Inside every air conditioner

Summary: KRN Heat Exchanger has built sticky relationships with leading air-conditioner manufacturers and expanded capacity to unlock its next phase of growth. We explore whether the company's execution can justify the lofty expectations already reflected in its valuation.

Summary: KRN Heat Exchanger has built sticky relationships with leading air-conditioner manufacturers and expanded capacity to unlock its next phase of growth. We explore whether the company's execution can justify the lofty expectations already reflected in its valuation. Walk into any Daikin or Blue Star showroom and pick an air conditioner off the wall. The salesperson will talk about star ratings, inverter compressors and smart connectivity. What they will not mention is the heat exchanger coil inside: the copper and aluminium component that actually transfers heat from your room to the air outside. In most cases, that coil was made by KRN Heat Exchanger and Refrigeration, a seven-year-old company from Neemrana, Rajasthan, that most investors have not heard of. It is a business-to-business manufacturer, invisible by design. It sells not to consumers but to Daikin, Blue Star, Carrier, Voltas, Schneider Electric and Kirloskar Chillers and has done so, in several cases, since its earliest years. That roster of demanding original equipment manufacturers (OEMs), who qualify suppliers carefully and switch reluctantly, is the first important thing to understand about KRN. Their continued patronage says more than any revenue chart can. The coil as a business A heat exchanger is not a commodity. Every OEM specifies its own tube diameter, fin geometry, coil configuration and coating, and KRN must engineer the component precisely to f