Kross Ltd (NSE: KROSS) Q4 2025 Earnings Call dated May. 19, 2025
Corporate Participants:
Unidentified Speaker
Sudhir Rai — Chairman and the Managing Director
Sumeet Rai — Whole time Director
Kunal Rai — Whole time Director & Chief Financial Officer
Analysts:
Unidentified Participant
Rohit Singh — Analyst
Mihir Vora — Analyst
Pritesh Shah — Analyst
Akshay Rani — Analyst
Sriram — Analyst
Payal Shah — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Cross Limited Q4 FY25 Quadrant Conference Call hosted by Equerious 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 the conference call, please signal an operator by pressing Star then zero on your Touchstone phone. Please note that this conference is being recorded. I now hand the CONFERENCE over to Mr. Meer Vora, please. Thank you. And over to you, sir.
Mihir Vora — Analyst
Yeah. Hi. Good morning everyone. On behalf of Equira Securities, I welcome you all to the 4Q FY25 results conference call of Cross Limited. From the management side we have Mr. Sudhir Rai, Chairman and Managing Director. Mr. Sumit Rai, Whole Time Director and Mr. Kunal Rai, Whole Time Director and CFO. Without further ado, I now hand over the floor to Sudhir sir for opening remarks. Over to you, sir.
Sudhir Rai — Chairman and the Managing Director
Cross Limited for the fourth quarter and full year ended FY25. Along with me I have Mr. Sumit Rai, old time director, Mr. Kunal Rai, full time director and CFO as well as other senior members from Investor Relation Advisor, Strategic Growth Advisory. I’ll begin by walking you through our performance highlights and then share updates on our key strategic initiatives and growth plans. Firstly, performance highlights. The company delivered a strong performance in Q4FY25, improving over Q3 and meeting expectations. Q3 was masked by inconsistent order flows starting on a positive note in October but softening in November and December.
In contrast, Q4 saw a clear rebound with healthy demands in January, February and March, recording our highest ever monthly trailer production and sales of nearly 4,200 units per month. As a result, Q4 FY25 top line grew by 23.3% over Q3. The trailer, axle and suspension assembly segment performed particularly well. We expect this positive momentum to carry forward in FY26 too. On the export front, we closed the year with 19.3 crore rupees in export revenues. With our partnership with global partners progressing smoothly, we have made steady progress in our export business with the Universal Joint Cross already in regular supplies.
Building on this momentum, we will be positioning to expand our export offerings in FY26, further strengthening our global relationship and reinforcing our long term strategy. We do not anticipate any material impact from the tariffs as our current exposure is largely limited to European OEMs who are on board who have onboarded us following a rigorous validation process. With this foundation in place, we are confident of growing export meaningful and are targeting a 5% revenue share from our exports in FY26. Outlook and growth initiatives for cross in FY26 as we step into FY26 we have seen a steady start to the year with April volumes holding strong consistent with momentum we saw at the close of FY25.
One of the most transformative developments underway is our new extrusion line, a first of its kind in India. There has been some delays in timelines due to logistics challenges. Equipment arrival is June 25th with the production likely to commence in Q2 FY26. This new capability will also support us into our entry of TAG axles, making an important expansion of our product portfolio and strengthening our positions in this place. Currently we have a capacity to manufacture 4,500 to 5,000 axles per month and with this upcoming technology upgrade we will significantly add headroom for scaling up volumes with the new technology.
While selling prices remain stable, costs reduce which directly enhance our margins. Our Seamless stew plant which is one of the most ambitious and capital intensive projects the company has undertaken. The equipment is expected to arrive in nine months. As earlier informed, the land for this project is already available with us and we have also started our construction work. The total capex for this plant is estimated at rupees 167 crores. With the capacity to produce 120,000 tonnes per annum. This plant will serve both captive consumption as well as external customers. The company sees significant opportunities in catering to India’s oil and gas, transportation, pipeline, automotive and general engineering sector.
The commercial production for this is expected to begin in Q3 FY27 and the business will contribute meaningful from FY28. We have some other product initiatives which we would like give which we’d like to share with you. Building on this strong foundation, we are expanding our product portfolio with the introduction of tipping Jack by H2FY26, a strategic addition to enhance our presence in the trailer ecosystem. This launch will depend deepen our engagement with the trailer manufacturers and further diversify our revenue streams. Cross has already earned a strong reputation of its trailer axle and suspensions, particularly in states like Rajasthan, Chhattisgarh, Dharkhand where our brand is widely used in tipping trailers.
Since tipping trailers require tipping jacks, we will already have a strong foothold in these regions. We are well positioned to drive market adoption. We are confident these initiatives will enhance profitability and further strengthen our market position. With this I’d like to hand over the call to Mr. Kunal Rai. He will update you on our financial performance for Q4 and the full year FY 2026.
Kunal Rai — Whole time Director & Chief Financial Officer
Hi, good morning everybody. I’d like to speak on the financial performance for the quarter ended and the full year ended 31st March 2025. Starting from the quarter I.e. q4FY25, our revenue stood at 185 crores showing a sequential growth of approximately 23% as compared to 150 crores in quarter three of FY25. EBITDA was at 26.8 crores up by 35.8% sequentially from 19.7 crores in Q3FY25. EBITDA margin improved to 14.5% this quarter up from 13.1% in Q3FY25. Our PAT has reached 17.1 crores reflecting a sequential increase of 26.1% from 13.6 crores in Q3FY25 and as far as PAC margins are concerned IT stood at 9.3% as compared to 9.1% in Q3FY25.
On the total revenue front, our year on year growth was flat and IT stood at 620.4 crores. The contribution from the trailer, axle and suspension business stood at 44.1% while the other businesses in the component structure such as exports, CV components and the tractor components contributed the balance 55.9%. Our export sales stood at 3.2% in FY25 and we are confident of growing exports meaningfully and targeting at least a 5% revenue share in this FY26. Our total EBITDA stood at 81.3 crores compared to 80.8 crores in FY24, an absolute growth of 0.6% over the same period last year.
EBITDA margins were at 13.1% as compared to 13% in FY24. Tax stood at 48 crores compared to 44.9 crores in FY24, a growth of 7% over the same period last year. Our PAT margin for the entire year was at 7.7% as compared to 7.2% in FY24. On the balance sheet front, ROCE AS on 31st March 2025 stood at 16.7%. The GFA turnover stood at 4.7 times and debt to equity for the period was at 0.1 times. I would like to close with these following remarks. To summarize, FY25 was a year of strategic process progress and operational resilience.
We have laid a strong foundation for sustainable growth across both core and emerging product categories. We would like to inform you that close to 75% of the IPO proceeds have already been deployed by us and the balance 25% will also be fully utilized within the current financial year. With the ongoing investments and continued product diversification. We’re excited about the opportunities ahead and remain committed to delivering long term value to all our stakeholders. We thank you for your continued support. We thank you for joining this call and we can now open the floor for further questions.
Questions and Answers:
operator
Thank you, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press STAR and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. We will wait for a moment now while the question queue assembles. The first question comes from the line of Rohit Singh from Invest Solutions. Please go ahead.
Rohit Singh
Hello.
operator
Please go ahead. Rohit.
Rohit Singh
My question is you are planning to enter into EMS manufacturing. What about this plan?
Sudhir Rai
Which manufacturing, sir?
Rohit Singh
EMS manufacturing.
Sudhir Rai
EM.
Rohit Singh
Yes.
Sudhir Rai
What is EMS manufacturing please?
operator
Rohit? Please go ahead.
Rohit Singh
Electronic manufacturing services.
Sudhir Rai
No, you see, we are not manufacturing electronic goods. Okay. Our trailer axle has certain electronic components like the ABS which will will be manufacturing in the ebs in the electronic unit of the where we have our plant. Okay. We are not into electronic equipment. Rather we are some electronics are used in the trailer axles where which we will be making over there. Do you understand?
Rohit Singh
Okay. Thank you.
operator
Thank you. The next question comes from the line of Mihir Vora from Equity Securities. Please go ahead.
Mihir Vora
Yeah, so. Hi sir. So basically my question was on this new business, the new initiative which you are talking about, the JAGS business. So basically just some industry sense on what is the percentage of tipping trailers as a percentage of total trailer market. Yeah, first would be that and then I’ll follow up with further questions.
Sudhir Rai
Sumit, you want to take it up? Yes, I can take. So.
Sumeet Rai
As we mentioned already tipping jacks are used on the tipping trailers particularly. And tipping trailers are mainly manufactured in the state of Chhattisgarh and in the state of Rajasthan in large volumes. They are of course manufactured in the other states as well. But these two states largely focus on this particular segment. As far as what the volume of tipping trailers to the overall volume of trailers produced. It will be about you can say 30. It depends of course on the scenario. But 35.
Sudhir Rai
Yeah, 35% of the total.
Sumeet Rai
30%. 30 to 35% of the overall traders produced would be tipping traders according to us, according to our market, market knowledge. And. Yeah, and we feel that because we have our customer base in these two states well entrenched and we are already doing business with these customers, we will have a good opportunity of growth in this segment.
Mihir Vora
With realizations. And what volumes are we targeting in FY26 year? Some number.
Sumeet Rai
The realization or the average realization? There are a few models out here but the average realization would be 1 lakh 15 thousand per tipping jack. This is the basic value and. We. Are hoping that in H2 of this FY26 we sell at least 300 to 400 tipping jacks or we sell at least, I would say, you know, 800 tipping jacks for the Indian market and.
Mihir Vora
That is per month. Or.
Sumeet Rai
We would like to reach a volume of 800 per month in the coming years. But initially gaining market share will be a process because this is again a product which is defined by the user but which is by the transporter himself. So there’ll be a process of gaining market share. But it will be, it should be an easier process than what our trailer axle was because we have done a lot of groundwork.
Mihir Vora
Right, right, right. And so what would be the competition here?
Sumeet Rai
There are companies who manufacture these tipping jacks. There is a company called Hewa that has, I mean been. Has been in this industry from the beginning. There’s also company called Hydromass. These two are the market shareholders. And the third company which is present in this market is Wipro Hydraulics division.
Mihir Vora
All right. And all of them have their plants in India?
Sumeet Rai
Yes, this all three manufacture component manufacture these in India.
Mihir Vora
All right, so I’ll fall. Okay, thank you. This was all from my side. I’ll fall back in the queues for further questions.
operator
Thank you. The next question comes from the line of Pritesh Shah from Lucky Investments. Please go ahead.
Pritesh Shah
Was the trailer market growth in FY25 in volumes? And what was your growth in FY25 volume? If you could tell us. And within trailer tailored to suspension, was there any mix change between FY25 and FY24?
Sudhir Rai
I’ll take that call. So firstly on the overall trailer volume increase there has been no increase in the overall volumes. In fact we feel that there has only been a reduction. I think the overall trailer market if I’m not mistaken has reduced by close to 3 to 5% on overall volumes. If we look into our overall business on this axle and suspension in terms of value, we had done 269 crores of revenue in FY24. And in FY25 we have done 274 crores revenue. The axles more or less have been quite similar. We’ve sold close to 31,000 axles in FY24 and we’ve sold close to 32,500 axles in FY25.
Only in the suspension we feel that the shift towards air suspensions are growing. That is one shift that we’ve been able to see. Plus the overall presence with all the product mix now that we have except the only car carrier axle that is under development. We’ve developed the entire range of axles and suspensions right. From the 12 ton to the 18 ton. The only shift in the suspension would be now that we’ve gained on more air suspensions in this last year.
Pritesh Shah
I didn’t understand the second part of your answer. So which means that suspensions in your revenue mix would have come down, right?
Sudhir Rai
No, it’s been more or less the same, sir. It’s been more or less the same.
Pritesh Shah
Okay, my second question is. In your opening remarks you mentioned that when the new line of Excels come into market.
Sudhir Rai
Yeah. Better margin product, is it also a better pricing product or it’s a similar pricing and a better margin product.
Sudhir Rai
It’s a better product with a better margin and we would like to retain that margin with us since we are offering the fabricator a better product. Now, whether we need to change the price that is we will see according to the market scenario. But the company would like to sell it at the existing price and have better margins on it for sure. But since the entire product is not welded at all and it is a one piece construction, it’s lighter in the total weight. That’s where the margin basically come in.
Pritesh Shah
So this margin expansion is. Will be on the tractor portion of your revenue where you mentioned that tractor and suspension put together is about 45%. In that the tractor portion of the revenue is where the margin expansion will come through.
Sudhir Rai
Yes. Only on the trailer. Only on the trailer. Plus what it would give us is a entry into the OEM sector with the tag axle business. The OEM on their rigid vehicles was also used a lot of tag axle. Okay. So they are all being manufactured currently by the fabricated route. And we would be coming in with the extruded technology. But the margin obviously would be on the trailer.
Pritesh Shah
Aktal business can you comment on the incremental margin range without your own seamless.
Sudhir Rai
The overall price benefit that we have on the realization value is close to 5%. 5 to 6%. That is the cost of. That would be the benefit that would be there. Okay.
Pritesh Shah
And can you just lastly comment on the capacity. You said you have 5,000 axle capacity today. With the new line of Excel, the.
Sudhir Rai
Capacity will rise to seven and a half thousand numbers firstly and then we can also go up to 10,000 numbers. See, the thing is was that we will be able to make axle beams close to 9 to 10,000 numbers. Now in, in our manufacturing of the axle is that we make close to 70% of the parts in house. The brake drums and hubs are an important product in the axle. We make it in house. We have a casting plant. The rest of the forgings are also we make. So it’s just a ramp up on our capacities that has to be done.
Okay.
Pritesh Shah
So just with the opening of the OE TAG Excel market as well and your ongoing trailer Excel, so this capacity of seven and a half thousand per month from whatever volumes you’re doing at about 3,000, this journey should finish in. Should finish in how many years? You’ll double your volumes in 12 months time.
Sudhir Rai
We have to obviously hope that the market remains good, number one. Number two is when we make this axle beam extruded design for the trailer industry, there is no validation which is required so we can immediately start selling. The only thing with the tag axle business with the oem that there would be certain validation obviously which would be required. So we are only projecting that revenue to come in from quarter four. Okay. Of this financial year, but by the end of this year, with the business of trailer axles and the tag axles put together by the end, we at least plan to be at the volume of seven, seven and a half thousand numbers.
Pritesh Shah
Okay. Okay. Thank you. And I’ll come back if I have more questions.
Kunal Rai
Sure.
operator
Thank you. The next question comes from the line of Akshay Rani from DSL Securities. Please go ahead.
Akshay Rani
Good morning sir. I’m audible.
Kunal Rai
Yes. Yeah.
Akshay Rani
So I have question on revenue contribution from your top five, five customers has been declined from around 56% previously to 60% currently. So was this a one off shift or. It is a part of a strategy to diversify and de risk from your customer base.
Sudhir Rai
So it is a. It is a strategy to diversify. Okay. It was earlier, two years back it was close to 68% then it has reduced to 64, 60 now it’s I think come down to 59% now we are diversified into mostly three segments. That is one is the axle CV tractor and then the exports. Exports is obviously still very small. But if you look into our top five customers, we have two from the OEM sector from our component business, one from our tractor business, two from our trailer business. So we are quite well diversified into the entire segment.
Akshay Rani
Okay. Okay sir, thank you. That’s it for my side.
operator
Thank you. The next question. Yes, please go ahead sir.
Sudhir Rai
Plus our existing customers in the CV business where earlier the share was just 3 to 4% of our revenue has also been increasing. Customers like Dana, where we were doing close to 3, 4% of our entire business is now also in the increasing trend. So further to which you will see a further decline of the top five customers, we would like it to be at close to 55, 56% by this year. Okay, thank you sir and all the best.
operator
Thank you. A reminder to all participants, you may press Star and one to ask a question. The next question comes from the line of Sriram from an individual investor. Please go ahead.
Sriram
So thank you for the opportunity. I just have one question and on slide number 22 you have given capacity utilization and I see like most of them are upwards of 70%. So my question is with current capacity, you know, what is the potential turnover that we can do?
Sudhir Rai
So these capacities as far as on the utilization level has been at around 70 odd percent as of March 31st. Also from the IPO proceeds. We have invested a lot to enhance these capacities now. So there will be a drastic increase as far as available capacity. We are almost doubling our forging capacities. One of our forging presses, a 2000 ton screw press has been commissioned in this month. We also bifurcate the capacities into mostly two segments. One is on the machining side and one is on the forging or casting. If you look into our forging and casting capacities, they are still at close to less than 70%.
And we are constantly enhancing these capacities as well. On the machining front, it’s a continuous process that we do throughout the year. And machines as far as CNCs, VMCs and all, they don’t take too long to start. We can start them in the next 45, 60 days. So machining capacities also we have drastically enhanced with the CAPEX funds.
Sriram
Okay, so. So we still have a balance of 30%, right?
Sudhir Rai
Something like that, yes. And more than that. And, and, and again that’s the process of increasing it. And I think from the revenue side as to whatever we are planning to grow. We have got obviously sufficient capacities in place for that for all our segments, whether be it on our exports, whether be it on our axle and suspensions or our component business.
Sriram
Okay, and so there’s one more question and how do you see the trailer and the CV market overall?
Sudhir Rai
The CV market? You know, I mean, it’s not that we get too much as to what these OEMs are making, but I’ll just tell you, key Q1 has been good of this year. The reason is that the OEMs are going in for a mandate in the month of October and they would be producing these vehicles with air conditioning on all their cabins from the month of July itself. They basically expect an increase in hike in their vehicles from quarter two. So they expect some pre buying to happen. Not too sure how the retail sales are, but at least production wise Q1 has been more or less a continuation of how Q4 was.
The volumes still hold quite strong. Leyland and Tata Motors both producing I think more than close to 9,10,000 vehicles in the first month. So we’ll have to wait and see at least if we go quarter wise. Yes, Q1 seems to be good. We’ll have to see how Q2 phases out like.
Sriram
Okay, thank you so much, sir. All the best.
operator
Thank you. A reminder to all participants, please press STAR in one to ask a question. The next question comes from the line of Payal Shah from Premium Securities. Please go ahead.
Payal Shah
Yeah, good morning sir. Thank you so much for the opportunity. I have two questions. First, our exports have been contributing and decreasing share to our revenue. So just wanted to check it. What level of export contribution do you believe that it would start meaningfully driving the margin expansion?
Sudhir Rai
That would be approximately when the exports reach at around 15% is when we again we feel that it would enhance our margins further.
Payal Shah
Okay. And my next question is also, is there any export potential in extruded axle and if so, how much can it drive the export growth?
Sudhir Rai
Absolutely. There. Once we have the extruded axle, then only we would be able to export our trailer axles to other countries, other jurisdictions. We must see that. You know, the leader in the trailer axle market world over is China. And Chinese axles have been manufactured in the extruded route for decades. Okay. And we would be the first to get this technology in India. And that is only when we would be able to at least display our product to the other markets. And I feel that with the manufacturing that is there in India now and the backward integration that we have at Cross, we will surely be competitive I am not too sure as to how long this process, but we will surely be working in this year itself to see how we can gain exports in our trailer axle business as well.
But only once we have the product ready, that is in by July we’ll have the product ready and then we would have, we can have avenues to display and to export our product.
Payal Shah
That’s it from my end. Thanks so much.
operator
Thank you. Participants, please press star and one to ask a question. The next question comes from the line of Meer Vora from Equerry Securities. Please go ahead.
Mihir Vora
Yeah, thanks for taking my question again. So my question was on the working capital. So if I see the working capital for FY24 that seems to be a bit stretched. The data and inventories have sort of gone up. And so what is driving this higher working capital in this year? Had we had to push more products or, you know, give more favorable schemes to our dealers here in the trailer axle business? Can you throw some light on it?
Sudhir Rai
Yeah, yeah. The trailer business, at least for the. First three quarters, have been extremely slow. And that is where we wanted to, you know, sell strong. And we’ve had to give out more credit to the fabricators to maintain our, to maintain our sale and to maintain our market share. Also in quarter four, we feel that it is coming down. Our receivable days as far as in quarter four over quarter three have reduced. And also on our exports, our exports, I know they are still at a very small percentage, it’s around 3.5%. But the credit line obviously over there is in excess of 120 days. It’s not mostly from the OEM business.
That’s where there is no issue at all. But it’s mostly pertaining to the trailer business and we feel that it should get better in the next one or two quarters.
Mihir Vora
But when we are entering this tipping trailer business and you know, with the market being at such, we have some competition in the trailer Excel as well. Don’t we see a risk that working capital may go up ahead? Like tipping trailers? It is a new product for you, the tipping jacks. Don’t you have to give a favorable kind of terms to the fabricators?
Sudhir Rai
We will be, we will be. Our product will be attractive as far as the pricing is concerned. We will like to, we like to have the same credit line what the other fabricators, what the other manufacturers have with their fabricators. It all depends a lot on market scenarios. You know, the last year was not very strong on the trailer side. The year before that, we really didn’t have this kind of an issue where the working capital cycle was in excess of 100 days. So we feel that, you know when the market performing better the receivables and the working capital cycle it does reduce.
But we’re getting into the tipping jack segment not seeing what our working capital cycle would be. I think it’s a great growth engine for us. We have our marketing and service divisions already ready for this product. We would be doing it mostly with all the same people employed and it’s going to be a new avenue also in the same trailer ecosystem.
Mihir Vora
So that’s all from my side. Thank you for.
operator
Thank you ladies and gentlemen. That was the last question for today. I would now like to hand the conference over to Mr. Sudhir Rai for the closing comments.
Sudhir Rai
Yeah, well we appreciate your participation in our earning calls today. We trust that we have addressed all your queries. Should you have any further questions, please feel free to reach out to US Strategic Growth Advisors or you can call our company also for this. Any related questions? We surely hope. I’d like to leave you all with this remark that we surely hope that FY26 would in the auto space be more positive seeing the Q1 growth over the previous years. Thank you so much for joining us today.
operator
Thank you sir. Ladies and gentlemen, on behalf of Equerious securities, that concludes this conference. Thank you for joining us and you may now disconnect your lines.