India Ratings Affirms Kross Ltd's Bank Loan Facilities at 'IND A'/Stable; Assigns Ratings for Additional Limits

India Ratings Affirms Kross Ltd's Bank Loan Facilities at 'IND A'/Stable; Assigns Ratings for Additional Limits​

India Ratings and Research (Ind-Ra) has announced rating actions on Kross Limited's (KL) bank loan facilities, affirming the existing limits and assigning ratings for additional funding capacity.

The rating action covers two key instruments. The existing bank loan facilities retain the 'IND A/Stable/IND A1' rating and are affirmed, while the additional limits have been assigned the same rating.

Key Drivers and Financial Performance​

The ratings assigned by Ind-Ra are based on the agency's expectations of sustained revenue growth over FY27-FY28, supported by healthy profitability and credit metrics.

The company reported steady revenues and resilient operating profitability with rangebound EBITDA margins over FY24-FY26. Furthermore, KL's credit metrics showed improvement in FY25-FY26, which was influenced by the utilization of IPO proceeds to largely repay debt, consequently reducing the interest burden and improving coverage indicators.

KL continues its investment trajectory, which includes increasing existing capacities and developing new products. The agency notes that the company's deleveraged balance sheet and healthy cash balance are expected to support its credit profile even if the auto industry experiences a downturn.

Strengths supporting the rating include:

• Improvement in scale of operations and operating margins, which are likely to sustain in the medium term.
• Product diversification and innovation.
• Established market position.
• Comfortable credit metrics.

Weaknesses noted are:
* The cyclical nature of the automobile industry.

Operational and Financial Highlights​

Kross Limited, a mid-sized player in the auto ancillary market, caters to large original equipment manufacturers (OEMs). The company's revenue in FY26 grew 8.5% year-on-year (yoy) to INR6,732 million (compared to INR6,204 million in FY25). Its absolute EBITDA grew 8.2% yoy to INR879 million in FY26.

The company's revenue saw a flat performance in FY25, as increased volumes in the trailer axle business were offset by muted demand in specific component categories. Ind-Ra expects revenue to improve significantly from FY27 onwards, driven by key initiatives like the launch of the tipping jack, commissioning of the axle beam extrusion plant, and the expansion of forging capacity.

Key Financial Indicators:

Growth Strategy and Market Position​

KL benefits from a diversified product portfolio, serving both the commercial vehicle and tractor industries. The company is fully backward integrated, owning its foundry division and having a comprehensive product range of axles and suspension systems (both mechanical and air suspension).

The company has strengthened its positioning within the trailer ecosystem with the launch of the tipping jack. Furthermore, the commissioning of the axle beam extrusion plant in February 2026 and the completion of the seamless tube plant are expected to further strengthen its backward integration, while surplus capacity may cater to the oil and gas sector.

KL is an established player with over 25 years in the auto ancillary industry, maintaining strong relationships with major OEMs, including Tata Motors Limited, Ashok Leyland Ltd., and TAFE Limited.

Liquidity and Capital Expenditure​

As of FY26, KL had cash and equivalents of around INR254 million. The company recorded capital expenditure (capex) of INR1,002 million during FY26. The company plans for additional capex ranging from INR1,000 million to INR1,500 million during FY27, primarily targeted towards expanding its seamless tube capacity.

The net adjusted leverage (adjusted debt/operating EBITDA) stood at 0.72x in FY26, down from 1.71x in FY24. Gross interest coverage improved to 10.9x in FY26, up from 5.4x in FY24.

The auto industry remains cyclical, with demand linked to overall economic growth. However, the recent revival in the commercial vehicle segment, supported by GST rationalization, is expected to provide positive momentum in the near term.

KROSS Stock Price Movement​

As of 11:55 AM, shares of Kross Limited are shedding 0.16% in live trading, trading down ₹0.30 to reach ₹188.8. The stock has seen 94,479 shares traded so far, indicating steady selling activity during the session.