Kross Ltd Q4 FY25 Earnings Analysis

- Targeting 15% export revenue contribution in the next 2-3 years, up from current ~5%. - Expecting double-digit growth in exports driven by new product lines and export orders, fueled by the China Plus One strategy. - Domestic trailer axle and suspension business volumes stable with ~7,500-8,000 axles per quarter; order book improving in Q4 and beyond. - New extrusion plant launch expected to be a game changer, enabling higher tonnage axles and opening new markets. - Expansion into new geographic regions and segments like car carriers and tag axles planned, supporting volume growth. - Overall FY25 revenue expected to be flat to slightly better than previous year; FY26 growth dependent on commercial vehicle sector recovery. - Focus on premium, higher-margin export and new product segments to drive volume and revenue growth beyond flat domestic market.

- Kross Limited expects 15% export revenue contribution in the next 2-3 years, driving growth. - With new product launches (18-ton axle, lower capacity suspensions, car carrier axle/suspension), a 15-20% growth is targeted next year. - Expansion of extrusion plant and seamless tube facility (INR170 crore capex) will enhance margins and product offerings, starting production soon and completing seamless tube project by mid-FY27. - Export margins are significantly higher, with EBITDA of 20-22% in export business vs domestic. - Domestic volumes improving, with Q4 FY25 showing better OEM orders and improved component demand, possibly better than previous year despite industry softness. - EBITDA margin expected to improve beyond current 13.1%, driven by exports and operational efficiencies. - Overall PAT margin has improved to 7.1% in 9M FY25 with 8.9% PAT growth; forward outlook likely positive.

- Current capex as per IPO plans is approximately INR 70 crores, mainly for forging capabilities, new foundry lines, and machines to ramp up export production. - Major upcoming capex is the seamless tube plant project in Adityapur Industrial Area, Jharkhand, valued at around INR 170 crores, starting Q4 FY25 with majority in FY26. - The seamless tube project targets mid-FY27 completion, aiming for backward integration and cost savings (~3-4% cost reduction). - Investment in an extrusion plant (arrival expected by early March) to increase trailer axle and suspension assembly capacity from 5,000 to 7,500 units/month; this will enable entry into tag and dead axle segments. - Strategic focus on expanding export business (targeting 15% revenue from exports in 2-3 years) with new alliances and product launches, supported by these capex projects.

- Kross Limited plans an investment of approximately INR167 crores to enter seamless tube manufacturing at Adityapur Industrial Area, Jharkhand. - This investment will be funded through a mixture of debt and internal accruals. - No specific details on new equity fundraising were mentioned in the call. - The company is progressing with capex financed partly from IPO proceeds but major upcoming capex, especially the seamless tube project, will involve debt. - No explicit announcement of fresh equity issuance or other fund-raising measures was made during the earnings call.

- The order book for February is approximately 4,000 axles. - In January, there was a noticeable growth in orders. - The company is operating at around 80% capacity of its 5,000 monthly axle production capability. - Demand in Q4 is strong, supported by a good order book and increasing inquiries. - The trailer and suspension business has maintained market share and even grown in certain regions like Rajasthan. - The company is expanding product offerings and geographic reach to fuel order growth. - New product launches such as the 18-ton axle and car carrier suspension are expected to contribute to increased demand. - With new product lines and expansions in place, the order book and volumes are expected to grow further in coming quarters.