Synopsis: India’s data centre industry is exploding, and that means everyone wants better cooling systems. KRN Heat Exchanger isn’t just dipping a toe in; they’re going for half the market share in big hyperscale projects.
India’s data centre scene is exploding, and honestly, things are getting very dicey. Billions are pouring into new server farms everywhere, and with all that hardware humming away, the demand for smarter cooling systems is skyrocketing.
Right in the middle of this, KRN Heat Exchanger and Refrigeration Ltd is making its move. The company wants a big slice of the action, hoping to consume up to half of the heat exchanger market for these massive data centres.
With a market capitalisation of Rs 4,562 crore, the shares of KRN Heat Exchanger and Refrigeration Ltd closed at Rs 734 per share, up 2 percent from its previous day’s closing price of Rs 718.15 per share. In the last one year, the stock has corrected by over 14 percent, as compared to NIFTY 50’s positive return of 11 percent. As of Q3 FY26, notable ace investor Mukul Mahavir Agrawal holds a 1.61 percent stake in the company, and his stake stayed constant over the past few quarters.
Industry Overview
India’s data centre story is developing more quickly than many anticipated. In 2025 alone, announced investments surpassed $63 billion, or over Rs 5 lakh crore. Major global and domestic companies like Reliance, Google, Adani Connex, Amazon Web Services, and TCS are building extensive data infrastructure across the country. Jefferies quoted that the installed capacity is expected to increase sharply from 1.6 GW to nearly 8 GW by FY30, and industry revenues are likely to grow fivefold.
Also, the Indian HVAC (Heating, Ventilation, and Air Conditioning) market is projected to reach $30 billion by 2030, growing at a CAGR of 15.8 percent, offering substantial opportunities for both local and international manufacturers
Behind these large investment figures lies a simple but important reality. Every data centre operates thousands of servers, and every server produces heat. As capacity grows, so does the amount of heat generated. Cooling is no longer just a supportive function; it has become a critical need. Without effective cooling systems, servers can overheat, performance declines, and downtime increases. This makes thermal management a key part of the entire data centre ecosystem.
How KRN fits in this industry?
This is where KRN Heat Exchanger and Refrigeration Ltd comes in. The company produces aluminium and copper fin-and-tube heat exchangers that are commonly used in HVAC and refrigeration systems. These products manage temperature and help eliminate excess heat, making them vital for data centres, commercial buildings, and industrial facilities.
While the overall Indian heat exchanger market is growing steadily, the commercial HVAC segment is expanding much more quickly (20-25 percent). Data centres, urbanisation, industrial growth, and renewable energy projects are driving this demand. KRN’s main business connects directly with this high-growth segment, positioning it to benefit from the ongoing growth in cooling infrastructure.
The opportunity is further interesting due to KRN’s claims about hyperscale data centres. Large global companies need very large and customised heat exchangers for their facilities. Not every manufacturer has the engineering know-how, production scale, and quality control systems to produce these large units. In FY25, condenser coils accounted for 60.7 percent of revenue, while evaporator coils accounted for 30.4 percent).
KRN believes it has developed that capability and estimates that the heat exchangers for Google’s planned data centre in Visakhapatnam alone could represent an opportunity worth Rs 1,500 crore, and the company aims to capture up to 50 percent of the heat exchanger needs in these large data centre projects.
This target is ambitious, but it shows management’s confidence in its manufacturing capabilities and technical knowledge. If KRN secures even a significant portion of these large contracts, it could greatly speed up revenue growth in the coming years.
KRN has already boosted its production capacity nearly six times from previous levels, increasing from around one million units per year. This expansion was necessary because the previous capacity was fully utilised. The management expects to achieve 20% capacity utilisation at this new facility in FY26 and gradually increase it to 50% in FY27, which could enhance operating efficiency and profit margins as volumes grow.
Now the company’s not stopping there and is eyeing to foray into other HVAC segments as well. For example, KRN expanded into Automotive and Transport HVAC through the acquisition of a bus air-conditioning division, which provides ready technology and an experienced team to address the Rs 1,000 crore bus AC market. Management views this as a stepping stone, with plans to bid for HVAC projects with Indian Railways and Metro systems after gaining operating experience across 500 buses.
The company also benefits from making several components in-house, which reduces reliance on external suppliers and improves cost control. In-house testing facilities further strengthen its competitive position, allowing it to prototype and validate products for major OEM clients like Daikin, Blue Star, Schneider Electric, and Voltas.
In addition to stationary HVAC systems, KRN has entered the automotive and transport HVAC market through the acquisition of a bus air-conditioning division. This move opens up new opportunities in buses, railways, and metro systems. While data centres remain its main focus, diversifying into various cooling applications lowers dependence on a single market.
Financials
The revenue from operations for KRN Heat Exchanger and Refrigeration stands at Rs 153 crores in Q3 FY26 compared to Q3 FY25 revenue of Rs 111 crores, up by 37 per cent YoY. Additionally, on a QoQ basis, it reported a slight growth of 0.7 percent from Rs 152 crore.
Coming to its sales mix, the company derived Rs 362.40 crore (84.31 percent) of its revenue from domestic clients and the remaining Rs 67.45 crore (15.69 percent) through exports. In its export mix, the company derived 38.10 percent of its exports sales from the UAE, followed by 37.28 percent from the USA, 8.57 percent from Canada, 7.6 percent from Italy and the remaining 8.45 percent from others.
Also, EBITDA stood at Rs 31 crore in Q3 FY26, a staggering growth of 97 percent as compared to Rs 16 crore in Q3 FY25. Additionally, on a QoQ basis, it reported a slight growth of 3 percent from Rs 30 crore. Also, coming to the margins front, EBITDA margins increased by a staggering 610 bps YoY, reaching 20.28 percent in Q3 FY26.
Coming down to its profitability, the company’s net profit stood at Rs 22.66 crore in Q3 FY26, a staggering growth of 65 percent as compared to Rs 13.73 crore in Q3 FY25. Additionally, on a QoQ basis, it reported a growth of 28 percent from Rs 18 crore.
Now, coming to the main question of whether the business can achieve its target and mitigate different risks. However, risks persist. The company depends on imports for certain raw materials, which exposes it to supply chain disruptions and price fluctuations. It also heavily relies on a few large customers, increasing concentration risk. If major OEMs decide to manufacture components in-house, it could impact order flows.
Despite these risks, the scale of India’s data centre expansion offers a strong advantage for cooling solution providers. As more capacity comes online, the demand for large and efficient heat exchangers will keep increasing. If KRN performs well and captures even a portion of its targeted 50 percent share in hyperscale projects, it could change from a niche HVAC component maker into a significant player in India’s data centre infrastructure.
The question now is not whether data centre cooling demand will grow; it clearly will. The real question is whether KRN can turn its manufacturing capability and early positioning into lasting market share gains. If it succeeds through its solid plan baked by robust execution and strong clientele, the goal of 50 percent may not seem as bold as it sounds today.
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Satyajeet is a Financial Analyst at Trade brains with 3+ years of experience, focusing on turning complex financial data into clear, data-backed insights. He specialises in equity research, company and sector analysis, IPO evaluation, and tracking market trends to create investor-friendly content.
