Kross IPO

Kross Ltd is a diversified player focused on the manufacturing and supply of a wide range of forged and precision machine parts for medium and heavy commercial vehicles (i.e. M&HCV) and farm equipment segments.

As such, they offer a diversified portfolio of high-performance and safety-critical components for the M&HCV and farm equipment segments. However, they are considered a specialist in manufacturing safety critical components for the M&HCV segment, which include axle shafts, companion flanges, anti-roll bars and stabiliser bar assembly, suspension linkages, etc. They also produce a wide variety of tractor components for the hydraulic lift arrangement, power take-off shafts and front axle spindles.

They supply their products to a diversified client base, which includes large original equipment manufacturers (OEMs) of M&HCV and tractors, as well as the top suppliers to these OEMs. They also have domestic dealers and fabricators as clients for their trailer axle and suspension business.

The MHCV industry is expected to grow at a compound annual growth rate of 2-4% between FY 2024 to FY 2029. Between the fiscal years of 2018 to 2023, the Indian tractor industry had registered a 5.4% CAGR. With the sectors that buy its products showing growth prospects, the revenue of Kross Ltd may also grow.

Kross IPO Strengths

• Kross Limited maintains long-standing relationships with large OEMs and domestic dealers, boosting its trailer axle and suspension business.
• The company is recognised as a prominent manufacturer of trailer axles and suspension assemblies in India, with in-house capabilities that enhance quality and efficiency.
• Kross Limited’s diversified product portfolio includes high-precision safety-critical components, catering to various sectors and reducing long-term risks.
• The company’s backward integration with design, forging, casting, and machining capabilities ensures greater control over production and cost.
• The company has shown robust financial performance and growth over the last three years, positioning itself as a major player in the industry.
• Kross Limited’s expansion plans focus on increasing manufacturing scale and creating new products, aiming to enhance their market presence.

Kross IPO Risks

• Kross Limited faces customer concentration risk, with the top 5 customers contributing over 66% of revenue.
• The company is exposed to end-user industry risk, as declines in vehicle sales by customers may negatively affect demand for their products.
• Kross Limited’s revenue dependency on trailer axles and suspension assemblies for M&HCVs exposes it to product concentration risk.
• Kross Limited is at risk of manufacturing facility disruptions; any shutdown or production problems could negatively impact sales and financial performance.
• The company’s geographical concentration of manufacturing facilities in Jamshedpur could result in adverse effects from local or regional disruptions.
• Kross Limited faces product quality risk, as defects or non-compliance with quality standards could lead to financial losses.