Kross IPO Lists at ₹240, Flat with Issue Price

Kross, a manufacturer of trailer axles and safety-critical parts for medium and heavy commercial vehicles, made a muted debut on the Indian stock market on Monday, 16th September 2024, with its shares listing at par with the issue price. The company's initial public offering (IPO) had generated good demand from investors during its subscription period, but the listing failed to meet market expectations.

Listing Details

• Listing Price: Kross shares were listed at ₹240 per share on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE), matching the upper end of its IPO price band.
• Comparison to Issue Price: The listing price represents no premium over the IPO issue price. Kross had set its IPO price band from ₹228 to ₹240 per share.
• Percentage Change: The listing price of ₹240 on both exchanges translates to a 0% premium over the issue price of ₹240.

First-Day Trading Performance

• Opening vs. Latest Price: Following its flat opening, Kross's share price gained momentum. By 10:34 AM, the stock was trading at ₹262.50, up 9.38% from its opening price.
• Market Capitalisation: As of 10:34 AM, the company's market capitalisation stood at ₹1,693.37 crore.
• Trading Volume: The traded volume was 129.03 lakh shares with a traded value of ₹327.05 crore, indicating significant investor interest on the first day of listing.

Market Sentiment and Analysis

• Market Reaction: Despite the flat listing, the market reacted positively to Kross during early trading. The post-listing gains indicate investor confidence in the company's prospects.
• Subscription Rate: The IPO was oversubscribed by 17.66 times, with QIBs leading at 24.55 times subscription.
• Grey Market Premium: Prior to listing, shares were trading at a premium of 10% in the grey market, which did not materialise at listing.

Growth Drivers and Challenges 

Expected drivers of future performance:

• Diversified product portfolio in trailer axles and safety-critical parts
• Strong presence in medium and heavy commercial vehicles sector
• Significant growth in revenue, EBITDA, and profit after tax.

Potential challenges:

• Competition in the auto ancillary industry
• Dependence on major OEMs in the M&HCV and tractor segments
• Economic fluctuations affecting the commercial vehicle market.

Utilisation of IPO Proceeds 

Kross plans to use the funds for:

• Purchasing machinery and equipment
• Repayment of debt
• Meeting working capital requirements
• General corporate purposes 

Financial Performance 

The company has demonstrated strong financial growth:

• Net profit increased by 45.1% to ₹44.9 crore in FY2024
• Revenue grew by 27% to ₹620.3 crore in FY2024
• EBITDA surged by 40.4% to ₹80.8 crore, with margin expanding by 120 basis points to 13%

As Kross begins its journey as a listed entity, market participants will closely monitor its ability to leverage its position in the auto ancillary industry to drive future growth and shareholder value. The initial post-listing gains suggest that investors may be looking beyond the flat debut to focus on the company's long-term prospects in the growing commercial vehicle and farm equipment sectors.