Kross IPO Day 2: GMP, subscription status, review, key dates. Apply or not?

Kross IPO Day 2 subscription status: On the second day of bidding, the IPO for Kross Ltd, an auto parts manufacturer, has been completely subscribed, with retail investors in the lead, and non-institutional investors following closely behind. Kross IPO subscription status is 2.56 times, as per BSE data.

The initial share sale received bids for 3,93,05,334 shares against 1,53,50,877 shares on offer, according to BSE data.

The portion for retail investors received 3.88 times subscription while the quota for non-institutional investors got subscribed 2.87 times. The qualified institutional buyers (QIBs) part is booked 2%.

Kross IPO saw 88% subscription for its initial public offer on the first day of bidding, which was on Monday.

The retail investors category had a subscription of 1.50 times, while non-institutional investors' portion received a 61% subscription.

On Friday, Kross Ltd announced that it raised ₹150 crore from anchor investors. The company has fixed a price band of ₹228 to ₹240 per share.

The total offering is divided such that 50% is set aside for Qualified Institutional Buyers (QIBs), 35% for retail investors, and the remaining 15% for Non-Institutional Investors (NIIs).

Kross specialises in producing and providing trailer axles, suspension assemblies, and a variety of forged and precision-machined high-performance safety-critical components for medium and heavy commercial vehicles (M&HCV) and farm equipment sectors.

The company specialises in producing safety-critical components for the M&HCV segment, along with a wide range of high-performance and safety-critical components for the farm equipment segments. These components encompass axle shafts, companion flanges, anti-roll bars, stabilizer bar assemblies, suspension linkages, differential spiders, bevel gears, planet carriers, inter-axle kits, rear-end spindles, pole wheels, and various tractor components for hydraulic lift arrangements, power take-off (PTO) shafts, and front axle spindles.

Kross IPO Review

SBICAP Securities Ltd

At the price band of ₹240, the company's valuation at a FY24 P/E multiple of 34.5x, based on its post issue capital, is as per the brokerage's analysis. The company's healthy growth track record makes the issue seem reasonably priced. Kross has achieved a CAGR of 44.4% in Revenue, 65.5% in EBITDA, and 91.8% in PAT from FY22-24. The management plans to utilise the IPO proceeds for debt repayment and to fund future growth, ultimately enhancing the company's earnings. For long-term investment purposes, we suggest subscribing to the issue.

Canara Bank Securities Ltd

Kross, previously known as Kross Manufacturers (India) Private Limited, was founded in 1991 and specializes in producing trailer axles, suspension systems, and precision-machined parts for medium and heavy-duty commercial vehicles (M&HCV) as well as agricultural equipment.

The company faces a risk due to customer concentration, with its top five clients contributing over 66% of its revenue in the past three fiscal years.

Despite having a slightly higher P/E ratio of 28.92x compared to the industry average of 26x, Kross's strong potential for future growth, plans for capacity expansion, and strategies for forward integration make this offering seem appealing.

As a result, the brokerage firm recommends SUBSCRIBING to this offering for long-term gains.

Kross IPO details

The Jamshedpur-based company's IPO consists of an offer-for-sale (OFS) by the founders totaling up to ₹250 crore and a new issue of equity shares valued at ₹250 crore. The equity shares that make up the OFS part are valued at up to ₹168 crore for Sudhir Rai and ₹82 crore for Anita Rai.

Kross intends to use the net proceeds of the new offering to pay down debt, support the company's working capital needs, and buy machinery and equipment. Additionally, a percentage will be applied to general business needs.

The Kross IPO's book running lead manager is Equirus Capital Private Limited, and the registrar for the issue is Kfin Technologies Limited.

Kross IPO Day 2 GMP today

Kross IPO GMP today or grey market premium is +48. This indicates Kross share price was trading at a premium of ₹48 in the grey market, according to investorgain.com

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Kross shares was ₹288 apiece, which is 20% higher than the IPO price of ₹240.

According to the grey market activities in the last 8 sessions, today's IPO GMP is on the rise and is anticipated to have a robust listing. The GMP ranges from ₹0 to ₹50, as indicated by experts at investorgain.com.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.