

  • Raw material price volatility, particularly a new USD 200 premium on copper, though management states they manage this with inventory and quarterly price adjustments.

  • Inter-billing between KRN Heat Exchanger and KRN HVAC makes consolidated numbers appear less clear for some segments.

Key financials

2 periods

Q3 FY26

  • Consolidated Total Income
    ₹155 Cr
    YoY +33%
  • Consolidated EBITDA
    ₹31 Cr
    YoY +100%
  • Consolidated Net Profit
    ₹23 Cr
    YoY +65%

9M

  • FY26 Standalone Total Income
    ₹485 Cr
    YoY +58%
  • FY26 Standalone EBITDA
    ₹67 Cr
    YoY +32%
  • FY26 Standalone Net Profit
    ₹54 Cr
    YoY +49%
  • FY26 Consolidated Total Income
    ₹428 Cr
    YoY +40%
  • FY26 Consolidated EBITDA
    ₹79 Cr
    YoY +53%
  • FY26 Consolidated Net Profit
    ₹53 Cr
    YoY +40%

What they filed

Q1 FY27: revenue up 59.6%, net profit up 18.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue99 104 131 114 223 +125%136 +31%202 +54%182 +60%
EBITDA18 16 20 20 30 +67%17 +6%18 −10%25 +25%
Net profit12 13 14 16 24 +100%15 +15%17 +21%19 +19%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

medium confidence

Execution

order book is short cycle probably 2 to 3 months

Composition

  • Data Center (product) 15%

Pipeline

L1 awaiting loa

Inquiry is under pipeline for data center. L1 position on bidding for a data center customer.

Order pipeline is stable, and customer engagement across domestic and export markets continues to be encouraging. Order book is short cycle (2-3 months) and rolling, with main customers sharing 6-month forecasts.

Source: Prepared remarks

Capital allocation

medium confidence
  • Capex Capex disclosed
    So we are going to inaugurate on 11th of March and then we will shift to our new office, new facility.
  • M&A Sphere Refrigeration Systems Acquisition · Closed

    To enter the bus air conditioning market and leverage existing market scenario.

    Sphere Refrigeration had low top line (INR 2-3 crores), but Sphere Thermal (part of the same group, not acquired by KRN) had INR 40-50 crores. The acquisition is part of a strategy to target the INR 1000 crore bus AC market.

    But we bought Sphere Refrigeration so they have not good numbers in Sphere Refrigeration, very less I think top line maybe INR2 crores INR3 crores only. But Sphere Thermal they did, I think INR40 crores or INR50 crores and they did this business around 12, 12 years plus.

Guidance & targets

Capacity

  • New Facility Inauguration Capacity · Q4 FY26 · High confidence Inauguration on March 11, 2026
    And finally, full-fledged we are going to inaugurate our new facility on 11th of March.

    — Santosh Kumar Yadav

Market Share

  • Bus AC Market Share Market Share · next FY · High confidence 15% of total India market
    So next year we expected at least cover the 15% of market of total top line of the India market with some OEMs and as well as some body builder and some aftermarket clients.

    — Santosh Kumar Yadav

Revenue

  • Bus AC Revenue Revenue · next FY · High confidence INR 160 crores
    I mean you had estimated the revenue it will bring will be around INR160 crores in the next FY.

    — Santosh Kumar Yadav

Margin

  • Bus AC Gross Margin Margin · ongoing · High confidence >20%
    So it will be more than 20%? That's what I wanted to know? Okay, that's great.

    — Santosh Kumar Yadav

Revenue Contribution

  • Data Center Revenue Contribution to India Market Revenue Contribution · long term · Medium confidence 50% of total order
    So whatever I said before also in last call, we expect at least whatever order will raise for data center particular for heat exchanger, so we will be contribute at least 50% of the total order for India market.

    — Santosh Kumar Yadav

Capacity Utilization

  • HVAC Capacity Utilization from New Facility Capacity Utilization · FY26 · High confidence 20%
    So, this quarter number will increase and I think guideline will same that we can able to achieve around 20% of capacity from HVAC.

    — Santosh Kumar Yadav

  • HVAC Capacity Utilization from New Facility Capacity Utilization · FY27 · High confidence 50%
    And next year we are going to achieve around 50% from HVAC.

    — Santosh Kumar Yadav

Service Network

  • Bus AC Service Centers Service Network · next six to seven months · High confidence 20-25 PAN-India service centers
    So our target is next six to seven month we will able to open at least 20 to 25 numbers service center in PAN-India based.

    — Santosh Kumar Yadav

What to watch in Q4 FY26

New Facility Commercial Operations

next quarter
Current Under construction, inauguration on March 11, 2026
Target Commercial operations and initial revenue contribution

Why it matters

The new facility is crucial for capacity expansion and future growth across all segments.

So we are going to inaugurate on 11th of March and then we will shift to our new office, new facility.

Risks & concerns

  • Raw Material Price Volatility

    medium

    Volatility in aluminum and copper prices, with a new USD 200 premium on copper, but managed through inventory and quarterly price adjustments, often resulting in a gain.

    Both acknowledged

  • Geopolitical Issues

    low

    Analyst raised geopolitical issues as a potential concern, but management stated it is not directly affecting their business or customer orders.

    Analyst downplayed

Q&A highlights

8 direct
New Plant Ramp-up & Q4/FY27 Outlook Direct
And finally, full-fledged we are going to inaugurate our new facility on 11th of March. So I also inviting all investors to come on 11th March for inauguration ceremony of our new facility. Officially, actually, earlier office was not completed, but now finally final stage. So we are going to inaugurate on 11th of March and then we will shift to our new office, new facility.

Analyst sought clarity on the new plant's contribution to revenue beyond the current run rate, and management provided a specific inauguration date and positive outlook.

Asked by Mohit from Subh Labh Research

Input Cost Volatility & Margin Impact Direct
So for us, I can say we are receiving some inventory gain of course because we always keep 2 and 2.5 inventory and some 20 days or 1 month inventory under transit. So of course metal is increasing, but we can change our price after quarter only. So last we change our price from 1st of December and now we will change from 1st of April 2026.

Analyst probed on the impact of commodity price volatility on margins, and management explained their strategy of inventory management and quarterly price adjustments, indicating a positive impact.

Asked by Mohit from Subh Labh Research

Bus AC Pursuit & OEM Approvals Direct
And of course we already started one OEM in last quarter only. And as I said we added almost 40 new customer in last quarter. So I think 10 to 15 only from belongs to bus air conditioning only. And however some big OEMs we did the NDA, but supply not started yet. So hopefully within this month -- this quarter, we will able to supply with two or three big OEM as well.

Analyst asked for an update on the new Bus AC segment's progress with OEMs, and management confirmed initial success and outlined plans for onboarding more large OEMs.

Asked by Prateek

Bus AC Acquisition, Revenue & Margin Direct
About market share, what I said, total top line is INR1000 crores, so we able to achieve 15% of course from them in next year. It's on right track. Third, margins if I talk about gross margin, so it's better than our existing product because we do complete assembly and we have backward integration in term of sheet metal, FRP and then tubing and of course heat exchanger.

Analyst sought details on the financial impact of the Bus AC acquisition, and management provided revenue targets and indicated higher gross margins for this segment.

Asked by Rajat G from Fortune

Working Capital & Input Inflation Direct
For us, as I said before, we always keep 2.5 month inventory on hand and then some 20 days or 1 month under transit and then quarterly base we can able to change to our customer. So directly hit not to us, even we are receiving some gain only.

Analyst questioned potential working capital stress and input inflation impact, and management reiterated their inventory and pricing strategy, asserting a positive outcome.

Asked by Manish Ostwal from Nirmal Bang Securities Private Limited

Data Center Investment & Southern Facility Direct
So whatever I said before also in last call, we expect at least whatever order will raise for data center particular for heat exchanger, so we will be contribute at least 50% of the total order for India market.

Analyst asked about data center investment and potential new facilities, and management highlighted the segment's growing contribution and ambitious market share target.

Asked by Manish Ostwal from Nirmal Bang Securities Private Limited

Export Market Competitiveness Direct
So if I compare to European supplier to my price, it will be maybe 15% to 20% less landed price. And of course, USA on same way. So if I to like conclude like target to Europe and USA with European and USA supplier, so we can able to like give to our customer 15% to 20% of value on our product.

Analyst questioned KRN's price competitiveness in export markets, and management provided specific figures on their competitive advantage against European and USA suppliers.

Asked by Meet Shah from Finance 360

HVAC Capacity Utilization from New Facility Direct
So HVAC, we achieved till now INR100 crores plus already in last three quarter for finish goods. So, this quarter number will increase and I think guideline will same that we can able to achieve around 20% of capacity from HVAC. But this number, if you consol, I think you can able to see HVAC number is seems less but actually it's upside because of inter-billing.

Analyst sought an update on the new capacity utilization guidance, and management confirmed the 20% target for FY26 and 50% for FY27, clarifying the impact of inter-billing.

Asked by Meet Shah from Finance 360

2 min read 6 chapters

Detailed narrative

Strong Q3 and 9M FY26 Financial Performance

KRN Heat Exchanger and Refrigeration Limited reported robust financial results for Q3 and 9M FY26. Consolidated total income for Q3 FY26 grew 33% year-on-year to INR 155 crores, with EBITDA nearly doubling to INR 31 crores and net profit increasing by 65% to INR 23 crores. For the nine-month period, consolidated total income rose 40% to INR 428 crores, and EBITDA grew 53% to INR 79 crores, demonstrating steady execution and improving operating performance.

New Facility and Capacity Expansion

The company is set to inaugurate its new, full-fledged manufacturing facility on March 11, 2026, which is currently in the ramping-up stage. This expansion is expected to significantly boost production, including new and existing products. Management targets achieving 20% HVAC capacity utilization from this new facility in FY26, further increasing to 50% in FY27, underscoring the strategic importance of this capacity addition.

Bus AC Segment Growth Strategy

KRN is aggressively expanding its presence in the bus air conditioning segment, targeting INR 160 crores in revenue and 15% of the total India market share in the next fiscal year. This segment is expected to yield gross margins exceeding 20%, which is better than existing products. To support this growth, the company plans to open 20-25 PAN-India service centers and hire over 50 service technicians and sales personnel within the next 6-7 months.

Data Center Segment Expansion

The data center segment is emerging as a significant growth driver, contributing 15% to the company's top line in Q3 FY26, an increase from 7% last year. KRN aims to capture at least 50% of the total order for heat exchangers in the India data center market, leveraging its new facility's large infrastructure and capacity. The company is actively receiving large orders and has achieved an L1 position on a significant bidding for a new data center customer, indicating strong future potential.

Raw Material Management and Export Markets

Despite volatility in aluminum and copper prices, KRN manages its input costs effectively by maintaining 2-2.5 months of inventory and adjusting product prices quarterly, often resulting in an inventory gain. The company is focusing on expanding its export footprint, particularly in the USA and European markets, where it can offer 15-20% lower landed prices compared to local suppliers. Recent participation in a US exhibition has generated good inquiries from both regions, signaling strong international demand.

Corporate Governance and Board Expansion

In response to an analyst's suggestion, management acknowledged the importance of strong governance for its growth trajectory. They currently have four independent directors with expertise in finance and company secretarial matters. The company plans to add more industry experts and professionals to the board in the coming years to further strengthen strategic guidance and oversight, aligning with its scaling ambitions.

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