Cross Limited IPO Overview
Cross Limited, a prominent manufacturer specializing in trailer axles and suspension assemblies, recently initiated its Initial Public Offering (IPO) aimed at raising ₹500 crore. As of the first day of bidding, this IPO has been subscribed 0.88 times, indicating a measured interest from investors.
IPO Subscription Details
On opening day, the public issue received bids for a total of 1.35 crore shares against the 1.53 crore shares available. Bidding for the IPO began on September 9, 2024, and will close on September 11, 2024. Investors can place their bids within a price band ranging from ₹228 to ₹240 per share. The shares are anticipated to be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on September 16, 2024.
| Investor Category | Subscription Rate |
|---|---|
| Qualified Institutional Buyers (QIB) | 0 |
| Non-institutional Investors | 0.61 times |
| Retail Investors | 1.50 times |
| Total | 0.88 times |
Kross IPO Highlights
The Kross IPO comprises new shares worth ₹250 crore along with an offer for sale (OFS) of another ₹250 crore. Sudhir Rai and Anita Rai are the promoters of the company. Within the OFS, Sudhir Rai is offering shares worth ₹168 crore while Anita Rai is offering shares valued at ₹82 crore. The allocation of shares will follow a structured format: 50% reserved for qualified institutional buyers, 15% for non-institutional investors, and 35% for retail investors. Successful applicants can expect allotment notifications by September 12, and shares will be credited to investors’ demat accounts by September 13.
Market Response and Gray Market Performance
As of September 9, 2024, the Cross Limited IPO is trading at a premium of ₹48 in the gray market. This pricing suggests a potential listing price of ₹288, which could yield a profit of approximately 20% for investors.
Utilization of IPO Proceeds
The funds raised through the IPO will be strategically allocated to enhance the company’s operational capabilities. Specifically, ₹70 crore is earmarked for the purchase of new machinery and equipment, while ₹30 crore will address further working capital needs. Additionally, ₹90 crore will be directed towards debt repayment, significantly reducing the company’s total debt, which stood at ₹128.63 crore (excluding vehicle loans) as of June 2024.
Cross Limited’s Business Profile
Cross Limited, based in Jharkhand, focuses on manufacturing forged and precision machined safety-critical parts for medium and heavy commercial vehicles (M&HCV) and farm equipment segments. The company has established a strong market presence, accounting for approximately 89% of its revenue from the M&HCV sector and the remaining 9% from farm equipment.
Financial Performance
In recent years, Cross Limited has demonstrated impressive financial growth. For the fiscal year 2024, the company’s net profit surged by 45.1% to reach ₹44.9 crore, while revenue experienced a substantial 27% increase, totaling ₹620.3 crore. Furthermore, the EBITDA also showed a robust growth of 40.4%, culminating in ₹80.8 crore for the year ending March 2024, with margins improving by 120 basis points to stand at 13% compared to FY23.
