Kross Ltd Financial Analysis : Founded in 1991, Kross Ltd has emerged as a strong player in the automotive component manufacturing sector in India. Specializing in trailer axles, suspension assemblies, axle shafts, and safety-critical forged components, the company supplies to both domestic and global Original Equipment Manufacturers (OEMs). With a reputation for precision engineering and reliable delivery, Kross Ltd serves automotive giants such as Ashok Leyland, Tata International, and Sweden’s Leax Falun AB.
Company Milestones
- Established: 1991
- Product Portfolio: Axles, suspension assemblies, anti-roll bars, axle shafts
- Clientele: Ashok Leyland, TAFE, Wheels India, Dana, Leax Falun AB
- Manufacturing Facilities: 5 locations
- Export Reach: Sweden, Japan, expanding globally
Financial Performance Overview
Kross Ltd has displayed remarkable financial progress. The company posted a revenue jump from ₹184 crore in FY21 to ₹620.3 crore in FY24, showcasing a robust CAGR of ~49%. Even more impressive is its net profit, which surged from ₹6 crore in FY21 to ₹44.9 crore in FY24, marking a CAGR of ~91%.
Revenue Growth by Fiscal Year:
- FY21: ₹184 crore
- FY22: ₹297 crore
- FY23: ₹489 crore
- FY24: ₹620.3 crore
Profitability Metrics:
- Net Profit FY24: ₹44.9 crore (up from ₹6 crore in FY21)
- EBITDA FY24: ₹80.8 crore
- Operating Profit Margin: Increased from 10% in FY21 to 13% in FY24
- Return on Equity (RoE): 31%
- Return on Capital Employed (RoCE): 28%
These financial figures highlight Kross Ltd’s ability to manage costs effectively while expanding its market share.
Initial Public Offering (IPO) and Its Impact
In September 2024, Kross Ltd launched its much-anticipated IPO. The price band was set at ₹228-₹240, and the offer consisted of a fresh issue and an offer-for-sale totaling ₹500 crore.
IPO Subscription Details:
- Overall Subscription: 16.69x
- Retail Investors: 11.26x
- Non-Institutional Investors: 23.40x
Use of IPO Funds:
- Debt Reduction: ₹90 crore
- Capex for Machinery & Equipment: ₹70 crore
- Working Capital: ₹30 crore
- General Corporate Use: Remaining funds
The capital raised is directed toward growth-centric initiatives such as capacity expansion, automation, and working capital enhancements.
Manufacturing Capabilities and Expansion Plans
Kross Ltd operates five advanced manufacturing facilities across India. With capacity utilization at 70% in FY24, the company has ample scope for scaling. New investments funded by the IPO are expected to:
- Enhance operational efficiency
- Reduce production lead times
- Drive incremental revenues of ₹200-220 crore by Q4 FY25
Strategic Client Partnerships
Kross Ltd’s success is strongly tied to its deep-rooted relationships with leading OEMs and Tier 1 suppliers. These include:
- Ashok Leyland
- Tata International Vehicle Applications Pvt. Ltd.
- TAFE (Tractors and Farm Equipment Limited)
- Wheels India
- HINO Motors
- Dana Incorporated
Such associations validate the company’s product quality and supply reliability.
Export Initiatives and Global Vision
While exports contributed 1.14% of revenue in FY24, Kross Ltd is actively increasing its global footprint. Export contribution rose to 3.1% in H1 FY25, with a strategic goal to cross 10% in the next 2-3 years.
Key Drivers of Export Growth:
- Demand for safety-critical automotive parts
- Growing recognition in European and Asian markets
- Entry into Japan and Sweden through existing contracts
Industry Trends & Market Positioning
Key Industry Drivers:
- Growth in M&HCV (Medium & Heavy Commercial Vehicles) segment
- Agri-mechanization in India and abroad
- Government’s push for ‘Make in India’ and export incentives
Competitive Advantage:
- Precision engineering capabilities
- Strong vendor relationships
- Consistent quality adherence
- Diversified revenue base
Strategic Roadmap for FY25-FY26
Revenue Target:
- Aim to reach ₹950-₹1000 crore by FY26
Profitability Enhancement:
- Projected OPM to improve to 15-16%
Capacity Building:
- Commissioning new machines and automation
- Optimizing supply chain efficiency
Digital Transformation:
- Implementing ERP systems for real-time monitoring
- Enhanced data analytics for production planning
Risks and Challenges
While the outlook is largely positive, investors should consider the following:
- Raw Material Price Volatility: Could impact margins
- Global Demand Uncertainty: Export plans depend on stable demand
- Currency Fluctuation Risk: Affects international earnings
- Competition from Chinese and local suppliers
Investment Thesis
Kross Ltd offers a compelling investment case:
- Consistent revenue and margin growth
- Strong client relationships
- Strategic deployment of IPO funds
- Increasing export opportunities
These aspects make it a potential long-term wealth creator in the auto component manufacturing sector.
Recommendations for Investors
- Long-Term Hold: Based on strong financials and future growth visibility
- Monitor Export Contributions: To gauge international success
- Watch Capacity Utilization Trends: Signal demand sustainability
- Track IPO Deployment Impact: Particularly new revenue from Capex
Final Thoughts
Kross Ltd’s evolution from a niche axle manufacturer to a well-diversified, export-oriented component supplier is a case study in strategic transformation. Its solid financials, clear growth roadmap, and commitment to quality position it as a promising investment option.
If you’re tracking manufacturing sector stocks with robust fundamentals and strong growth plans, Kross Ltd is certainly one to watch.
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