Kross Ltd — Q2 FY26 earnings call

Call held 17 Nov 2025

Management summary

Kross Limited reported a challenging Q2 FY26 with a 6% revenue decline to INR 130.9 crores and a PAT margin of 6.2%, primarily due to industry slowdowns and postponed purchases. Despite this, the company is aggressively pursuing growth through capacity expansions, new product launches like the tipping jack, and a strong focus on exports, which grew 24% YoY in H1 FY26. Management remains optimistic for a stronger H2 FY26, driven by new initiatives and improving market demand.

Highlights

  • Exports contributed 4.2% of H1 FY26 revenue, up 24% year-on-year, with similar traction expected in Q3.

  • Extrusion plant trials are underway, with commercial production scheduled to commence by end of Q3 FY26, enhancing axle capacity by 50%.

  • The Tipping jack facility is fully installed, with production of the first batch scheduled for November 2025.

  • The tractor business delivered double-digit growth in H1 FY26, with strong traction sustaining into Q3.

  • Secured purchase orders from leading Tier-1 OEMs in Europe for export business.

Concerns

  • Q2 FY26 revenue declined 6% to INR 130.9 crores compared to Q2 FY25.

  • H1 FY26 revenue declined 5% year-on-year to INR 270 crores.

  • PAT margin for Q2 FY26 stood at 6.2%.

  • Cash flow tightness due to cyclical industry slowdown and 90+ days receivables from trailer fabricators.

Key financials

2 periods

Q2 FY26

  • Revenue
    ₹130.9 Cr
    YoY -6%
  • EBITDA
    ₹14.8 Cr
  • EBITDA Margin
    11.3%
  • PAT
    ₹8.1 Cr
  • PAT Margin
    6.2%

H1 FY26

  • Revenue
    ₹270 Cr
    YoY -5%
  • EBITDA
    ₹30.9 Cr
  • EBITDA Margin
    11.4%
  • PAT
    ₹18.8 Cr
    YoY +8.7%
  • PAT Margin
    6.9%

What they filed

Q1 FY27: revenue up 32.4%, net profit up 18.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue139 150 185 139 131 −6%177 +18%225 +22%184 +32%
EBITDA18 20 27 16 15 −17%23 +15%34 +26%23 +44%
Net profit10 14 17 11 8 −20%14 +0%22 +29%13 +18%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Tractor-trailer division (Q2 FY26)
    43.6% Revenue Contribution
  • Component business (Q2 FY26)
    56.4% Revenue Contribution
  • Trailer axles and suspensions (H1 FY26)
    41.7% Revenue Contribution
  • Component business (H1 FY26)
    58.3% Revenue Contribution
  • Tractor components (Q2 FY26)
    ₹14 Cr Revenue
  • Exports (H1 FY26)
    4.2% Revenue Contribution24% YoY Growth

Capital allocation

high confidence
  • Capex Capex disclosed
    • Seamless tube project ₹170 Cr
    • Other growth capex (ex-seamless tube) ₹150 Cr
    • Extruded axle plant ₹24 Cr
    Our capacity expansion initiatives are progressing well. Trials for the extrusion plant are already underway and commercial production scheduled to commence by end of Q3 FY26. This will enhance our axle capacity by 50%. Also, construction of our seamless tube unit is on schedule with foundation work for heavy machinery underway and deliveries from our overseas supplier progressing as planned. Our export business continue to build momentum. We have secured purchase orders from leading Tier-1 OEMs in Europe and across two families of parts. Samples have been dispatched and final supplier approval is expected in Q3 FY26. We have also entered the Tipping jack segment to deepen our presence in the trailer ecosystem and diversify revenue streams from Q4 FY26. The facility is fully installed, production of the first batch of Tipping jacks is scheduled in the month of November 2025 itself. Just an update in terms of our IPO proceeds utilization. 84% of the proceeds have already been deployed and the balance 16% we plan to deploy within FY26 as well. So, we have a lot of projects which are coming up, Lakshminarayanan, and in the sense that we've just done our IPO in the month of September 24. And you could as we mentioned in the call, close to 85% of the IPO proceeds have already been spent. INR90 crores was towards the repayment of a loan facility, but apart from that everything is towards the capital expense. We have one of the projects which is the tipping jack project we are getting into in the trailer ecosystem. Apart from that, a very big project in FY27, which we are coming up with is a seamless tube project that's approximately at INR170 crores. So all these units are going to have different asset turn ratio. The tube project is obviously going to be giving us a top line only from FY28 onwards. But the newly launched -- the newly implemented extrusion facility, the tipping jack facility, these are all expenses which are towards capital. In H1 of FY25, we've already spent approximately INR60 crores in terms of capital expense. So there is a lot more which is coming up right now. Okay, the ex of the seamless tube plant will be close to about INR150 crores. See, we have spent approximately INR24 crores on this, not only on the extrusion, but also on the machining setup.
  • Debt Debt disclosed
    • Repayment Repayment of loan facility from IPO proceeds ₹90 Cr
    INR90 crores was towards the repayment of a loan facility, but apart from that everything is towards the capital expense.

Guidance & targets

Volume

  • Exports revenue contribution Volume · FY26 · High confidence 5%
    We remain on track to achieve a full-year revenue contribution of 5%, with a clear roadmap to reach double-digit export share by FY27.

    — Sudhir Rai

  • Tipping jack production Volume · November 2025 · High confidence First batch production
    The facility is fully installed, production of the first batch of Tipping jacks is scheduled in the month of November 2025 itself.

    — Sudhir Rai

  • Tipping jack units sold Volume · FY26 · High confidence At least 600 units
    And till March, we plan to have at least a 600-unit sale for this financial year.

    — Sumeet Rai

  • Tipping jack units sold per month Volume · FY27 · High confidence 300-400 units
    We are targeting 300-to-400-unit volume per month for FY27.

    — Sumeet Rai

Market Share

  • Off-highway OEM segment contribution to revenue Market Share · next two years · Medium confidence 15%
    This supports our goal of increasing this segment's contribution to 15% of our revenue over the next two years.

    — Sudhir Rai

Capacity

  • Extrusion plant commercial production Capacity · end of Q3 FY26 · High confidence Commercial production
    Trials for the extrusion plant are already underway and commercial production scheduled to commence by end of Q3 FY26.

    — Sudhir Rai

Revenue

  • Tipping jack top-line addition Revenue · Per annum for FY27 · High confidence INR 50 crores
    So that will give us a top-line addition of about INR50 cores.

    — Sumeet Rai

Margin

  • Margins Margin · next one or two years · Medium confidence Closer to 15%
    But going forward with the extrusion line and with more exports in the next one or two years, we are looking at margins of approximately closer to 15%.

    — Kunal Rai

Product Launch

  • Extruded axle plant product availability Product Launch · From January onwards (Q4 FY26) · High confidence Product rolling out
    Sir, in Q4, from January onwards, do visit us and you will see the product rolling out of the line from January onwards.

    — Sudhir Rai

Market context

  • Exports revenue contribution Volume · FY27 · High confidence Double-digit
    We remain on track to achieve a full-year revenue contribution of 5%, with a clear roadmap to reach double-digit export share by FY27.

    — Sudhir Rai

What to watch in Q3 FY26

Extrusion plant commercial production

By end of Q3 FY26
Current Trials underway
Target Commercial production commenced

Why it matters

This is a key capacity expansion initiative expected to enhance axle capacity by 50% and contribute to future growth.

Trials for the extrusion plant are already underway and commercial production scheduled to commence by end of Q3 FY26.

Risks & concerns

  • Industry slowdown and postponed purchases

    high

    The announcement of GST rate cut led to customers to postpone purchase from August and September into Q3, impacting the CV business in Q2, with MHCV volumes remaining soft.

    Management acknowledged

  • Cash flow tightness due to high receivables

    medium

    42% of revenue is directly to trailer fabricators, where total receivable days often exceed 90 days, leading to tight cash flow.

    Management acknowledged

  • Underperformance relative to industry growth

    medium

    Analysts questioned why Kross's growth lagged reported industry growth in certain segments, with management attributing it to overall industry slowness and maintaining market share.

    Analyst downplayed

Q&A highlights

3 direct
EV transition readiness and global supply chain strategy Direct
we are in the sector supplying our auto components to the medium and heavy commercial vehicle segment. We are not really in the LCV segment. And this segment, fortunately, isn't threatened really by any electrification yet. ... we have had a strategy of producing in-house rather than relying on offloading, whether it be components that we supply to the OEMs or whether it be for our own designed trailer axles and suspensions, or now whether it be the Tipping jack project that we are setting up.

Addresses a key sector-wide concern (EV transition) by clarifying the company's segment focus and highlights its backward integration strategy for competitive advantage.

Asked by Sucrit Patil

Underperformance in trailer axle segment vs. industry growth Partial
On our axle and suspension segment, it's not that we are losing any kind of market share. The overall industry in the quarter has been very, very slow. ... So, market shares, it seems to be -- it remains to be the same.

Analyst questioned the company's market share given its underperformance relative to reported industry growth. Management attributed it to overall industry slowness and claimed market share stability.

Asked by Mihir Vora

Discrepancy in Kross's growth vs. industry growth in tractor-trailer and tractor components Partial
There has been a decline of H1 versus H1 of approximately 7%. If you look into the quarter versus quarter, we saw in quarter one also, versus the quarter one of FY25, there was a decline of 8.5% to 9%, in fact, in terms of the total tractor-trailer volumes drop. ... If you look into the entire H1 period, it is at approximately 7% drop. And if we look into our market share also, I think we are consistently at around 26%-28% market share.

Analyst pressed on the company's underperformance compared to reported industry growth. Management clarified their comparison basis (prime mover sales and H1 data) where they maintain market share despite an overall industry drop.

Asked by Shubham Batra

Cash flow constraints and high receivables Direct
It's mostly due to the entire slowdown in the cyclical industry, which has been there. Not to forget that 42% of our revenue is directly to these trailer fabricators. In that, basically the total receivable days and everything is more than 90 days. So there is a tight cash flow in terms of --

Identifies a specific operational challenge (high receivables from trailer fabricators) contributing to cash flow tightness, linked to the cyclical nature of the industry.

Asked by Lakshminarayanan

Management's optimism and past statements vs. current flat revenue post-IPO Partial
Look at the amount of our peers who have fallen by 20%, 25%. So we have at least maintained and not lost part of our growth story. ... You're quite right. Sometimes we also ask this question amongst ourselves that why has the growth not been there as it was in the past. ... If you ask me now also, we are optimistic. We have to be able to deliver according to an opportunity. We are not trying to paint a pink cloud in the sky. It's not like that. It is just that we are optimistic about what was happening in the past. It has definitely given us a lot of confidence of growing in that speed. And we aspire to grow at that speed. It is not something to mislead investors.

Analyst directly challenged management on the discrepancy between pre-IPO growth narrative and post-IPO flat revenue, and prior optimistic statements. Management acknowledged flat growth but maintained optimism, attributing it to industry cycles and peer comparison.

Asked by Arun Zawar

Extruded axle plant capitalization and margin impact Direct
It will be in this financial year itself. See, we have already done dry runs. A team of experts on this from China will be expected here in this calendar year itself. And they will do the wet runs where the components are manufactured. ... The cost saving in terms of making the trailer axle with the extruded beam is at approximately 2% to the existing realization value of the axle. So once we do have once we do reach a good production number on the extruded axle beams, it is going to be margin beneficial to us overall.

Provides details on the timeline for the new extrusion plant, its commercialization, and the expected margin benefits (approx. 2% cost saving) from the new technology.

Asked by Pritesh

3 min read 7 chapters

Detailed narrative

Q2 & H1 FY26 Financial Performance Overview

Kross Limited reported a challenging Q2 FY26 with revenues at INR 130.9 crores, a 6% decline compared to Q2 FY25, and an EBITDA margin of 11.3%. For H1 FY26, revenues stood at INR 270 crores, down 5% year-on-year, with an EBITDA margin of 11.4% and PAT of INR 18.8 crores. The decline was primarily attributed to a GST rate cut leading to postponed customer purchases and soft MHCV volumes, though demand picked up meaningfully from Q3.

Strategic Capacity Expansion and New Product Initiatives

The company is actively pursuing growth through capacity expansion and new product initiatives. Trials for the extrusion plant are underway, with commercial production expected by the end of Q3 FY26, which will enhance axle capacity by 50%. Construction of the seamless tube unit is on schedule, and the first batch of Tipping jacks, a new segment to deepen presence in the trailer ecosystem, is scheduled for production in November 2025. These initiatives are expected to drive future revenue streams.

Growing Export Business Momentum

Kross Limited's export business continues to build momentum, contributing 4.2% of H1 FY26 revenue, marking a 24% year-on-year increase. The company has secured purchase orders from leading Tier-1 OEMs in Europe and aims to achieve a full-year revenue contribution of 5% in FY26, with a clear roadmap to reach double-digit export share by FY27. Exports are highlighted as having the best margins for the company.

Industry Outlook and Market Share Stability

Management noted a subdued auto sector for 17-18 months but sees a revival from October onwards with good demand visibility until March. Despite a 7% decline in overall H1 tractor-trailer volumes, Kross claims to have maintained its market share at 26-28%. The tractor business showed double-digit growth in H1 FY26, and the company aims to increase the off-highway OEM segment's contribution to 15% of revenue over the next two years.

Margin Outlook and Cost Control Initiatives

While Q2 margins were weak, management is focused on improving profitability. They are implementing cost-saving proposals, particularly in steel procurement, and expect margins to move closer to 15% in the next one to two years, driven by the new extrusion line and increased exports. The extruded beam technology is anticipated to provide approximately 2% cost savings relative to the axle's realization value, contributing to overall margin benefit.

Capital Expenditure and IPO Proceeds Utilization

The company has deployed 84% of its IPO proceeds, with the remaining 16% planned for utilization within FY26, including INR 90 crores for loan repayment. Key capital projects include the seamless tube project, estimated at approximately INR 170 crores, and other growth capex (excluding seamless tube) of approximately INR 150 crores. The extruded axle plant alone involved a spend of INR 24 crores, with product rollout expected from January onwards.

Cash Flow and Receivables Management

Cash flow has been constrained due to the cyclical industry slowdown. A significant portion of revenue (42%) comes from trailer fabricators, where receivable days often exceed 90 days. Management acknowledged this challenge, noting that the crunch is primarily due to the subdued season, which is now showing signs of improvement.

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