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    Kross Ltd

    KROSS
    Automobile and Auto Components·19 May 2025
    Management Summary

    Kross Ltd reported a strong Q4 FY25 with revenue growing 23.3% QoQ and EBITDA margin expanding to 14.5%, driven by healthy demand and record monthly trailer production. The company is investing significantly in a new extrusion line and a seamless tube plant, and is expanding its product portfolio with tipping jacks, while also targeting increased export revenue. Despite some delays in new project timelines and stretched working capital, management is optimistic about FY26 growth.

    Highlights

    5
    • Q4 FY25 revenue grew 23.3% QoQ to ₹185 crores, improving over Q3 and meeting expectations.

    • Q4 FY25 EBITDA margin improved to 14.5%, up from 13.1% in Q3 FY25.

    • FY25 PAT increased by 7% YoY to ₹48 crores, with PAT margin at 7.7%.

    • Achieved highest-ever monthly trailer production and sales of nearly 4,200 units per month in Q4 FY25.

    • Targeting a 5% revenue share from exports in FY26, up from 3.2% in FY25.

    Concerns

    3
    • Delays in timelines for the new extrusion line due to logistic challenges, with production now expected in Q2 FY26.

    • Working capital was stretched in FY25 due to extended credit to fabricators during a slow trailer business period.

    • The overall trailer market reduced by 3% to 5% on volumes in FY25.

    What Changed2

    vs Q1 FY26

    Guidance items14 → 9 (-5)Risks discussed5 → 3 (-2)
    Key financials

    Metrics

    8

    Periods

    2

    Q4 FY25

    4
    • Revenue
      ₹185 Cr
      QoQ+23.3%
    • EBITDA
      ₹26.8 Cr
      QoQ+35.8%
    • EBITDA Margin
      14.5%
    • PAT
      ₹17.1 Cr
      QoQ+26.1%

    FY25

    4
    • Revenue
      ₹620.4 Cr
      YoY0%
    • EBITDA
      ₹81.3 Cr
      YoY+0.6%
    • PAT
      ₹48 Cr
      YoY+7.0%
    • ROCE
      16.7%

    Segment breakdown

    Trailer Axles and Suspensions (FY25)
    44.1% Revenue Contribution
    Other Businesses (Exports, CV Components, Tractor Components) (FY25)
    55.9% Revenue Contribution
    Export Sales (FY25)
    3.2% Revenue Contribution₹19.7 Cr Revenue
    List

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Debt disclosed

    Liquidity

    Liquidity disclosed

    Close to 75% of the IPO proceeds have already been deployed, with the balance 25% to be fully utilized within the current financial year.

    Guidance & targets

    9
    CategoryTargetPriority
    Market Share
    Export Revenue Share
    5%
    High
    Market Share
    Top 5 Customer Revenue Share
    55%-56%
    High
    Capacity
    New Extrusion Line Production Start
    Q2 FY26
    High
    Capacity
    Seamless Tube Plant Commercial Production Start
    Q3 FY27
    High
    Capacity
    Axle Production Capacity
    7,500 numbers (then up to 10,000 numbers)
    High
    Product Launch
    Tipping Jacks Introduction
    H2 FY26
    High
    Product Launch
    Extruded Axle Product Readiness
    July
    High
    Volume
    Tipping Jacks Sales Volume (Indian market)
    800 units per month
    Medium
    Profitability
    Export Contribution for Margin Expansion
    15% of revenue
    Medium

    New Extrusion Line Production Start

    Q2 FY26
    CurrentEquipment arrival June '25
    TargetProduction commenced

    Why it matters

    This project is key for capacity expansion and potential margin enhancement from a superior product.

    Equipment arrival is June '25, with production likely to commence in Q2 FY '26.

    How to verify

    detailed_narrative

    Risks & concerns

    3
    RiskSeverity

    Delays in New Extrusion Line Timelines

    Timelines for the new extrusion line have faced delays due to logistic challenges, pushing production commencement to Q2 FY26.Management acknowledged

    medium

    Stretched Working Capital

    Working capital was stretched in FY25 due to the need to extend credit to fabricators to maintain sales and market share during a slow trailer business period.Analyst acknowledged

    medium

    Overall Trailer Market Decline

    The overall trailer market experienced a reduction of 3% to 5% in volumes during FY25.Management acknowledged

    medium

    Q&A highlights

    8

    “You see, we are not manufacturing electronic goods, okay? Our trailer axle has certain electronic components like the ABS, which we will be manufacturing in the electronic unit where we have our plant, okay? We are not into electronic equipment. Rather, some electronics are used in the trailer axle, which we will be making over there.”

    Clarifies that the company's involvement in electronics is limited to components for its own trailer axles, not general Electronic Manufacturing Services (EMS).

    asked by Rohit Singh

    2 min read5 chapters

    Detailed Narrative

    01

    Strong Q4 FY25 Performance and FY26 Momentum

    Kross Ltd delivered a robust Q4 FY25, with revenue growing 23.3% sequentially to INR 185 crores and EBITDA margin expanding to 14.5% from 13.1% in Q3. This performance was driven by healthy demand, leading to a record monthly trailer production and sales of nearly 4,200 units per month. The company anticipates this positive momentum to continue into FY26, with April volumes holding strong, consistent with the close of FY25.

    02

    Strategic Capacity Expansion and Product Diversification

    The company is undertaking significant capital expenditure, with 75% of IPO proceeds already deployed and the remainder to be utilized in FY26. Key projects include a new extrusion line, expected to commence production in Q2 FY26, and a seamless tube plant with a capex of INR 167 crores, targeting commercial production by Q3 FY27. Kross is also expanding its product portfolio with the introduction of Tipping jacks by H2 FY26, aiming for 800 units per month in the coming years, leveraging its existing customer base.

    03

    Export Growth and Market Diversification Initiatives

    Kross closed FY25 with export revenues of INR 19.7 crores, representing 3.2% of total revenue, and aims to increase this to 5% in FY26. The company is also strategically diversifying its customer base, targeting a reduction in revenue contribution from its top five customers to 55-56% by FY26, down from 59% currently. Management believes exports reaching 15% of revenue will significantly enhance overall margins, and the new extruded axle product, ready by July, will enable further export opportunities.

    04

    Financial Performance for Full Year FY25

    For the full fiscal year 2025, Kross reported total revenue of INR 620.4 crores, which was flat year-on-year. EBITDA stood at INR 81.3 crores, a modest 0.6% increase over FY24, with EBITDA margin at 13.1%. PAT grew 7% to INR 48 crores, resulting in a PAT margin of 7.7%. The company maintained a strong balance sheet with ROCE at 16.7% and a low debt-to-equity ratio of 0.1 times, reflecting operational resilience.

    05

    Working Capital Management and Market Dynamics

    The company acknowledged that working capital was stretched in FY25, primarily due to extending credit to fabricators during a slow trailer business period in the first three quarters. However, receivable days improved in Q4 FY25 compared to Q3. The overall trailer market experienced a 3-5% reduction in volumes in FY25, but Kross managed to increase its axle sales to 32,500 units in FY25 from 31,000 in FY24, indicating resilience in a challenging market.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.