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Kross, a manufacturer of trailer axles and suspension assemblies, is set to launch its Rs 500 crore initial public offering (IPO) on Dalal Street starting September 9. This IPO will be the third one opening for subscription on the same day, alongside those of Bajaj Housing Finance and Tolins Tyres. Details about the price band are expected to be announced soon.
The IPO consists of a fresh issue of shares and an offer-for-sale (OFS) worth Rs 250 crore each. Promoters Sudhir Rai and Anita Rai will be selling shares worth Rs 168 crore and Rs 82 crore, respectively, through the OFS. The IPO subscription period will end on September 11, with the anchor book opening for a single day on September 6. Equirus Capital is serving as the sole merchant banker for the offering, while KFin Technologies will act as the registrar.
The issue has a specific allocation: 50% of the shares are reserved for qualified institutional buyers, 15% for non-institutional investors, and the remaining 35% for retail investors. Kross, based in Jharkhand, also produces forged and precision-machined high-performance safety-critical components for medium and heavy commercial vehicles (M&HCV) and farm equipment. From the net proceeds of the fresh issue, the company plans to use Rs 70 crore to purchase machinery and equipment, Rs 30 crore for working capital, Rs 90 crore to repay debt, and the rest for general corporate purposes.
According to the Red Herring Prospectus (RHP) submitted to the Registrar of Companies, Kross had a total debt (excluding vehicle loans) of Rs 128.63 crore as of June 2024. This suggests that over half of its debt could be reduced after the IPO. Owned by the Rai family, Kross competes with listed companies such as Automotive Axles, GNA Axles, Ramkrishna Forgings, Jamna Auto Industries, and Talbros Automotive Components. About 89% of Kross's business comes from the M&HCV segment, 9% from the farm equipment segment, and the rest from other components or services.
Kross has demonstrated strong financial performance in recent years, with net profit rising by 45.1% to Rs 44.9 crore in fiscal 2024, and revenue increasing by 27% to Rs 620.3 crore compared to the previous year. EBITDA (earnings before interest, tax, depreciation, and amortization) jumped 40.4% to Rs 80.8 crore in the year ending March 2024, and the margin improved by 120 basis points to 13% compared to fiscal 2023.
The company will finalize the allotment of IPO shares by September 12, with shares credited to the demat accounts of successful applicants by September 13. Trading of Kross's equity shares is scheduled to begin on the BSE and NSE from September 16.
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