Kross Ltd (NSE: KROSS) Q3 2026 Earnings Call dated Jan. 30, 2026
Corporate Participants:
Kunal Rai — Whole Time Director and Chief Financial Officer
Sudhir Rai — Chairman and the Managing Director
Sumeet Rai — Whole time Director
Analysts:
Unidentified Participant
Mihir Vora — Analyst
Aakash — Analyst
Ankur Poddar — Analyst
Pritesh — Analyst
Shubham Gupta — Analyst
Bhargav Buddhadev — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Q3FY26 Cross Limited Results Conference call hosted by Equidistant Securities. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Meer Vora from Ecodis Securities. Thank you. And over to you Mr. Vora. Yeah.
Mihir Vora — Analyst
Yes. Thank you. Neer. Good afternoon everyone. On behalf of Equidistant Securities I welcome you all to the Q3 SI26 conference. Call of Cross Limited. From the management side we have with us Mr. Sudhir, Chairman and Managing Director, Mr. Sumit, whole time Director and Mr. Punar, full time Director and CFO. So without further ado, I now hand. Over the floor to management for opening remarks. Over to you sir.
Sudhir Rai — Chairman and the Managing Director
Yeah. Thank you. Me? Good afternoon everyone. Thank you for joining us on this earnings call of Cross Limited for the quarter and nine months ended December 25th. Along with me I have Mr. Sumit Rai, Whole Time Director. Mr. Kunal Rai, Whole Time Director and. CFO as well as other senior team. Members and our Investor Relations Advisor, Strategic Growth Advisors. Let me first update you on the performance of. On the performance and the industry which we operate for the quarter and nine months gone by. Supported by a favorable microeconomics backdrop including. GST rationalization, a healthy monsoon, a steady. Improving demand environment, the company delivered a strong performance during the third quarter of FY26. Revenues for Q3. FY26 stood at 177.5 crores. This between Q2 and Q3 of FY26 has seen an increase of 37%. And if you compare it with our.
Our year on year Q3 results it is 18.3%. Our EBITDA also has seen a growth. Margin and its current margin is 13.2%. For the nine months ended FY26 the company reported a revenue of 447.8 crores reflecting a year on year growth of approximately 3%. EBITDA for the period stood at 54.4. Crores with a margin at 12.1%. Underscoring. Sustained operational discipline despite a transitional. Demand environment In the early part of. The year. For the first time in seven quarters, the company witnessed growth in the MNHCV segment. The segment has remained subdued over the past seven quarters. However, from October 25 onwards, both key. OEM, Tata Motors and Ashok Leyland have. Reported sharp increase in production volumes. The production projections for Q4FY26 is also encouraging.
The increased demand within the MNS CV segment is largely driven by dumper tipper. And prime movers which is well aligned. With the company’s product portfolio. As a result, the company expects H2FY26 revenues from MNS CV segment to be significant higher than H1 FY26. The company’s capacity expansion initiatives continue to progress in line with the planned timeline. Trials for the axle beam extrusion plant are currently underway with commissioning expected by February 26th. Upon commissioning, the facility is expected to enhance axle manufacturing capacity by approximately 50%. In addition, construction of the seamless tube facility has been completed. During the quarter, the company further diversified its product portfolio with the launch of a key product in the trailer segment, the Tipping Jack.
This addition is expected to strengthen the company’s positioning within the trailer ecosystem and provide incremental revenue opportunities. Beginning FY27, the manufacturing facilities for the product has been fully installed, production has commenced and the product is currently undergoing validation phase. The company also expanded its forging capabilities by commissioning a 2000 ton screw press, 1000 ton screw press and now additionally a 1600 screw press is under commissioning. And it will be completed in the month of February. These investments expected to enhance our forging capacity, improve operational efficiency and support future growth across product segments. On export front, the company achieved meaningful progress during this period. Purchase orders were secured from a leading Tier one company in Europe across two distinct product families. Samples were successfully dispatched and the supplier has approved and the supplier approval has been obtained for one family of parts against which trial orders have already been received. Exports contributed 4% of our total revenue during FY, that is for the nine months registering a growth of 14%. The company remains confident on achieving its full year export contribution of 5% and has laid out a clear roadmap to scale exports to Double digit by FY27.
The trailer segment has also witnessed a noticeable pickup in demand, further supporting volume growth in the second half of the year. The company added five new fabricator customers during the quarter. Continued focus on expanding the fabricator customer base and further strengthening the market penetration and improving demand visibility in this segment, the agri sector is operating at a high level of activity. The Company’s tractor segment delivered healthy revenue growth of 16% during the nine months of FY26 with strong momentum carrying into Q4. We have also witnessed an earlier than usual improvement in the schedule visibility, with OEM production schedules increasing meaningfully from February itself which typically accelerates from April.
Over the next two years, the company aims to increase the tractor segment contribution to approximately 15% of its revenue. Overall customer engagement continued to reflect a strengthening demand environment evidenced by higher production schedules and increased inward volumes. This positive movement has extended into quarter four with schedules for the quarter remaining healthy. Combined with improving working capital cycle, new product launches, a healthy order book pipeline and ongoing capacity expansion, the company remains confident of delivering a strong performance in the fourth quarter of FY26.
With this, I’d like to hand over the call to Mr. Kunal Rai to update you on the financial performance for. The quarter and nine months ended 12-31-25.
Kunal Rai — Whole Time Director and Chief Financial Officer
Thank you. Hi good afternoon everybody. Let me take you through the financials and take a moment to walk you through all the key performance indicators. Speaking about the quarter three first revenue for US stood at 177.5 crores reflecting a growth of 18.1% on a year on year basis. EBITDA for the quarter stood at 23.5. Crores representing a year on year growth of 18.9% compared to 19.7 crores in quarter three of FY25. EBITDA margins for this quarter stood at 13.2%. Profit after tax came at 14 crores as compared to 13.6 crores in Q3. FY25 reflecting a growth of approximately 3% and the margins for this quarter are at 7.9%.
The revenue contribution in terms of a sales mix from trailer axles and suspensions stood at 40.7% while the other component business which includes CV components, expansion and tractors stood at 59.3% in quarter three. For a nine month period the revenue. Stood at 447.8 crores which is approximately a growth of 2.8% on a year. On year basis EBITDA stood at 54.4. Crores as compared to 54.5 crores in nine month period of FY25. EBITDA margins for the nine months were at 12.1%. PAT came in at 32.8 crores as compared to 30.9 crores in nine month FY25. Reflecting a year on year growth of 6.1%.
The PAT margins stood at 7.3% for. The sales mix for the nine month period, the revenue contribution from the trailer, axle and suspension business stood at 41.3%. While the rest is at 58.7%. Just to update our investors on our IPO proceeds, we have approximately spent 90% of the proceeds. These have already been deployed and the balance 10% will fully be deployed within FY26 which has been previously guided by us. We thank everyone for their continued support and we now can open the floor for further questions and answers.
Questions and Answers:
operator
Thank you very much. We’ll now begin with the question and answer session. Anyone who wishes to ask a question, may you press star and one on attached on telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue ascended. Participants, you may press star and one to ask the question. First question is from line of Aakash from NV Alpha Fund Management. Please go ahead.
Aakash
Yeah, thanks for the opportunity. Sir. Two questions from my side. Firstly on the new product we launched for Tipping Jack, which we did in December, I guess so just wanted to understand about the product acceptance currently. What are the, I mean what kind of validations will be required, where are we currently at that stage and you know, what are the breakeven volumes we’ll be requiring and when do we target to achieve those breakeven. So yeah, just if you could give some color on that.
Kunal Rai
So you see, we started this project. In this financial year only. In fact. We started installing all the. Equipment in April, May, June, July and. During this very short period we have come into production. Now since we are already in this. Trailer segment business and the product will. Be used by the same customers as. The fabricators, our existing fabricators for their trip trailers. So. But what, what is correct, how it is to be done is we have technology. Hello, Am I audible?
operator
Yes sir, go ahead. There was some disturbance from the participants line. I muted the line. You can go ahead.
Kunal Rai
Okay, so after, during the installation of this plant which has taken us up. To, you know, October. Yeah, October this year we had the whole plant installed. Now the product is under validation with a few of our known customers who are willing to use the product and also give us the feedback on its performance. We will like to launch this product sometime in January or February this year. We have already dispatched close to about 35 or 40 assemblies in the field. And. As far as our capacity for. Manufacturing, this Tipping Jack is close to. 800 assemblies a month. It will take us maybe the whole. Financial year FY27 to come to the peak capacity. But otherwise currently we add, I think so close to 350 to 400 units. That is from the time way we will, we will start producing in bulk.
Currently we are awaiting our validation of this. It’s a highly safety item. So we have to go through the process of validation. Unfortunately you don’t have an external agency. Like ARAI which validates this. Okay. In fact, validation of the trailer axle is done by ar, but not for the tipping jack. So here the validation has to be done by us. The second part of the business will start maybe in the next one and. A half years after 18 months when we will approach all the OEMs also for this product. So there is going to be a long story of, of development on this, on this assembly.
Aakash
Understood, sir. Just if you could indicate what sort of volumes are we planning for this year. That is FY27. Before I move on to my second question.
Kunal Rai
So like we had indicated to you. That we will reach our peak peak. Capacity within a year. That is 800. So in Q1 we will produce close to 750 units. That is an averaging of 250 units a month. Okay. And. As far as producing the components are concerned, I told you we have. A laid out capacity of 400 unit a month. When we can take it up to 800 units a month, that is when. We go to the peak capacity.
Aakash
So at what utilization? Utilization we break even generally like what level.
Kunal Rai
So it’s like this, you know, we. Have a utilization, you know, for all the brackets which are used. We are doing the castings ourselves. All the trunnions which are used, we are doing the casting and forging ourselves. There is a lot of backward integration available with us. So it’s very difficult to, you know, say what is the utilization? There are dedicated, you could say six. Seven machines which are for this application. But we have to get all the child parts, all the inputs, all the pumps and all that ready. That is where the problem is. I mean as far as the top limit is concerned, in fact for this quarter, that is Q4, we have a plan to do 300 units. Also we have a plan for Q4 of this financial year to do 300 units.
Aakash
Understood. So just if we want to understand the product at a margin level and margin level. Consolidated that we do as compared to a tipping jack as far as margins.
Kunal Rai
You know, we have, we have, let’s say a total backward integration. When our tubes are going to be made, we will have the seamless tubes also. Okay. Even we will be backward integrated to that extent. We have all the forgings, the castings and all proprietary items like pumps and valves. They are going to be bought out. For us and also our competitors.
Okay. Now as far as margins are concerned, we cannot price ourselves more than say the market leaders. So we have to take margins at a time. Once we, you know, penetrate into the, into this marketing and be a number two player then we can talk in what type of margins we will earn. But just predicting our margins when we are producing 200, it doesn’t make any sense. We are looking at the bigger picture. We are looking at this contributing to our top line in the next two years. A hefty amount and margins should be calculated looking at that, not what we are doing currently.
Aakash
Right? Understood. Just one last question before I move on to the queue sir. On a nine month level, nine month basis, if we compare our other expenses as a percentage of sales, I think it has moved up significantly by almost 250 300bps. So I mean, I mean what could be our levers to you know, reinstate our EBITDA margins to our initial levels? I think we had issued around a. 15% kind of a level last year. In March in a similar scale of top lines. Right?
Kunal Rai
Yeah. So just speaking on the other expenses, if you look at, look into it as a percentage. Firstly, you know our other expenses for quarter three of FY25 were at approximately 24.5% which has now gone up to 26.5%. If you look into the preceding quarters of quarter one and quarter two, they all stand at around 26.5% and in fact 28% for quarter two as well. Now just to give a little flavor on the other expenses which basically constitute into these are a large variety of consumables and spares.
Now we have a lot of ongoing projects. You know, things like the extrusion, new components for the exports, that is for Liex. Even the tipping jack business which has just started off, there is a lot of consumables like the tooling and everything which goes into for these which have basically, you know, come into our cost but not reflecting in terms of our top line yet. And once we do start these projects, you know, from quarter four and quarter one onwards, you’ll see these expenses remaining the same. Whereas our top lines will go further up and then we’ll contribute to a similar margin of approximately 14 to 15% in this quarter four as well.
That what we are targeting apart from the consumables there are certain other expenses like the power and fuel and the. Freight expense, the traveling expense. We are consistently increasing our reach in our trailer segment to other states, you know, where we have not been very present. So in fact we feel that the expenses will remain the same now since most of these projects now have been set up and will now further these will further contribute towards the revenue side. And hence then we’ll be able to have margins closer to the 15% for quarter four as well.
Aakash
Understood. Thanks, sir.
operator
Thank you. Next question is from line of Ankur Podar from Swan Investments. Please go ahead.
Ankur Poddar
Hi. Congrats on a good set of numbers. I have a few questions. First is in terms of our exports which we are targeting of over 5% for our full year. And so can you just help me with what is the duty which we are currently on our, which is levied on our components and is there any clarification on the FTA like how the duty will move going forward?
Kunal Rai
Okay. So on our exports which we are targeting at 5% for this year, it is going in line with what our plans were. Now most of these exports, Ankur, is that our exports are 99% to Europe. Okay. And they are not to the US. Now, the custom duties which we have been paying is, I mean obviously what the customer base is approximately 0 to 0 to 4%. Okay. Now coming in with this trade deal which is, you know, being discussed between the EU and India, we obviously need to wait as to what exactly are the entire guidelines which do come out.
But it’s not that we benefit too much from it yet in the sense with customers like Liex, we already have the order book in hand and it’s now a process to ramp up on those volumes. Okay. We’ve mostly secured all the businesses of these four components that we are doing. Similarly, where the other business has started, it’s been just at the stage of sampling and validation of these components which we submitted. Obviously we will wait as to once these are completed, these will give us meaningful revenues from quarter one onwards. So with this deal coming in, we need to wait a little to find out what exactly how it benefits us.
But at least we are fortunate. Right now we don’t have this exposure of 5% into the US market. It’s better that we have it in the Europe only.
Ankur Poddar
Understood. And my next question is regarding our forging capacity. So we are adding. We have added 200 tons through press and 2000 tons screw press and a thousand ton screw press with another one scheduled for Feb. So what would be our total capacity going forward. And what is the utilization levels Currently.
Kunal Rai
The utilization levels in the forgings, you know, are at approximately between 60 to 65%. Okay. We usually plan our forging infrastructure a little in advance because it takes time to install and commission these machines and most of these machines imported for us. The regular machining capacity utilization is at around 70%, 70 to 75%. But what happens in the machining infrastructure. Is you, you can add it as and when you like. Because mostly these are CNC turning VMC centers where you can get delivery of these in a span of 30 to 40 days from the machine manufacturers. So utilizations with all our businesses, you know, doing well in the sense especially the commercial vehicle segment in quarter four has seen a sharp increase. Tractors are going to follow the same trailers has seen a huge spike as compared to quarter two which also uses a lot of our forging capacities. With the addition of these three presses we will be at around 65, 65 to 68%.
Ankur Poddar
All right. And next regarding our trailer segment. So what were the volumes for the quarter and the axial volumes and also what is the run rate that we are seeing in Q4 in Jan, if. You could help me with that.
Kunal Rai
As compared to, if you look into what our quarter four volumes are, at least we’re looking at a volume of 4,000 axles a month. This is the kind of an order book right now we have as compared to if you see what February and March, what we are planning, that is 4,000 axles on a monthly basis. If you look into quarter three we have done approximately 8,300 axles in quarter three. Revenue wise. If you look into our axle business in H1 we were approximately 12% down as compared to H1 of FY25.
But if you look into a nine month period, we are just 1.5% down. Now we’ve done revenues of around 185 crores as compared to 188 crores of FY25. Volumes from quarter two to quarter three have increased by 26%. And if you look into quarter three versus quarter three business has become better by 21%. We did a top line of approximately 72 crores versus 59.5 crores in quarter three of FY25. So it’s obviously helped because the entire CV volumes have picked up. But it is picking up further in quarter four. Although a lot of dumpers and tippers are being made within these OEMs.
But for sure whether there is a growth in the Volumes. A bit of it might be in terms of market share also. And I think once the exclusion line starts by Feb and March then we should be able to see even better volumes coming in.
operator
Thank you. Ankur, can I request to come back for a follow up question please?
Ankur Poddar
Sure. Thank you. Thank you Kunal.
operator
Thank you. Next question is from the line of Pritesh from Lucky investment managers. Please go ahead.
Pritesh
Yeah. Hi guys. So just with the excluded Excel line. Now becoming operational, one question is on. The, on the the component side but on the trailer, trailer axle side of the business which is 40% of your business. 40 plus 40% of your business there. If you have to map your growth rate with the CV prime mover growth rate with the new product which you are introducing, what should be the multiplier in terms of volume is your. It’s a fair guess that you can make. Will you grow 1.5x? Will you grow 2x the prime mover growth? And second question is how much is the is there any pricing premium that you would command on extruded axle versus a welded axle today or as a market penetration strategy, both the products will be equated at pricing.This will give us a fair guess on what should be the growth in your axle side of the business which is about 40, 45% of your business. I’ll ask the other two questions later. Maybe you want to answer this first.
Sumeet Rai
Hi, this is Sumit here. I’ll just reply to the first question. First of did the extrusion line starting. What is the increase in sales volume or. Yeah, sales volume that we expect for the trailer axle? I think that was the first question. So look at the moment, we are at around 26 to 28% market share in the Indian market, right? And the market leader is at about 40 to 45%.
Around 45% market share. So we of course want to become the leaders in the market. But what we will be looking at will at least we would like to reach a market share of about 35% with this improvement in technology. Whether we can demand a premium for this product. Of course we would always like to demand the premium on the product. But to the customers we have to show a better performance of the product which of course we are committing to our customers. But I think this premium would probably have to come in at a slightly later time.
See at the premium today, maybe the acceptance of this product is there in the market, but then we will sort of be missing out on increasing our market share at least for the first six months of introducing this product to the market. We don’t plan on charging a premium. So I think when you talk about multipliers, we have not kept a multiplier in our head. But we are looking to grow our market share from about 26 to 28% to a figure of 35% is what we are looking at. We are also looking to, to explore export markets with this, with this product.
So we have an installed capacity of 7,500 extruded beams with the line which we have set up right now. And we are at a current volume of 4,000 axles per month. We in the next one and a. Half years we should be. Or in the next end of next. Financial year we should be looking to utilize this whole capacity of ours of 7,500. And could you repeat the second question?
Pritesh
My second. No, I didn’t ask the second question. My second question is with respect to the 55% components business which is in turn linked to tractors and CVS and also the export. So one, what is the progress on the export order that you had which was supposed to bring you a revenue of about 100 crores. What is the progress there? What level have you reached now? And second, what are the incremental developments on a domestic CV component size if any? Are there any for which you can grow faster than the CV tractor market growth rate or will you will grow in line with the CV and the tractor market volume growth rate is the question.
Kunal Rai
Right. So this is Kunal here again. We have as far as our component. Business, we have a very diversified component base. Okay. And we should grow faster than what the market is. Okay. In terms of the overall growth in. The CV industry we should be faster than that. I’ll give you a few examples. You know we do an anti roll bar for one of our customers and. A year back that was used at around 2,000amonth. And now with the cabins with all the air conditioning in, they’ve converted. Five to 6,000amonth. So there are certain product lines within our component business which are going to grow faster than the cycle. And if you look into just our figures, boss, in, within our component business. In the CV component.
operator
Sorry to interrupt you. Can I please request you to mute your line from your side? Okay, sorry, please continue.
Kunal Rai
Yeah, within, within the component business in the CV components in quarter two we. Had done a revenue of approximately 48 crores. And in quarter three we’ve got that revenue to 82 crores. That’s a jump of approximately 70%. So. And that’s not how the industry obviously has expanded. So we are obviously looking with all these new developments to grow for faster than the cycle. Secondly your first question was on the exports. Exports you know we are still, if you look into our liex business this. Year we would be approximately doing 28. To 30 crores in our export business. The other two, three components with the. Same customer are now in production and I think by next year we should be able to double this revenue. What we have planned for this year. So it’s going as per the plan is obviously in the exports. It’s a little slower than the domestics speed which is there but it’s going in the right track with this. And then we have added another new tier one company for which as I told you samples and everything have been sent. It’s under validation. We should be starting doing some revenues from quarter one of this coming year with at least two of the products.
And all these products are very similar to what we are already doing with our existing customer. Can you give us the tractor and the CV mix in the components business? Sorry, tractor and the CV mix in the components. What will be a broader mix in how much is tractor, how much is seen. Tractors is you can say for quarter three, not for quarter three, not for quarterly generally for the full year. So approximately tractors at around 12% and balances the commercial vehicles.
Pritesh
Okay, and my last question is on the tipping jack product. Tipping jack product which has been introduced what kind of a business size you see two years from now?
Kunal Rai
Well next year at least a year ahead. I can tell you in FY27 we. Are targeting revenues of approximately 45 to 50 crores. Okay. Now this is keeping in mind we make close to an average of around. 300 to 350 kits per month. So if you look into that is. Approximately 4000 kits with an average realization. Value of 1.2, 1.3 lakhs. It comes to around 45, 50 crores. This is what we’ve targeted in FY27 and FY28 once. Obviously we see you know now rolling out 25 parts of these and trying to see what we are going to do. Two years ahead is not the right way. But one year ahead is what we have seen. And once we get a better response we’re just waiting for a little bit of validation to be completed then we should be able to penetrate faster after 7, 8 months. And as last clarification, your extruded Excel is available in the market now, right? No, not yet.
Not yet, not yet. When will it be available? March. March okay.
Pritesh
Okay. Thank you and all the best you guys. Thanks.
operator
Thank you. Next question is from Ryan Shubham from Ambit Asset Management. Please go ahead.
Shubham Gupta
Hi sir. Thanks for taking my question. Congratulations on a strong top line growth. A couple of questions mostly on the cost side. We have seen around the 80 bips Q impact on the gross margin front. Largely I believe our gross margins would have been better because steel was soft during the quarter. So what was the reason for that? And secondly, conveying to the first article, participant question on other expenses. So largely if I look at your over the last three, four years other expense schedule and filter out expenses which likely appear to be semi Fitch, they are showing a growth of around 35% over 22 to 25 which is in fact higher than our top line growth.
Kunal Rai
So. Can you just repeat the second question Again, your line wasn’t very clear.
Shubham Gupta
Yeah. So largely if I look at your other expense schedule and if I filter out expenses which largely appear semi, variable or fixed and I calculated growth, it is coming to around 35% CAGR over FY22 to 25 which is in fact higher than our top line growth. Also top line growth is around 30% so also wanted to understand what is really driving the strong increase in other expenses.
Kunal Rai
So as I, as I mentioned prior to this also Shubham, on the other expenses there are few categories which have basically expanded as compared to overall last year quarter three. Okay. A few of these include the consumables and the spares and secondly are certain work offloading charges and power and fuel expense sensors and also freight. Now with the amount of new product lines and new projects which are coming up for which all the installation and everything has been completed, the trials are running, there is certain amount of expense which comes into things like consumables and tooling, etc. Now, now once we see the effect of these new projects and products coming into our top line, you will see that the total percentage of the other expenses starts reducing back to around 22 to 23% which was there at 24% in the last year.
So most of these installations, most of these trials have now been almost completed. Okay. In our axle network also we are going very strong in terms of expanding our network further. Okay. A lot of our freight is now coming in from the other customers apart from Damshedpur earlier our largest Customer was at 15% which was local. Today our local sales in the state are just at around 13%. It’s expanded elsewhere. So you’ll certainly see once these revenues come from the new product lines from quarter four of FY26 and quarter one of FY27, you will see that these mostly these costs start getting offset set into the top line.
Shubham Gupta
Sir. So should we, on a long term basis, let’s say over the next couple of years, other expenses should be in line with how we have done over to FY 25, 24, 25.
Kunal Rai
I mean mostly in line with FY 25, it’s not. We have several cost reduction activities which are always ongoing in our plant. So we feel that it’s mostly a lot to do with the revenues coming in. Now that we’ve come out of six, seven weak quarters and we’ve finally had better results of one quarter and then we continue to have this trend of increasing our top line by 10, 15% every quarter. Then you see that the other expenses also mostly fall in place as well.
Shubham Gupta
So then on the gross margin side.
Kunal Rai
Gross margins, it’s, you know, steel will start seeing an upward trend. Now. We’ve, from the month of December we have already started seeing a little bit of increase in steel prices. The letters have come out, the discussions happening between the OEMs, the steel mills. However, I think we should be able to maintain same gross margins. The fact that we will be compensated by the OEMs for the steel price hikes, but gross margins will vary between these percentages. 1 or 2% up can be there.
Shubham Gupta
80 bits QoQ impact? So largely I was actually, I know. That steel has now started trending upwards. But for Q3, why was there a.
Kunal Rai
December onwards? You see mostly when demand starts going up, there is steel price hikes which start coming in. So we’ve seen a bit of hike in the month of December also already. What kind of inventory do we hold for the raw materials? We hold approximately an inventory of 30 to 40 days, especially during a busy month. Actually the thing is that there are various grades and sizes that we use. You know, now there all. There will always be some certain grades and sizes which where we are single source to our customers, we have to hold a bigger inventory than the ones that we use on say an everyday basis.
So it does vary in terms of different grades and sizes. But on an overall tonnage basis we do hold approximately 30, 35 days inventory. So just to clarify, your gross margin has. Your gross margin across product categories would be similar, right? It is not. It is fair to assume that since truck component has gone up significantly in this quarter, that has nothing to do with how the gross margin pans out. Gross margins are mostly similar across. I Mean what has gone up is our trailer business. If you look into quarter versus quarter we’ve seen a growth of around 21% in terms of our Q3 of FY25 versus Q3 of FY26 has seen a growth of 21% and the CV component cycle has seen a growth of approximately 16% that is from approximately 71 crores to around 82, 83 crores.
So the tractors also have seen an increase only of Q3 versus Q3 it’s approximately 25, 26%. But gross margins overall are across the industries are relatively similar.
operator
Thank you Shubham. I’ll request to come back for a follow up question please.
Shubham Gupta
Thank you.
operator
Thank you. Next question is from the line of Ricken from Capri Global. Please go ahead.
Unidentified Participant
Hi sir. Thank you so much for the opportunity. Sir, I have a few questions. Firstly if you would help understand in the current quarter our tractor business you just mentioned has grown at about 25%, correct?
Kunal Rai
Yeah. So would this compare it to quarter. Three of last year? Yeah, but yeah, why O?
Unidentified Participant
Yeah, why O y it is 25% and if I’m not wrong, the industry volumes in this quarter would have grown at about 35% or so. Would you help understand, is it that some of our customers where we are present have grown slower or. And you did mention about adding a new client. So overall, you know you are at I think about quarterly run rate of about 20 crores or so in this quarter. How do you see the tractor business run rate moving going forward? And also can you discuss about the performance versus the industry? So number one, sir, adding a new client.
Kunal Rai
Yes, we have, but obviously it takes. Time to build business on it. Right. It starts all with a sample stage and then you need to set up a dedicated production line for them. So that’s only going to come in if you ask me. Meaningful revenues to come out of it is going to be from quarter one onwards. If you look into our performance in Q3 of FY26 versus Q3 of FY25, actually the total increase has been almost at 29%. Okay. And if you look into nine months versus nine months performance it’s at around 16, 17%. So we have to look at it at a overall broader picture.
I think by the end of quarter four the increase in our tractor business is going to be upward of 20%. The fact that we usually see good schedules coming in only from April, but this is the first time now we’ve seen that February also has been very encouraging. The customers we don’t have a very big proportion of the tractor business. We are associated currently with two companies, now added another one and total tractor exposure is at 11% which with the addition of this new customer and new developments with our existing customers, we plan. To take IT to around 15% to. 16% of our revenue in a year and a half time. So that is how the tractor segment is. It’s working.
Unidentified Participant
Got it. So tractors have grown at about tractor components has grown at about 29% and the CV components have grown at what rate in this quarter?
Kunal Rai
So if you look into quarter three. Versus quarter three we’ve seen an upward. Movement of around 16%. Okay. And if you look into quarter two versus quarter three, we’ve almost hiked by around 70%.
Unidentified Participant
Right. Okay. Okay. And here again, what is the trajectory do you expect? Because I use sort of just expecting to grow this business in line with industry or are there any initiatives which will help grow the CV component business faster?
Kunal Rai
The CV component business. I as I did mention to Ritesh as well in the previous question that we must grow more than the industry considering that we have quite a diversified product range. Okay. We do axle shafts, we do coupling flanges, we do anti roll bars, planet carriers, disc spiders, bevel gears, lot of suspension parts. There are always certain product lines which grow faster with the oem. Okay. One of them has been our anti roll bar business. Due to, you know, the AC cabin mandate coming in. The customer is using more of these anti roll bars and now they’re using.
It on in almost 80, 85% of. Their vehicles which was approximately 40% last year. So there are certain products which are going to grow for us faster than the industry. That is how we, we should look at it like, you know.
operator
Thank you to come back for a follow up question please.
Unidentified Participant
Okay.
operator
Thank you. Next question is from line of Bharga from Ambed Asset Management. Please go ahead.
Bhargav Buddhadev
Yeah, good afternoon team and congratulations on a good set of. My first question is that on these exports you highlighted that you want to reach double digits as a percentage of revenue in FY27 versus closer to 4% as of now. So is this on the back of the new European customer that you’re working with or are you
Kunal Rai
Assuming that the.Double digit growth will take us a couple of years? Sorry sir, this there is, it will be basically FY28 is when we reach by end of FY28 is when we reach a double digit growth. Right. This year we have, we should be reaching at 5% and then it will obviously grow to 7, 7 and a half and then to closer to the double digit growth. But even the incremental sales that will come in say from five to seven and a half percent is going to be one from the new customer marginally because in the exports there is a certain timeline to grow on numbers but mostly it will be coming in from our existing customer that is Liex where we have started the production of three more parts that we are doing with them.
Secondly is the supply to their other facility in South America. Earlier we were only supplying to the European facility. Now in the last two, three months there has been supplies which we have started to the South American facility as well. Plus once we have our extrusion line as Sumit did mention is we would be looking at exports of our single piece extruded axle as well. We would be working on that.
Bhargav Buddhadev
For that you are assuming some bit of revenue to come from that in FY28 also or FY27.
Kunal Rai
FY27 7 in fact by end of quarter because we are already under some discussion for these products with some customers.
Bhargav Buddhadev
Secondly sir, on the seamless pipe in your presentation you written that the capex is completed but that capex was supposed to be around 170 crores if I understand correctly or was that in places?
Kunal Rai
No sir, you’re right. The capex for the seamless tube is left the key. The capex of the IPO proceeds are, you know mostly has been completed. Okay, but there is some part of, there is a lot of part of the seamless tube expansion which is still left out but that is from the out of the scope of the IPO proceeds. The IPO proceeds have you can say. By quarter four, by end of it are going to be fully utilized.
Bhargav Buddhadev
For this. Around 60 crores of capex that we incurred in the first half. Maybe by the year end we should be around 80, 90 odd crores. This capex next year should be around similar levels or maybe 6070 odd crores the next year.
Kunal Rai
Capex levels mostly are going to be towards the balance payments for our seamless tube project and the incremental, incremental CAPEX expense that we need to do every year. But the majority of it in terms of a new casting line, a new extrusion line, new forging presses that is addition of three presses. These sir have been mostly completed sir.
Bhargav Buddhadev
And lastly Rajasthan, Satisgar and Jharkhand are typically our key states for trader access and you mentioned you added five new fabricators. Is this, are these from the similar state or you are entering another.
Kunal Rai
Sumit can take this question.
Sumeet Rai
So it’s. Yeah, actually. So basically we are strong in these states and we are adding fabricators in these as well as in the other states, which mainly Gujarat and in Maharashtra. The majority of volume growth that we are looking at is going to come from our existing customers because those are the customers that make the highest volume of that. That make the highest volume of trailers. So it’s, it’s, it’s from a few states outside Rajasthan, Jharkhand and Chhattisgarh and one or two customers are from these three areas. But it’s. What’s more important is that we capture. The market where it’s growing around the country. We capture the market where it’s growing, which we are focused on.
Bhargav Buddhadev
Okay, great. Thank you very much and all the very best.
Sumeet Rai
Thank you.
operator
Thank you very much, ladies and gentlemen. That will be the last question for today. And now hand the conference over to the management for closing comments.
Sudhir Rai
Sorry, we have the closing.
operator
Yes, sir.
Sudhir Rai
Oh, right. Okay, fine. Thank you. Thank you everyone for joining this call. Thank you, Mihir for hosting it. We appreciate everyone’s participation. We thank Strategic Growth Advisors as our investor relation advisors. And in case we have any further questions, we request you to please reach. Out to them, to us and we can plan that. Thanks a lot for joining us.
operator
Thank you very much on behalf of Ecoregus Securities. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.