Kross Ltd — Q4 FY25 earnings call

Call held 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

  • 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

  • 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.

Key financials

2 periods

Q4 FY25

  • 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

  • Revenue
    ₹620.4 Cr
    YoY 0%
  • EBITDA
    ₹81.3 Cr
    YoY +0.6%
  • PAT
    ₹48 Cr
    YoY +7%
  • ROCE
    16.7%

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

  • 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

Capital allocation

high confidence
  • Capex Capex disclosed
    • Seamless tube plant ₹167 Cr
    • Enhance forging capacity (2,000-ton screw press commissioned)
    • Enhance machining capacities (CNCs, VMCs)
    The total capex for this plant is estimated at INR167 crores, with a capacity to produce 120,000 tons per annum. (page 4); We are almost doubling our forging capacity. One of our forging presses, a 2,000-ton screw press, has been commissioned in this month. (page 9)
  • Debt Debt disclosed
    debt-to-equity for the period was at 0.1 times. (page 5)
  • 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.
    We would like to inform you that close to 75% of the IPO proceeds have already been deployed by us and the balance 25% will also be fully utilized within the current financial year. (page 5)

Guidance & targets

Market Share

  • Export Revenue Share Market Share · FY26 · High confidence 5%
    are targeting a 5% revenue share from our exports in FY '26.

    — Sudhir Rai

  • Top 5 Customer Revenue Share Market Share · This year (FY26) · High confidence 55%-56%

    From 59% today

    We would like it to be at close to 55%-56% by this year.

    — Kunal Rai

Capacity

  • New Extrusion Line Production Start Capacity · Q2 FY26 · High confidence Q2 FY26
    Equipment arrival is June '25, with production likely to commence in Q2 FY '26.

    — Sudhir Rai

  • Seamless Tube Plant Commercial Production Start Capacity · Q3 FY27 · High confidence Q3 FY27
    The commercial production for this is expected to begin in Q3 FY27, and the business will contribute meaningfully from FY28.

    — Sudhir Rai

  • Axle Production Capacity Capacity · One year · High confidence 7,500 numbers (then up to 10,000 numbers)

    From 3,000 numbers today

    7,500 numbers, firstly. And then we can also go up to 10,000 numbers... So this capacity of 7,500 per month from whatever volumes you are doing at about 3,000. This journey should finish in how many years? One year.

    — Kunal Rai

Product Launch

  • Tipping Jacks Introduction Product Launch · H2 FY26 · High confidence H2 FY26
    we are expanding our product portfolio with the introduction of Tipping jacks by H2 FY '26

    — Sudhir Rai

  • Extruded Axle Product Readiness Product Launch · July · High confidence July
    But only once we have the product ready, that is in by July, we'll have the product ready.

    — Kunal Rai

Volume

  • Tipping Jacks Sales Volume (Indian market) Volume · Coming years · Medium confidence 800 units per month

    From 300 to 400 units (H2 FY26 initial target) today

    And we are hoping that in H2 of this FY '26, we sell, at least, 300 to 400 tipping jacks or we sell at least, I would say, 800 tipping jacks for the Indian market. We would like to reach a volume of 800 per month in the coming years.

    — Sumeet Rai

Profitability

  • Export Contribution for Margin Expansion Profitability · Not specified · Medium confidence 15% of revenue
    That would be approximately when the exports reach at around 15%. Is when we feel that it would enhance our margins further.

    — Kunal Rai

What to watch in Q1 FY26

New Extrusion Line Production Start

Q2 FY26
Current Equipment arrival June '25
Target Production 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.

Risks & concerns

  • Delays in New Extrusion Line Timelines

    medium

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

    Management acknowledged

  • Stretched Working Capital

    medium

    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

  • Overall Trailer Market Decline

    medium

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

    Management acknowledged

Q&A highlights

8 direct
EMS Manufacturing Plan Direct
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

Tipping Jacks Business - Market Size and Volumes Direct
30% to 35% of the overall trailers produced would be tipping trailers according to our market knowledge... And we are hoping that in H2 of this FY '26, we sell, at least, 300 to 400 tipping jacks or we sell at least, I would say, 800 tipping jacks for the Indian market.

Provides context on the market size for the new tipping jacks product and specific sales volume targets for H2 FY26 and the coming years.

Asked by Mihir Vora

Tipping Jacks Business - Competition Direct
There are companies who manufacture these tipping jacks. There is a company called Hyva that has been in this industry from the beginning. There is also a company called Hidromas. These two are the market shareholders. And the third company which is present in this market is Wipro Hydraulics Division.

Identifies key established competitors in the newly entered tipping jacks segment.

Asked by Mihir Vora

Trailer Market Growth & Kross's Volume Growth FY25 Direct
on the overall trailer volume increase, there has been no increase in the overall volumes. In fact, we feel that there has only been a reduction. I think the overall trailer market, if I'm not mistaken has reduced by close to 3% to 5% on overall volumes... in terms of value we had done INR269 crores of revenue in FY '24. And in FY '25, we have done INR274 crores revenue. The axles more or less have been quite similar. We've sold close to 31,000 axles in FY '24 and we've sold close to 32,500 axles in FY '25.

Highlights that Kross grew its revenue and axle volumes in FY25 despite an overall market decline, suggesting market share gains or better realization.

Asked by Pritesh Shah

New Axle Line Margin & Pricing Direct
It's a better product with a better margin. And we would like to retain that margin with us since we're offering the fabricator a better product. Now, whether we need to change the price, that we'll see according to the market scenario, but the company would like to sell it at the existing price and have better margins on it for sure.

Indicates potential for margin expansion from the new extrusion line due to a superior product that can command better margins even at existing prices.

Asked by Pritesh Shah

Axle Capacity Post New Line Direct
7,500 numbers, firstly. And then we can also go up to 10,000 numbers... So this capacity of 7,500 per month from whatever volumes you are doing at about 3,000. This journey should finish in how many years? One year.

Quantifies the significant increase in axle production capacity and provides a timeline for achieving higher volumes, indicating future growth potential.

Asked by Pritesh Shah

Diversification from Top 5 Customers Direct
Sir, it is a strategy to diversify. It was earlier, two years back, it was close to 68%. Then it has reduced to 64%, 65%. Now it has come down to 59%. Now we are diversified into mostly three segments... We would like it to be at close to 55%-56% by this year.

Confirms a strategic effort to reduce customer concentration, providing specific targets for this diversification to mitigate risk.

Asked by Akshay Rane

Working Capital Increase Direct
The trailer business, at least for the first three quarters, has been extremely slow. And that is where we wanted to, you know, sell strong. And we've had to give out more credit to the fabricators to maintain our sale and to maintain our market share. Also, in quarter four, we feel that it is coming down. Our receivable days as far as in quarter four over quarter three have reduced.

Explains the reason for stretched working capital (slow market leading to extended credit) and notes recent improvement in Q4, indicating management's focus on this area.

Asked by Mihir Vora

2 min read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.
View original transcript

More Automobile and Auto Components earnings calls