Heating equipment maker JNK India sees revenue growth but profits decline in Q3 FY25

JNK India Limited, a leading player in the heating equipment market, has reported its financial results for the third quarter and the nine-month period ending December 31, 2024. The company posted total revenue of ₹969.2 million for Q3 FY25, reflecting a steady demand for industrial heaters and related equipment. However, despite strong revenue growth, profit margins declined, with profit after tax (PAT) standing at ₹28.4 million, translating to a slim margin of 2.9%.

Over the nine-month period of FY25, revenue growth at JNK reached 15.6% year-over-year, climbing to ₹2,950.5 million from ₹2,553.4 million in 9M FY24. The company reported an order book of ₹12,269 million, with new order inflows amounting to ₹8,848 million, underscoring strong demand for its process heating solutions.

What Factors Affected JNK India’s Profitability?

While JNK India maintained a solid foothold in the heating equipment market, its profitability took a sharp downturn. The EBITDA for Q3 FY25 stood at ₹97.5 million, with an EBITDA margin of 10.1%, reflecting a considerable decline from the 34.1% recorded in Q3 FY24. Profit before tax (PBT) was ₹29 million, a stark 91.9% year-over-year drop, while operating profit fell to ₹292.9 million, marking an operating margin of 30.2%.

For the nine-month period, JNK India’s EBITDA declined by 48.1% to ₹373.3 million, while PBT dropped to ₹219.9 million, down 63.6% from the previous year. The company’s return on equity (ROE) stood at 6.7%, while return on capital employed (ROCE) was 12.9%, signaling capital efficiency despite declining earnings. Analysts attribute this profitability contraction to rising input costs, competitive pricing pressures, and fluctuations in project execution timelines.

What Is Driving JNK India’s Revenue Growth?

A key factor supporting revenue growth at JNK is its strong market presence in industrial heating solutions. The company specializes in process-fired heaters, reformers, and cracking furnaces, which are widely used in refineries and petrochemical plants. These heating systems play a crucial role in energy-intensive industries, where efficiency and reliability are paramount.

Beyond heating solutions, JNK India is a notable player in waste gas management systems, including flares and incinerators. These systems are critical for refineries and petrochemical plants seeking to comply with stringent environmental regulations. With an increasing focus on emissions control and sustainable energy solutions, demand for JNK India’s expertise in industrial heater technologies remains robust.

The company has also made significant inroads into the renewable energy sector, particularly in hydrogen refuelling infrastructure. JNK India was instrumental in setting up the hydrogen refuelling station at Indian Oil’s R&D Centre in Faridabad. The station, designed to support hydrogen-powered vehicles, underscores the company’s growing commitment to green energy technologies. Additionally, JNK India is engaged in solar EPC (engineering, procurement, and construction) projects, further diversifying its portfolio in the renewable sector.

What Challenges Does JNK India Face?

Despite its leading position in the heating equipment market, JNK India faces several headwinds. The sharp decline in profit margins indicates ongoing pricing pressures and cost-related challenges. The drop in EBITDA margins from 34.1% in Q3 FY24 to 10.1% in Q3 FY25 highlights the impact of increased raw material costs and project execution complexities.

Market analysts suggest that competitive dynamics in the industrial heating sector are intensifying, leading to tighter margins and reduced pricing power. Additionally, the transition to cleaner energy alternatives poses both opportunities and risks. While the company is making strides in hydrogen and solar energy solutions, the pace of adoption and regulatory support will influence its long-term growth trajectory.

What Are the Future Growth Prospects for JNK India?

Despite short-term profitability concerns, JNK India’s strong order book suggests a positive outlook for future growth. With new orders worth ₹8,848 million secured in the first nine months of FY25, the company is well-positioned to capitalize on increasing industrial demand. The rising focus on emissions control, coupled with the need for efficient heating solutions in refineries and petrochemical plants, provides a stable demand base for JNK India’s products.

The company’s expansion into industrial heater demand for renewable energy applications could serve as a long-term growth driver. Hydrogen refuelling stations and solar EPC projects are expected to gain momentum as India pushes forward with its clean energy initiatives. If JNK India successfully navigates cost pressures and enhances operational efficiency, it could leverage its industry expertise to improve margins in upcoming quarters.

What Lies Ahead for JNK India in the Heating Equipment Market?

JNK India’s current performance reflects a mix of strong industrial heater demand and profitability challenges. The company’s ability to sustain revenue growth while addressing cost pressures will be crucial in determining its financial trajectory. Given its robust order book and strategic positioning in both traditional and renewable heating solutions, JNK India remains a key player in India’s industrial heating sector.

Industry experts suggest that while short-term financial pressures persist, the company’s diversified portfolio and strong client base provide a cushion against market volatility. As industrial heating technologies continue to evolve, JNK India’s focus on innovation and efficiency could enable it to strengthen its market share.

With increasing demand for energy-efficient heating solutions, revenue growth at JNK is likely to be driven by a combination of industrial expansions, sustainability initiatives, and regulatory shifts favoring cleaner energy technologies. As the company navigates these industry trends, its ability to adapt and optimize operational efficiencies will be central to sustaining profitability.