KRN Heat Exchanger and Refrigeration Ltd Q1 FY27 Earnings Call: Sets Rs 2,000 Cr Revenue Target for FY28, Exports Double YoY

KRN Heat Exchanger and Refrigeration Ltd held its Q1 FY27 earnings call on August 12, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Revenue Surges 119% on Consolidated Base; Margins Expand

• Consolidated revenue of Rs.252.32 Cr — grew 118.87% YoY in Q1 FY 2026-2027, driven by strong export performance and new customer additions.
• Standalone revenue of Rs.181.97 Cr — rose 59.07% YoY, with the core fin-and-tube segment continuing to scale.
• Consolidated EBITDA margin of 19.44% — expanded from 15.26% in Q1 FY 2025-2026, aided by operating leverage and product mix; EBITDA stood at Rs.49.06 Cr (+178.85% YoY).
• Consolidated net profit of Rs.32.90 Cr — up 164.84% YoY; net profit margin improved to 13.04% from 10.77%.
• Standalone EBITDA grew 24.67% to Rs.24.67 Cr — standalone net profit rose 19.02% to Rs.18.67 Cr in Q1 FY 2026-2027.
• Exports reached ~Rs.50 Cr — contributed 21% of revenue (up from 16% in Q4 FY 2025-2026), with products shipped to 14 countries across North America, Europe, and the UAE.

Exports Double YoY; Heat Exchanger Technology Called Irreplaceable for Cooling

• Exports grew 177% YoY and 88% QoQ — in Q1 FY 2026-2027, driven by new data-center customers in North America and Europe; revenue from UAE declined due to the ongoing Red Sea conflict.
• Q1 FY27 export revenue of ~Rs.50 Cr — aligns with the FY 2026-2027 target of ~Rs.200 Cr (double the Rs.100 Cr achieved in FY 2025-2026), per management guidance.
• Fin-and-tube exports to reach 50% of segment revenue — over the next 2-3 years; total business exports currently stand at ~20% (Q1 FY 2026-2027).
• Management sees "no technology" replacing heat exchangers — for data-center cooling, stating that "even liquid cooling requires plate heat exchangers, and fin-and-tube units remain necessary for ambient heat rejection."
• Q1 consolidated revenue split — old facility contributed Rs.140 Cr, while the new HUC facility added Rs.115 Cr+; sequential growth is expected.

Bus AC Ramps; Railway Oil Cooler Win and HVAC System Development Underway

• 29 new customers onboarded in Q1 FY27 — primarily from the bus AC segment, including OEMs and body builders; bus AC revenue run-rate is ~Rs.5-6 Cr per month.
• Major customer MOU for bus AC — supply begins September 2026, with management on track to achieve 15% market share; significant revenue expected in Q3 and Q4 FY 2026-2027.
• L1 in CLW tender for locomotive oil coolers — total tender size ~Rs.70 Cr; KRN eligible for a maximum 20% share (~Rs.8 Cr); order finalization expected in 1-2 weeks (by late August 2026).
• ~Rs.40 Cr revenue from oil coolers targeted for FY 2026-2027 — across multiple customers, with management expecting multi-fold growth in subsequent years.
• Complete HVAC system for Indian Railway passenger coaches — under development (cab AC and bogie AC); revenue from this new product line expected to begin in FY 2027-2028.
• Product portfolio expanding beyond fin and tube — to include shell and plate, refrigeration components, complete HVAC systems, bus AC, and applications for data centers, railways, industrial cooling, and mobility.

PLI and RIPS Benefits Not Yet Recognised; Headcount Crosses 1,500

• PLI eligibility requires Rs.400 Cr in fin-and-tube sales in FY 2026-2027 — management expects this threshold by Q3 or early Q4 FY27; no PLI claims have been booked yet.
• RIPS certificate received end of June 2026 — management will discuss provisional recognition with the auditor in Q2 FY 2026-2027 and update by the end of that quarter.
• Employee costs increased sharply in Q1 FY27 — total headcount now 1,500+, as the company builds teams for bus AC, heat exchangers, and other businesses to support the next growth phase.
• EBITDA margin guidance of 20%+ for FY 2027-2028 — with potential to reach 22-23%, supported by short-term PLI incentive and the RIPS scheme, which management stated is "RIPS scheme continuing for at least 10 years."
• Working capital from QIP sufficient for two years — covering FY 2026-2027 and FY 2027-2028; interest cost expected to remain stable or decrease, with no incremental debt required unless growth accelerates.

Bangalore Facility Planned; Rs.2,000 Cr Revenue Target Set for FY28

• 80% utilisation targeted by FY 2027-2028 — at the existing facility, which has an initial capacity of 20,000 units.
• New facility near Bangalore — ~Rs.100 Cr of existing business will be transferred; land acquisition expected within 4-6 weeks (~Q2 FY 2026-2027); operations targeted to begin within one year (~Q1 FY 2027-2028).
• Bangalore expansion described as "10-15% of current scale" — a steady-state addition, not a major capacity increase; first year will have no impact on revenue guidance, with additional revenue starting only after FY 2028-2029 (FY29).
• Rs.2,000 Cr revenue target for FY 2027-2028 — management guided that after reaching this threshold, further capex of ~Rs.100 Cr is planned for bus AC and railway facilities near Bangalore.
• Cash pile of Rs.300-Rs.500 Cr may accumulate by end FY 2027-2028 — management has no specific deployment plans beyond the ~Rs.100 Cr capex for bus AC and railway facilities; no major additional capex plans were mentioned.

Geopolitical Headwinds in UAE; Working Capital Squeeze Favours Large Players

• UAE market remains challenged — Red Sea conflict has driven freight costs from ~$1,500 to ~$6,000 per container, eroding cost competitiveness; management expects recovery only once the war settles.
• Europe and North America revenues unaffected — management stated that clear forecasts and orders from these regions are expected to continue at the same rate for Q1 FY 2026-2027.
• Small vendors unlikely to survive — management highlighted that high working capital requirements from elevated copper and aluminium prices are squeezing smaller players, which works in KRN's favour.
• Demand diversification across geographies and applications — data centers, railways, bus AC, and industrial cooling help the company maintain margins despite seasonal or regional fluctuations.
• Management committed to "delivering much better results in Q2 FY27" — in closing remarks, with an emphasis on sequential improvement.