The initial public offering (IPO) of Kross continued to attract a muted from the investors during the second of the bidding process. The issue, which had kicked off on Monday, September 09, managed to sail through on the first day of the bidding, as it was booked 95 per cent.
The Jamshedpur-based Kross is selling its shares in the price band of Rs 228-240 apiece. Investors can apply for a minimum of 62 shares and its multiples thereafter. It is looking to raise Rs 500 crore via IPO, which includes a fresh share sale of Rs 250 crore, and an offer-for-sale (OFS) of up to 1.04 crore equity shares.
According to the data, the investors made bids for 3,31,28,398 equity shares, or 2.16 times, compared to the 1,53,50,877 equity shares offered for the subscription by 3.20 pm on Tuesday, September 10. The three-day bidding for the issue will conclude on Wednesday, September 11.
The allocation for retail was subscribed 3.42 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 2.09 times. However, the quota set aside for qualified institutional bidders (QIBs) was subscribed merely one per cent as of the same time.
Kross Ltd, formerly known as Kross Manufacturers (India) was established in 1991. It manufactures and supplies trailer axles and 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.
The grey market premium of Kross has remained stable despite the rising volatility in the broader markets. Last heard, the company was commanding a premium of Rs 48-50 per share in the unofficial market, suggesting a listing pop of about 20 per cent for the investors.
Kross has achieved a remarkable 100.55 per cent CAGR in revenue from trailer axles and suspension assemblies between FY22 and FY24, driven by a substantial increase in production capacity from 15,000 units in FY22 to 60,000 units in FY24. This growth reflects the company's strategic investments in expanding its manufacturing capabilities, said SMIFS.
"We recommend to subscribe to the issue as a good long term investment as the capacity ramp up - both existing and fresh additions to come up in future - aid growth along with healthy return ratios combined with attractive valuations at the issue price and steady to low raw material costs aiding margins," it said.
For the year ended on March 31, 2024, Kross Ltd reported a net profit of Rs 44.88 crore with a revenue of Rs 621.46 crore. The company reported a net profit of Rs 30.93 crore with a revenue of Rs 489.36 crore. The company will command a total market capitalization of close to Rs 1,550 crore.
Ahead of its IPO, Kross raised Rs 150 crore from anchor investors by allocating 62,49,999 shares at Rs 240 apiece. Kross Ltd has reserved 50 per cent of the net offer for qualified institutional bidders (QIBs), while 15 per cent of the shares have been reserved for non-institutional investors (NIIs) and retail investors will get 35 per cent and 35 per cent of the net offer.
Kross is a diversified firm specializing in the manufacturing and supply of trailer axles, suspension assemblies, and a wide range of forged and precision-machined, high-performance safety-critical parts for M&HCV and farm equipment. By Kross has successfully attracted major customers, including a leading automobile OEM and an Indian farm equipment OEM, said Choice Broking.
"Kross is asking for an EV/sales ratio of 2.3 times, which is in-line to the peer average. The company's performance is closely tied to the growth of its end industries; any negative impact on these sectors could affect the company’s business. Thus, we recommend a 'subscribe with caution' rating for this issue," it said.
Equirus Capital is the book running lead manager of the Kross IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE, with Monday, September 16 as the tentative date of listing at the bourses.