Kross Limited, founded in 1994, is a prominent manufacturer of forging components for OEMs and Tier 1 companies in India. The company is a recognized specialist in producing high-performance and safety-critical components for the commercial vehicle, tractor, and trailer axle industries. This positions Kross as a key player in the automotive supply chain, delivering robust, reliable components that are essential for vehicle safety and performance.

The Kross IPO, a Book Built Issue worth ₹500 Crores, opened for subscription on September 9, 2024, and closed on September 11, 2024. The issue comprises a Fresh Issue of ₹250 Crores and an Offer for Sale (OFS) of ₹250 Crores. The allotment will be finalized on September 13, 2024, with the shares listed on BSE and NSE by September 16, 2024.

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Business Overview and Promoters

Kross Limited has built a solid reputation over the past three decades for manufacturing forging components for the automotive industry. The company's expertise lies in producing critical components for the tractor and trailer axle industry, which are widely used in commercial vehicles and agricultural machinery.

Under the leadership of Chairman and Managing Director, Sudhir Rai, who has over 30 years of experience in automotive component manufacturing, Kross Limited has seen continued growth and expansion. His leadership and industry knowledge have been integral to the company’s consistent performance and market recognition.

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IPO Details and Pricing

The Kross Limited IPO has a price band set between ₹228 and ₹240 per share, with a minimum lot size of 62 shares. Retail investors can start with a minimum investment of ₹14,880, while HNIs must invest a minimum of ₹208,320 for 14 lots (868 shares).

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

Financial Performance

Kross Limited has demonstrated consistent financial growth, with revenue increasing from ₹2,978.81 Million in FY22 to ₹6,214.64 Million in FY24. The EBITDA has also seen a significant rise, growing from ₹295.48 Million in FY22 to ₹807.58 Million in FY24. The company's Profit After Tax (PAT) grew from ₹121.69 Million in FY22 to ₹448.81 Million in FY24, reflecting a positive trend in profitability.

Key financial metrics include a pre-issue EPS of ₹8.30, while the post-issue EPS is expected to drop to ₹6.59. The pre-issue P/E ratio stands at 28.91x, while the post-issue P/E ratio is 34.53x, against an industry P/E ratio of 24.85x. The company’s Return on Capital Employed (ROCE) for FY24 is 28.15%, and Return on Equity (ROE) is 30.57%. These numbers suggest that the IPO is fairly priced given its financial performance.

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Grey Market Premium (GMP) and Subscription Status

The Grey Market Premium (GMP) for Kross Limited's IPO is anticipated to be between ₹25 to ₹30, signaling a potential listing gain of 10% to 13%. Although the GMP serves as an indicator of investor sentiment, it does not guarantee accurate price discovery, as it reflects demand and supply dynamics in an unregulated market. Investors are advised to use GMP data for informational purposes only.

As of 7:00 PM on September 11, 2024, the IPO was subscribed 16.81 times, with strong interest from retail and institutional investors alike. To view the live subscription status, you can refer to {Finance Saathi Telegram Channel}.

Allotment and Listing

The Kross Limited IPO allotment date is scheduled for September 13, 2024. Investors can check their allotment status on the registrar's website, KFin Technologies, or via {Best IPO to Apply Now - IPO List 2024, Latest IPO, Upcoming IPO, Recent IPO News, Live IPO GMP Today - Finance Saathi}.

To check the allotment status:

Navigate to the IPO allotment status page.

Select Kross Limited IPO from the dropdown list.

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

Submit the details to view your allotment status.

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Objectives of the IPO

The Kross Limited IPO proceeds will be used for the following purposes:

₹700 Million will be allocated for capital expenditure, specifically for the purchase of new machinery and equipment.

₹900 Million will be used for repayment or prepayment of outstanding borrowings from banks and financial institutions.

₹300 Million will be utilized for working capital requirements.

Funds will also be reserved for general corporate purposes.

These funds are aimed at boosting the company's production capacity, improving financial flexibility, and supporting future growth initiatives.

Conclusion

The Kross Limited IPO offers a compelling investment opportunity in a company that has consistently grown in the automotive component manufacturing sector. With strong financial performance, a well-defined growth strategy, and seasoned leadership, the company is poised for continued success. However, with a high post-issue P/E ratio and a relatively modest GMP, investors may want to proceed cautiously, especially those seeking short-term listing gains. For those looking to invest for the long term, Kross Limited presents a stable option in a growing industry.

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