Snowball Effect 📈

KRN Heat Exchanger - Growth is impressive but the real test is profitability. KRN's Q2 FY27 revenue more than doubled to ₹319 Cr, while H1 revenue surged 114% to ₹571 Cr. Net profit for H1 grew 127% to ₹69 Cr. 🔸 The biggest driver? Data centres. H1 data-centre revenue jumped to ₹180 Cr from ₹38 Cr last year. Exports also grew 192% to ₹126 Cr, now contributing 22% of revenue. 👉 Management believes FY27 revenue could reach ₹1,250 Cr or more, against its earlier guidance of ~₹1,200 Cr. And the opportunity pipeline is expanding into bus ACs, railways, new export customers and eventually liquid cooling. 🔸 But the picture isn't all rosy. Despite strong growth, Q2 EBITDA grew 61%, much slower than revenue growth of 110%. EBITDA margin declined to 15.27%, versus roughly 19.9% in Q2 last year. Management attributed margin pressure to freight costs, higher metal costs, pricing arrangements with a major customer and selling expenses. Q3 margins are expected to remain around Q2 levels, with improvement more likely in Q4. 🔸 There are other things to watch 1. Working capital: Inventory and cash flow remain under pressure due to capacity ramp-up and BIS-related copper procurement requirements. 2. Supply-chain risks: Copper tubes and bus AC compressors remain key sourcing challenges. 3. Execution risk: The new facility is still ramping up; reaching 80% utilisation is a FY28 target. 4. New businesses: Railway approvals are pending, while meaningful revenue from the new liquid-cooling product is not expected until around FY29. 5. Order visibility: Much of the business runs on rolling orders, typically covering only 1-2 months. 👉 Management's long-term EBITDA margin aspiration is 18-20%, but achieving it will depend on export mix, product mix, cost control and execution. That's where the next few quarters matter most. No reco. DYDD.

Shadowfax Q2 FY27 - The growth story is getting bigger 🔥 A year ago, Shadowfax was largely seen as a logistics partner for e-commerce deliveries. Today, it is expanding across D2C brands, quick commerce, premium deliveries and large enterprise customers while improving profitability. 🔸 Where is the growth coming from? ▪️ Express Parcel: Revenue reached ₹1,096 Cr (+55% YoY), while shipments grew 72%. D2C revenue more than doubled, and Shadowfax's D2C market share crossed 14%. ▪️Quick Commerce: Revenue surged 88% YoY to ₹341 Cr. Realisation per order improved to over ₹60, compared with ₹55 in the previous quarter. ▪️Building beyond traditional marketplaces: Shadowfax 360 onboarded 6,700+ sellers in 200 days. Amazon became a top-five customer within a year, while the company continues expanding its enterprise and D2C relationships. 🔸 The next leg of expansion 1. 70 of 100 planned dark stores are operational 2. Micro-fulfilment centres (MFCs) are targeting 8-12 hour deliveries, with opportunities across 50 cities 🔸Management's growth outlook 1. Long-term revenue growth CAGR: 27-30% 2. Express Parcel revenue CAGR: 27-28% 3. Quick Commerce industry growth: expected to exceed 30% 👉 The opportunity is not just faster revenue growth. It is whether Shadowfax can convert scale into sustainable earnings while managing infrastructure costs, customer concentration and the profitability of its expanding delivery network. No reco. DYDD.