KRN Heat Exchan (KRN)

FairStock Score: 27/100 — RISKY

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Strong growth: sales up 37.46% and profit up 65.04%, with latest quarter sales of ₹153 Cr and net profit of ₹23 Cr.
• Low leverage: debt-to-equity of 0.06, with ROCE of 20.75% and ROE of 13.63%.
• Healthy Piotroski F-Score of 7/9 suggests decent financial quality.
• Promoter holding of 69.62% aligns owners with minority shareholders.

Concerns

• Very rich valuation: P/E of 91.27 and P/B of 16.18 against book value of ₹79.47.
• PEG of 1.78 and FairStock Score of 27/100 indicate limited margin of safety.
• Zero dividend yield means all expected returns depend on price appreciation.
• Profit growth of 65.04% far exceeds sales growth of 37.46%, which may be difficult to sustain.

AI Analysis

Let me look at KRN Heat Exchan the way I look at any business: what does it earn on capital, how durable is the edge, and what am I paying. The returns are respectable—ROCE near 21% and ROE of 13.63%, helped by almost no leverage with debt-to-equity of 0.06. A Piotroski F-score of 7 tells me the recent numbers are not just cosmetic. Promoters own 69.62%, which aligns interests. Sales grew 37.46% and profit grew 65.04%; those are impressive, and the latest quarter's ₹153 Cr revenue with ₹23 Cr profit shows momentum continues. But Graham would stop at the price. At P/E of 91.27 and price-to-book of 16.18, the market is already celebrating future success. Book value is just ₹79.47; I am paying ₹1,285.80 for every share of that book. The PEG ratio of 1.78 suggests current growth is roughly priced in, and FairStock's 27/100 risk score echoes my discomfort. There is no dividend, so the only return depends on further price appreciation. That is speculation, not investment. In an industrial product business, demand can be cyclical; today's 65% profit growth can mean mean-reversion tomorrow. I would not chase this at ₹1,285.80. A wonderful growth story can be a poor investment at the wrong price. I need a margin of safety; at 91 times earnings, this stock has almost none. Let the business prove it can compound for several more years without a stumble. If it does, there may be a better price later. For now, I watch and wait.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer