Cross Limited’s IPO: Strong Investor Response and Future Prospects
The Initial Public Offering (IPO) of Cross Limited, a notable manufacturer of trailer axles and suspension assemblies, has attracted significant interest from investors, highlighting the growing demand for high-quality automotive components in India. As of the last subscription day, this IPO was oversubscribed by an impressive 16.69 times, with bids totaling 25.61 crore shares against the 1.53 crore shares up for grabs. The company aims to raise Rs 500 crore through the IPO, with shares priced in a range between Rs 228 and Rs 240. Cross Limited is set to make its debut on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on September 16.
IPO Subscription Details
| Investor Category | Subscription Rate |
|---|---|
| Qualified Institutional Buyers (QIBs) | 23.32 times |
| Non-Institutional Investors | 22.20 times |
| Retail Investors | 10.53 times |
| Total Subscription | 16.69 times |
As of September 11, 2024, the enthusiastic response from institutional and retail investors underscores the market’s confidence in Cross Limited’s growth trajectory.
Key Details on Kross IPO
The Kross IPO consists of new share offerings worth Rs 250 crore alongside an offer for sale valued at Rs 250 crore. Key figures in the company, Sudhir Rai and Anita Rai, are set to sell shares as part of this public offering, with Sudhir Rai offering shares worth Rs 168 crore and Anita Rai Rs 82 crore. The allocation for the IPO is designed to cater to various investor classes; 50% is reserved for qualified institutional buyers, 15% for non-institutional investors, and the remaining 35% for retail investors.
Investors can expect share allotment results by September 12, with equity shares credited into demat accounts by September 13.
Market Performance and Predictions
On September 9, the Cross Limited IPO was observed to be trading at a premium of Rs 50 in the gray market, which suggests a potential listing price of Rs 290 per share. Should this forecast materialize, it indicates a profit potential of approximately 20.83% for investors at the IPO price.
Utilization of Funds
The company plans to appropriate Rs 70 crore from the IPO proceeds for purchasing new machinery and equipment, while Rs 30 crore will be directed towards further working capital needs. Additionally, Rs 90 crore is earmarked for debt repayment. The remaining capital will be allocated for general corporate uses. As of June 2024, Cross Limited reported a total debt of Rs 128.63 crore, positioning itself to significantly reduce its liabilities following the IPO.
About Cross Limited
Founded in Jharkhand, Cross Limited specializes in manufacturing forged and precision machined components critical for safety in medium and heavy commercial vehicles (M&HCV) and farm equipment. Predominantly, 89% of its revenue stems from the M&HCV segment, with the farm equipment division contributing 9%. Competing with established players like Automotive Axles, GNA Axles, Ramkrishna Forgings, Jamna Auto Industries, and Talbros Automotive Components, Cross Limited has established a solid footing in a competitive landscape.
Financial Performance
Cross Limited has demonstrated robust financial growth over the past fiscal year. Its net profit surged by 45.1% to Rs 44.9 crore in FY24, while revenue increased by 27% to Rs 620.3 crore. The company’s EBITDA climbed by 40.4% to reach Rs 80.8 crore for the financial year ending in March 2024, with margins expanding by 120 basis points, bringing it to 13% compared to FY23. This impressive financial performance not only underscores the company’s operational efficiency but also boosts investor confidence ahead of its IPO.
