JNK India reported a 13.5% year-on-year increase in revenue for Q1, reaching INR 1,030.00 million. However, the company faced significant margin pressure due to legacy projects, with EBITDA margin compressing to 7.00% from 13.40% in the same quarter last year.

Financial Performance

The company's financial results for Q1 show:

The margin compression was primarily attributed to legacy projects under execution, which impacted overall profitability. The company has transitioned to a cost-based revenue recognition method, which is expected to stabilize margins in future quarters.

Order Book and Business Outlook

As of June 30, JNK India's order book stood at INR 9,828.00 million, with the following composition:

• 79.40% from heating systems
• 12.80% from process plants
• 7.80% from flares, incinerators, and other renewables

Domestic orders account for 90.90% of the total order book, providing strong revenue visibility. The company anticipates two large order finalizations worth INR 2,000.00-3,000.00 crores in Q2.

Green Hydrogen Joint Venture

JNK India has entered into a joint venture agreement to develop green hydrogen and other sustainable fuel technologies, as well as critical engineered equipment for the chemical and pharmaceutical industries. The company will hold a 51% equity stake in the newly formed entity.

Key points of the joint venture:

• Partners: Mr. Sunil Dhole and Mr. Tushar Wagh, founders of Chemdist Group
• Initial investment: INR 10.00 crores by way of preference capital
• Working capital support: Approximately INR 50.00 crores in the first year
• Expected revenue contribution: 8-10% of JNK India's revenue
• Projected growth: 15-25% of JNK India's revenue within 5 years
• Estimated EBITDA margin: 10-12%

Management Commentary

Arvind Kamath, Chairperson and Whole-Time Director of JNK India, stated, "The first quarter was centered around project execution. Our teams remained focused on delivering ongoing assignments across domestic and international markets."

Pravin Sathe, CFO, added, "The impact of higher costs related to the earlier projects is likely to continue in Q2 as well. We continue to focus on disciplined execution, cost control, and alignment of internal systems to support timely delivery."

Future Outlook

JNK India maintains its guidance of 40-50% revenue growth with target EBITDA margins of 13-15% once legacy projects are completed. The company expects margin recovery from Q3 onwards.

The management remains optimistic about opportunities in the refining, petrochemical, and green energy sectors, leveraging its integrated capabilities across fire heaters, cracking furnaces, incinerators, flares, and process plants.

JNK India Limited , a prominent player in the industrial products sector, has made significant strides in utilizing the proceeds from its Initial Public Offering (IPO) completed in April 2024. The company has released a detailed monitoring agency report, shedding light on how it has put the raised funds to work.

IPO Proceeds Utilization

JNK India successfully raised Rs 2,821.84 crores through fresh issuance in its IPO. As of the latest report, the company has utilized Rs 2,530.11 crores, leaving Rs 291.73 crores yet to be deployed. The breakdown of the utilization is as follows:

Working Capital Boost

The lion's share of the utilized funds, amounting to Rs 2,360.11 crores, has been channeled into meeting the company's working capital requirements. This strategic allocation supports JNK India's need to maintain substantial bank balances for issuing bank guarantees, a critical aspect of its operations.

Financial Facilities

The company's financial position is further bolstered by its sanctioned facilities:

• Fund-based working capital facilities: Rs 450.00 crores
• Non-fund based limits (including guarantees and letters of credit): Rs 1,124.50 crores

These facilities underscore JNK India's robust financial framework to support its business operations and growth initiatives.

Prudent Management of Unutilized Funds

The remaining Rs 291.73 crores of unutilized funds have been judiciously deployed in fixed deposits across three major banks:

This conservative approach has yielded Rs 1.21 crores in earnings on the unutilized funds, demonstrating the company's commitment to efficient capital management.

Transparency and Compliance

JNK India Limited has demonstrated its commitment to transparency by submitting the monitoring agency report in compliance with SEBI regulations. The report, prepared by CRISIL Ratings Limited, provides an objective view of the IPO proceeds utilization, ensuring that the company adheres to its stated objectives in the offer document.

Conclusion

The strategic deployment of IPO proceeds by JNK India Limited, with a focus on strengthening its working capital position, reflects the company's dedication to fortifying its operational capabilities. As the industrial products sector continues to evolve, JNK India's prudent financial management and transparent reporting practices position it well for sustained growth and stakeholder confidence.