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Overview of the IPO
The IPO of Kross Limited is generating considerable excitement among investors and financial analysts alike. The company plans to raise capital through a combination of an Offer for Sale (OFS) and a fresh issue of shares. The OFS component is valued at ₹200 crores, while the fresh issue is expected to generate an additional ₹250 crores. This capital injection will be crucial for company as it aims to expand its operations and strengthen its position in the market.
Kross Limited IPO Timeline:
| Event | Date |
|---|---|
| IPO Open Date | Monday, September 9, 2024 |
| IPO Close Date | Wednesday, September 11, 2024 |
| Basis of Allotment | Thursday, September 12, 2024 |
| Initiation of Refunds | Friday, September 13, 2024 |
| Credit of Shares to Demat | Friday, September 13, 2024 |
| Listing Date | Monday, September 16, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on September 11, 2024 |
Kross Limited IPO Details :
| Details | Information |
|---|---|
| IPO Date | September 9, 2024 to September 11, 2024 |
| Listing Date | [.] |
| Face Value | ₹5 per share |
| Price Band | ₹228 to ₹240 per share |
| Lot Size | 62 Shares |
| Total Issue Size | 20,833,334 shares (aggregating up to ₹500.00 Cr) |
| Fresh Issue | 10,416,667 shares (aggregating up to ₹250.00 Cr) |
| Offer for Sale | 10,416,667 shares of ₹5 (aggregating up to ₹250.00 Cr) |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE, NSE |
| Share holding pre-issue | 54,092,756 shares |
| Share holding post-issue | 64,509,423 shares |
Understanding Kross Limited’s Business Model
Kross Limited has made a name for itself in the manufacturing sector, particularly in the production of tractor axles, truck components, and various automotive parts. The company’s journey began 30 years ago in Jamshedpur, a city renowned as a hub for the automotive industry in India. Over the decades, company has not only expanded its range of products but also broadened its customer base. Today, it is a key supplier of critical forged safety parts to Original Equipment Manufacturers (OEMs) in the Medium and Heavy Commercial Vehicle (MHCV) segment.
In 2019, Kross Limited took a bold step by venturing into a new segment—trailer axles and suspensions. This move proved to be a game-changer for the company, propelling it to become a major player in the Indian market in a relatively short period. The introduction of this new product line has significantly boosted the company’s sales and profitability, marking a pivotal moment in its growth trajectory.
Strategic Expansion and Technological Investments
Company’s growth strategy is not confined to the domestic market. The company has ambitious plans to expand its footprint internationally, particularly in Europe and Japan, where it has already established strategic partnerships with prominent companies. These collaborations have begun to yield results, with business operations in these regions kicking off in December 2023.
To support this expansion, Company is making significant investments in new technology and infrastructure. A substantial portion of the funds raised from the IPO will be allocated towards setting up a new extrusion plant. This plant is expected to enhance the company’s manufacturing capabilities, allowing it to meet the growing demand for its products both in India and abroad.
Kross IPO Lot Size :
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Retail (Min) | 1 | 62 | ₹14,880 |
| Retail (Max) | 13 | 806 | ₹193,440 |
| S-HNI (Min) | 14 | 868 | ₹208,320 |
| S-HNI (Max) | 67 | 4,154 | ₹996,960 |
| B-HNI (Min) | 68 | 4,216 | ₹1,011,840 |
Financial Performance and Strategic Investments
Kross Limited’s financial performance has been nothing short of impressive. The company has maintained a strong Compound Annual Growth Rate (CAGR) of 44.2% over the past three years. In the fiscal year 2024 (FY24), Company reported a top line of ₹620 crores, a notable increase from previous years. The company’s profitability is also strong, with an EBITDA margin of 13.02% and a net profit margin of 7.2%, indicating a well-managed and efficient operation.
The decision to raise ₹250 crores through a fresh issue of shares will be instrumental in funding the company’s future growth initiatives. Specifically, ₹70 crores will be used for the acquisition of new plant and machinery, ₹90 crores will go towards repaying existing debt, and ₹30 crores will be allocated to meeting the company’s working capital requirements.
Risk Management and Diversification
While Kross Limited’s revenue is heavily concentrated among its top five customers, who account for over 50% of its earnings, the company views this as a strength rather than a vulnerability. Kross Limited has built strong, long-term relationships with these clients, ensuring a steady and reliable stream of business.
In addition to these strong client relationships, Kross Limited has also taken steps to diversify its product offerings and customer base. This diversification strategy is designed to mitigate potential risks associated with over-reliance on a limited number of customers. Furthermore, the company’s policy of backward integration—such as the recent establishment of its own foundry for producing brake drums and hubs—has helped reduce costs and improve profit margins.
Key Drivers of Future Growth
Looking ahead, Kross Limited is optimistic about its growth prospects. The company’s management is confident that its expansion into new markets, both domestic and international, will be key drivers of future revenue and profitability. Kross Limited’s strong focus on innovation, technology, and customer satisfaction positions it well to capitalize on emerging opportunities and continue its upward trajectory.
Conclusion: A Compelling Opportunity for Investors
In conclusion, Kross Limited’s IPO represents a compelling opportunity for investors to participate in the growth of a company that is not only expanding its market reach but also continuously improving its operational efficiency and financial performance. With its robust business model, strategic growth plans, and strong financials, Kross Limited is poised to make a significant impact in the automotive components industry. Investors looking for a promising addition to their portfolios would do well to consider Kross Limited’s IPO.
FAQs
- What is Kross Limited’s primary business focus?
Kross Limited specializes in manufacturing tractor axles, truck components, and various automotive parts, with a particular focus on supplying critical forged safety parts to Original Equipment Manufacturers (OEMs) in the Medium and Heavy Commercial Vehicle (MHCV) segment. - What will the funds raised from the IPO be used for?
The company plans to allocate ₹70 crore for the acquisition of new plant and machinery, ₹90 crore for debt repayment, and ₹30 crore for working capital requirements. - Why is Kross Limited’s IPO significant?
Kross Limited’s IPO is significant due to the company’s strong growth record, strategic expansion plans, and its pivotal role in the automotive components industry. - How has Kross Limited diversified its business?
The company has diversified by expanding its product range, entering new market segments like trailer axles and suspensions, and implementing backward integration strategies to reduce costs and enhance margins. - What are the key drivers of Kross Limited’s future growth?
The key drivers of Kross Limited’s future growth include its expansion into new domestic and international markets, as well as its strong focus on innovation, technological advancements, and customer satisfaction.
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