Kross Limited IPO: Check IPO Date, Lot Size, Price & Details

About the Company:

Established in 1991, Kross Limited is a leading player in the manufacturing and supply of trailer axles and suspension assemblies, along with a broad range of forged and precision-machined high-performance safety-critical parts for medium and heavy commercial vehicles (M&HCVs) and farm equipment. M&HCV segment, which includes trailer axle and suspensions, contributed 88.87% of Revenue from Operations in Fiscal 2024, while Farm Equipment and Other Component/ Service contributed 9.02% and 2.11% respectively.

The company’s diverse product portfolio includes axle shafts, companion flanges, anti-roll bars, stabilizer bar assemblies, suspension linkages, differential spiders, bevel gears, planet carriers, inter-axle kits etc. It supplies these products to a diverse clientele, including major OEMs and tier-one suppliers for M&HCVs and tractors. It is a backward integrated in design, process engineering, forging, casting, and machining and forward-integrated with a network of sales and service locations across key Indian states.

The company has the capacity to manufacture forged parts with an input weight of up to 40 kg. Operating from five manufacturing facilities in Jamshedpur, Jharkhand, the company’s facilities are certified for various quality standards.

IPO Details:

Objects of the Offer:

The Net Proceeds (Gross Fresh Issue proceeds less Offer related expenses in relation to Fresh Issue) are proposed to be utilized as follows:

Key Strengths and Opportunities:

• Long-standing customer relationships: The company has maintained long-standing relationships with major OEMs, tier-one suppliers, domestic dealers, and fabricators in the trailer axle and suspension sector. Notable clients include OEMs such as Ashok Leyland Limited and Tata International DLT Private Limited. Over the past three fiscal years, it has served more than 200 customers through a diverse network of dealers.
• Prominent manufacturers of trailer axles and suspension assemblies: The company has transitioned from producing precision-machined auto components to becoming a systems manufacturer. Its Trailer axle and suspension revenue has grown by 100.55% CAGR for Fiscal 2022 to Fiscal 2024. Its manufacturing capacity now stands at 60,000 trailer axle and suspension assemblies per year.
• Integrated manufacturing operations: The company’s backward integration grants it enhanced control over processes, delivery timelines, pricing, and quality. This integration reduces reliance on third parties, streamlines production, and boosts operational efficiency, more competitive delivery timelines and costs for customers.
• Robust financial performance: The company has a consistent revenue growth and profitability track record. Its Total income, Gross profit, EBITDA and PAT has achieved a CAGR of 44.44%, 38.82%, 65.32% and 92.05% from Fiscal 2022 to Fiscal 2024.

Risk factors:

• Customer concentration risk: The company’s top five customers have consistently accounted for over 66% of revenue in each of the past three fiscal years. The loss of a major customer or a decline in demand from these key clients could negatively impact the business and future prospects.
• End-user industry risk – The company’s sales are closely tied to the production levels of OEMs in the M&HCV and farm equipment sectors. These levels can be influenced by overall economic and industry conditions, industrial activity, agricultural output, infrastructure development, and changes in regulatory requirements, government initiatives, and trade agreements.
• Manufacturing facility geographical concentration: The company operates five manufacturing facilities in Jamshedpur, Jharkhand. Since these facilities are all situated in the same geographic area, any disruptions in the manufacturing process caused by local or regional factors could negatively impact the operational outcomes.
• Raw material price risk: Cost of raw materials consumed by the company amounts to around 60% of revenue from operations. Fluctuations in the availability and increase in cost of steel, which is the company's primary raw material, could negatively impact its business.

Financial Snapshot:

Conclusion:

Kross Ltd manufactures a wide range of high-performance and safety-critical components for the commercial vehicle and tractor segments. In 2019, it began manufacturing and selling trailer axles and suspension assemblies, and rapidly become one of the fastest-growing players in the organized trailer axle manufacturing industry. Although the automotive industry, including commercial vehicles and tractors, is closely tied to economic performance and monsoon levels, demand for auto components is expected to grow due to increasing business activities and logistics needs. The company has shown strong financial performance, with an ROE exceeding 30%. Its operating income CAGR from FY19 to FY23 is 20.59%, the highest among its peers. Considering these factors, we recommend subscribing to the IPO.