Kross Limited IPO made its debut on September 16, with shares initially listing at ₹240 per share on the NSE, which was at the upper end of the IPO price band. However, within hours of listing, the stock saw an increase of 7.6%, reaching ₹258.2 per share by 10:13 AM. The IPO's performance reflects moderate optimism from investors, driven by the company's robust financials and strong demand during the subscription period.

About Kross Limited

Kross Limited, founded in 1994, is a leader in the manufacturing of forging components used by leading OEMs and Tier 1 companies in India. The company’s product portfolio includes high-performance, safety-critical components for industries such as commercial vehicles, tractors, and trailer axles. Kross has developed a strong reputation in the market for its precision manufacturing and reliability, serving both the domestic and export markets.

Kross Limited IPO Overview

The Kross IPO was a Book Built Issue worth ₹500 crore, with ₹250 crore raised through a Fresh Issue of 10.41 lakh shares, and the remaining ₹250 crore through an Offer for Sale (OFS) by existing shareholders. The issue was open for subscription between September 9 and September 11, 2024. The price band was set between ₹228 and ₹240 per share, with investors required to purchase a minimum lot of 62 shares. Retail investors needed to invest ₹14,880, while HNIs were required to invest ₹208,320 for 14 lots.

The book-running lead manager for the IPO was Equirus Capital Private Limited, and the registrar was KFin Technologies Limited.

Kross IPO Live Subscription Status

The Kross Limited IPO garnered significant interest during the subscription period, with a total subscription rate of 16.81x. The retail portion was subscribed 5.2x, the QIB portion saw 21.1x subscription, and HNIs contributed to 13.5x subscription. The high demand from institutional investors highlights confidence in Kross’s business model, but the pricing has raised some concerns about overvaluation.

Investors can check the Kross Limited IPO allotment status on the KFin Technologies website by following these steps:

Go to the IPO allotment status page.

Choose Kross Limited IPO from the dropdown list.

Enter your application number, PAN, or DP Client ID.

Submit the details to check your status.

Grey Market Premium (GMP)

The Grey Market Premium (GMP) for Kross Limited IPO was estimated to be between ₹25 to ₹30, suggesting potential listing gains of 10-13%. However, it’s important to note that the GMP is not an official metric and is largely driven by market speculation. The GMP may not reflect the stock's true value post-listing.

Financial Performance of Kross Limited

Kross Limited has displayed steady growth in recent years. The company’s revenue rose from ₹2,978.81 million in FY22 to ₹4,893.57 million in FY23, and further to ₹6,214.64 million in FY24. Similarly, EBITDA increased from ₹295.48 million in FY22 to ₹575.22 million in FY23, and stands at ₹807.58 million for FY24.

On the profit front, PAT grew from ₹121.69 million in FY22 to ₹309.31 million in FY23, and further increased to ₹448.81 million in FY24. The company's Return on Capital Employed (ROCE) for FY24 is 28.15%, while the Return on Equity (ROE) stands at 30.57%, reflecting efficient management of capital and strong profitability.

IPO Valuation & Ratios

For the Kross IPO, the shares were priced at a pre-issue EPS of ₹8.30 and a post-issue EPS of ₹6.59. This results in a pre-issue P/E ratio of 28.91x and a post-issue P/E ratio of 34.53x, which is notably higher than the industry average P/E ratio of 24.85x. The higher P/E ratio has sparked concerns about the stock being overvalued compared to industry peers, even though the company has demonstrated strong financial growth.

Use of IPO Proceeds

The funds raised from the Fresh Issue of the Kross IPO will be allocated as follows:

₹700 million will be used to purchase machinery and equipment to expand production capacity.

₹900 million will be directed towards repayment or prepayment of existing debts.

₹300 million will be set aside for working capital requirements.

Any remaining proceeds will be used for general corporate purposes.

Kross Limited IPO Review and Recommendation

Kross Limited is a well-established player in the forging components space, with a strong track record of steady revenue growth and improving profitability. The company’s strong ROCE and ROE metrics, combined with its strategic use of IPO proceeds for expansion and debt repayment, provide a solid foundation for future growth.

However, the premium pricing of the IPO, reflected in the higher P/E ratios, suggests that the stock might be overvalued at the current price point, especially for short-term investors looking for listing gains. The initial 7.6% rise in share price may reflect the demand from investors, but we advise caution when considering the stock for long-term investment.

Given the company's financial performance, but with a relatively high valuation, we recommend investors avoid the Kross IPO for short-term gains, and instead, consider it for long-term investment if they believe in the company's growth potential.

For further updates on similar issues and investment opportunities, explore the Best IPO to Apply Now - IPO List 2024, Latest IPO, Upcoming IPO, Recent IPO News, Live IPO GMP Today - Finance Saathi and stay informed with the Top News Headlines - Share Market News, Latest IPO News, Business News, Economy News- Finance Saathi.

Join our Trading with CA Abhay Telegram Channel for stock market trading insights and the Finance Saathi Telegram Channel for regular updates on share markets and IPOs.

Start your stock market journey by opening a free demat account with Choice Broking FinX.