What You Must Know About Kross IPO: Price Band ₹228 to ₹240 Per Share

Established in 1991, Kross Limited (formerly known as Kross Manufacturers (India) Private Limited) is a leading manufacturer and supplier of trailer axles, suspensions, and a wide range of high-performance forged and precision machined safety-critical parts for medium and heavy-duty commercial vehicles (M&HCV) and agricultural equipment.

Kross Limited's product portfolio includes:

• Axle shafts
• Companion flanges
• Anti-roll bars and stabilizer bar assembly
• Suspension linkages
• Differential spiders
• Bevel gears
• Planet carriers
• Inter-axle kits
• Rear-end spindles
• Pole wheels
• Various tractor components for hydraulic lift arrangement, power take-off (PTO) shafts, and front axle spindles

Key Highlights of Kross Limited's operations include:

• Five ISO 9001:2015 certified manufacturing facilities in Jamshedpur, Jharkhand
• Capability to manufacture forgings weighing up to 40 kg
• Advanced production facilities with forging presses, foundry, high-precision machining, in-house cathodic electro dip painting system, and heat treatment furnaces
• 528 permanent employees as of 30th June 2024
• Major clients include OEMs manufacturing M&HCVs and tractors, as well as domestic dealers and trailer axle and suspension manufacturers

The Objectives of the Issue

Kross Limited intends to utilize the net proceeds from the IPO for the following purposes:

• Capital Expenditure: Funding capital expenditure requirements for the purchase of machinery and equipment.
• Debt Repayment: Repayment or prepayment of all or a portion of certain outstanding borrowings availed by the Company from banks and financial institutions.
• Working Capital: Funding working capital requirements of the Company.
• General Corporate Purposes: For various corporate activities aligned with the company's strategic goals.

Highlights of Kross IPO

Kross IPO is set to launch with a book-built issue of ₹500.00 crores. The issue combines a fresh issue and an offer for sale. Here are the key details of the IPO:

• The IPO opens for subscription on 9th September 2024 and closes on 11th September 2024.
• The allotment is expected to be finalised on 12th September 2024.
• Refunds will be initiated on 13th September 2024.
• Credit of shares to Demat accounts is also expected on 13th September 2024.
• The company will tentatively list on BSE and NSE on 16th September 2024.
• The price band is set at ₹228 to ₹240 per share.
• The fresh issue comprises 1.04 crore shares, aggregating to ₹250.00 crores.
• The offer for sale comprises 1.04 crore shares, aggregating to ₹250.00 crores.
• The minimum lot size for the application is 62 shares.
• Retail investors need to invest a minimum of ₹14,880.
• The minimum investment for small NII (sNII) is 14 lots (868 shares), amounting to ₹208,320.
• The minimum investment for big NII (bNII) is 68 lots (4,216 shares), amounting to ₹1,011,840.
• Equirus Capital Private Limited is the book-running lead manager for the IPO.
• Kfin Technologies Limited serves as the registrar.

Kross IPO - Key Dates

The cut-off time for UPI mandate confirmation is 5:00 PM on 11th September 2024. This deadline is crucial for investors to ensure their applications are processed successfully. Investors are advised to complete their applications well before this deadline to avoid any last-minute technical issues or delays.

Kross IPO Issue Details/Capital History

The Kross IPO is scheduled from 9th September to 11th September 2024, with a price band of ₹228 to ₹240 per share and a face value of ₹5. The total issue size is 20,833,334 shares, raising up to ₹500.00 crores. This includes a fresh issue of 10,416,667 shares aggregating to ₹250.00 crores and an offer for sale of 10,416,667 shares aggregating to ₹250.00 crores. The pre-issue shareholding is 54,092,756 shares, which will increase to 64,509,423 shares post-issue.

Kross IPO Allocation & Minimum Investment Lot Size

The IPO shares are allocated across different investor categories as follows:

Investors can place bids for a minimum of 62 shares, with additional bids required in multiples of this figure. The table below illustrates the minimum and maximum investment amounts for retail investors and HNIs, expressed in shares and monetary values.

SWOT Analysis: Kross Ltd

Strengths:

• Established presence in the M&HCV and agricultural equipment parts manufacturing sector
• Diverse product portfolio catering to various vehicle types
• ISO 9001:2015 certified manufacturing facilities ensuring quality standards
• Advanced production capabilities with in-house forging and machining facilities

Weaknesses:

• High dependence on the automotive and agricultural equipment industries
• Potential vulnerability to raw material price fluctuations
• Geographical concentration of manufacturing facilities in Jamshedpur

Opportunities:

• Growing automotive and agricultural sectors in India
• Potential for expansion into new product categories or export markets
• Increasing demand for high-performance and safety-critical vehicle parts

Threats:

• Intense competition in the auto components industry
• Economic downturns affecting automotive and agricultural equipment sales
• Regulatory changes impacting manufacturing or raw material sourcing

Financial Highlights: Tolins Tyres Ltd

Kross Limited has demonstrated strong financial growth over the past three fiscal years. The company's assets have grown consistently, increasing from ₹1,978.24 lakhs in FY22 to ₹3,520.04 lakhs in FY24, representing a robust growth of 77.9% over two years. This substantial increase in assets indicates significant investments in the company's operational capabilities and infrastructure.

Revenue has shown impressive growth, rising from ₹2,978.81 lakhs in FY22 to ₹6,214.64 lakhs in FY24, marking a substantial increase of 108.6% over two years. The year-over-year growth from FY23 to FY24 was particularly strong at 27%, indicating accelerating market demand for the company's products.

The company's profitability has seen a remarkable upward trajectory. Profit after tax rose significantly from ₹121.69 lakhs in FY22 to ₹448.81 lakhs in FY24, representing an extraordinary growth of 268.8% over two years. This sharp rise in profits suggests improved operational efficiency and effective cost management.

Net worth has shown consistent growth, increasing from ₹724.04 lakhs in FY22 to ₹1,468.05 lakhs in FY24, a growth of 102.8% over two years. This substantial increase reflects the company's ability to generate and retain earnings, strengthening its financial position.

The company's financial leverage has evolved over the years. Total borrowings increased from ₹860.56 lakhs in FY22 to ₹1,171.04 lakhs in FY24, an increase of 36.1%. While this represents a significant increase, it should be viewed in the context of the company's even more substantial growth in assets and revenue.

The substantial growth in assets and revenue, coupled with the even more impressive growth in profit after tax, indicates that the company has not only expanded its operations but has also significantly improved its operational efficiency.