Summary
Kross Limited - Q3 FY26 Earnings Call Summary Friday, January 30, 2026 02:00 PM
Event Participants
Executives 3 Kunal Rai (Whole-Time Director & CFO), Sudhir Rai (Chairman & Managing Director), Sumeet Rai (Whole-Time Director)
Analysts 5 Aakash (NV Alpha Fund Management), Ankur Poddar (Svan Investments), Bhargav (Ambit Asset Management), Pritesh (Lucky Investment Managers), Shubham (Ambit Asset Management)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹177.5 crores | +18.1% YoY, +37% QoQ; driven by M&HCV recovery and strong trailer demand in H2. |
| EBITDA | ₹23.5 crores | +18.9% YoY; growth supported by operational discipline and favorable product mix. |
| EBITDA Margin | 13.2% | +10 bps YoY; management targets 14-15% in Q4 as new capacities absorb overheads. |
| Profit After Tax (PAT) | ₹14.0 crores | +3.0% YoY; margins at 7.9% for the quarter. |
| 9M FY26 Revenue | ₹447.8 crores | +2.8% YoY; reflects a transitional demand environment in the early part of the fiscal. |
| 9M FY26 PAT | ₹32.8 crores | +6.1% YoY; PAT margins stood at 7.3%. |
| Sales Mix (Q3) | 40.7% / 59.3% | Trailer Axles & Suspension (40.7%) vs. Components/Tractors/Exports (59.3%). |
| Trailer Axle Volume | 8,300 units | +21% YoY, +26% QoQ; Q4 run rate targeted at 4,000 axles per month. |
Geographic & Segment Commentary
- M&HCV Segment: Witnessed growth for the first time in seven quarters with a sharp increase in production from Tata Motors and Ashok Leyland since October 2025. H2 FY26 revenues are expected to be significantly higher than H1, driven by demand for dumpers, tippers, and prime movers.
- Trailer Segment: Added five new fabricators during the quarter and expanded focus to Gujarat and Maharashtra. The segment saw a 21% YoY revenue spike in Q3, with market share currently at 26-28% and a medium-term target of 35%.
- Tractor Segment: Reported healthy 16% revenue growth for 9M FY26, with Q3 YoY growth reaching 29%. Management plans to increase the revenue contribution of this segment from 11% to approximately 15-16% over the next two years.
Company-Specific & Strategic Commentary
- Axle Beam Extrusion: Trials for the new extrusion plant are underway with commissioning expected in February 2026. This facility will enhance axle manufacturing capacity by 50% and enable the production of single-piece extruded axles for domestic and export markets.
- Tipping Jack Launch: Introduced a new product for the trailer segment currently in the validation phase with 35-40 units dispatched. Management targets ₹45-50 crores in revenue from this product in FY27, reaching a peak capacity of 800 units per month within a year.
- Forging Capacity Expansion: Commissioned 2,000-ton and 1,000-ton screw presses, with a 1,600-ton press expected in February 2026. These investments support backward integration for the axle and Tipping Jack businesses.
- Export Roadmap: Exports contributed 4% of total 9M revenue (+14% YoY) with a 5% target for full-year FY26. Management has a roadmap to reach double-digit export contribution by FY28 through deeper penetration into Europe and South America.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue (Trailer Axles) | 4,000 units/month | Targeted run rate for Q4 FY26 based on healthy order book and market recovery. |
| Export Revenue Mix | 10% by FY28 | Scaling from 5% in FY26 through new European Tier 1 client approvals and extruded axle exports. |
| Tipping Jack Revenue | ₹45-50 crores (FY27) | Based on average realization of ₹1.2-1.3 lakh and production of ~4,000 kits annually. |
| Capex Utilization | 100% of IPO proceeds | Remaining 10% of IPO funds to be fully deployed by end of FY26. |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Volatility | Steel prices began trending upward in December 2025. While OEMs typically provide compensation, a 30-40 day inventory lag may impact short-term gross margins. |
| Product Validation | The Tipping Jack is a safety-critical item requiring rigorous internal and customer field validation. Any delay in validation could push back the planned bulk production ramp-up in FY27. |
| Other Expense Inflation | Other expenses rose to 26.5% of sales due to tooling/consumables for new projects. Margin recovery to 15% depends on these new projects achieving scale to absorb these fixed costs. |
Q&A Highlights
Tipping Jack Business
- Question: What is the timeline for the Tipping Jack breakeven and peak capacity? (Aakash)
- Answer: Plant installation was completed in October; validation is ongoing with 300 units planned for Q4 FY26. Peak capacity is 800 units/month, and management aims to be the number two player in the market over the next two years. (Sudhir Rai)
Trailer Axle Technology
- Question: Will you command a pricing premium for extruded axles over welded ones? (Pritesh)
- Answer: While the technology is superior, Kross will not charge a premium for the first six months to prioritize market share growth from 28% to 35%. Capacity will reach 7,500 units/month once fully operational. (Sumeet Rai)
Margin Pressure
- Question: Why have other expenses increased as a percentage of sales? (Shubham)
- Answer: Higher costs are due to one-time consumables and tooling for new projects (extrusion, Leax exports, Tipping Jacks). As these revenues kick in during Q4 and Q1 FY27, other expenses should normalize back to 22-23%. (Kunal Rai)
Export Strategy
- Question: How are you planning to double export revenue by next year? (Pritesh)
- Answer: Growth is driven by three additional part families for Leax, supplies to their South American facility, and two new products for a second European Tier 1 customer starting Q1. (Kunal Rai)
Key Takeaway
Kross Limited delivered a strong Q3 FY26 with 18.1% YoY revenue growth, marking a recovery in the M&HCV cycle after seven subdued quarters. The company successfully navigated a transitional H1, leveraging its diversified portfolio to post 9M revenues of ₹447.8 crores. Strategically, Kross is nearing the completion of its IPO-funded expansion, with the high-margin axle beam extrusion plant and the new Tipping Jack product line set to drive growth in FY27. Management is aggressively targeting market share gains in the trailer segment (aiming for 35%) and a doubling of export contributions by FY28. While rising steel prices and elevated tooling costs for new launches posed minor margin headwinds in Q3, the commissioning of backward-integrated facilities and higher capacity utilization are expected to restore EBITDA margins to the 14-15% range. Kross enters Q4 with a strong order book and a clear roadmap for product diversification and geographic expansion.
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