Kross Limited IPO: Public Issue Subscribed 60% On Day 1, GMP Jumps; Everything You Need To Know

Kross Limited, a player in the trailer axle and suspension assembly manufacturing sector, is set to open its Initial Public Offering (IPO) for subscription today, September 9. The company manufactures and supplies trailer axle and suspension assemblies as well as offers a wide range of forged equipment used in farm machinery and commercial vehicles. The IPO opened for subscription today and is expected to remain open till September 11.

This IPO marks a major milestone for Kross Limited, positioning it for further expansion in an industry witnessing growing demand.

The Kross Limited IPO is valued at Rs 500 crore, comprising a fresh issue and an offer for sale. Specifically, the IPO includes a fresh issue of 1.04 crore equity shares, which amounts to Rs 250 crore, and an additional offer for sale of 1.04 crore shares, also worth Rs 250 crore. The price band for the offering has been set between Rs 228 and Rs 240 per share, with a face value of Rs 5 per share.

Investors should note that the IPO follows a book-built issue format. Around 50% of the issue is reserved for Qualified Institutional Buyers (QIBs), while 35% has been allocated to retail investors, and 15% to Non-Institutional Investors (NIIs). This structure allows for a balanced participation from a wide range of investors, from institutional to retail segments.

The proceeds from the IPO are primarily intended for loan repayment and capital expenditures, which are key to the company's growth strategy. Kross Limited has announced that around Rs 90 crore will be used for repaying its existing debt. Additionally, Rs 70 crore will be allocated to capital expenditures, particularly for purchasing new machinery and equipment that will bolster production capacity. Another Rs 30 crore has been set aside for meeting working capital requirements.

Kross Limited's financial performance has been impressive in recent times, further adding to the appeal of its IPO. In the fiscal year 2024, the company recorded a 45.1% increase in net profit, reaching Rs 44.9 crore, compared to the previous year. This growth highlights Kross's ability to efficiently manage costs while expanding its market reach. Moreover, the company's revenue surged by 27%, rising from Rs 488.5 crore in FY 2023 to Rs 620.3 crore in FY 2024.

Investor sentiment toward Kross Limited's IPO is already showing positive signs in the grey market. The Grey Market Premium (GMP) for Kross's shares is currently at Rs 50, suggesting that the estimated listing price could be around Rs 290 per share. This represents a 20.83% increase over the upper end of the IPO price band, which is Rs 240 per share.

The grey market premium reflects the willingness of investors to pay a higher price for Kross shares before they are officially listed on the stock exchanges. While the GMP is not an official measure, it often serves as an early indicator of how the market perceives the upcoming IPO. In this case, the premium suggests that demand for Kross's shares could be strong when it is listed on the NSE and BSE.

Investors won't have to wait long to see how their bids for Kross Limited's shares fare. The allotment process is expected to be completed on September 12, just one day after the subscription period ends. Subsequently, the company's shares are anticipated to be listed on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on September 16.

For investors looking to track the progress of the IPO and share allotment, Kfin Technologies Limited has been appointed as the registrar for the offering. Equirus Capital Private Limited is acting as the book-running lead manager for the IPO.

Kross Limited's decision to go public comes at a time when the demand for trailer axles, suspension assemblies, and related products is on the rise, driven by the growth of sectors like agriculture and commercial transportation. By utilizing the proceeds of the IPO to reduce debt and invest in capital expenditures, Kross is positioning itself for further growth and operational efficiency.

The company's plans to expand its production capacity through the purchase of new machinery and equipment are crucial for meeting the anticipated increase in demand from its core markets. Meanwhile, the allocation of funds for working capital will ensure that the company can manage its day-to-day operations smoothly.