Kross Ltd Q2 FY27 Earnings Call — Analysis (NSE: KROSS)
Kross delivered 80% YoY revenue growth in Q2FY27 to ₹235 Cr driven by strong trailer axle and CV component demand, while progressing its ₹170 Cr seamless tube backward integration project targeting Q4FY27 trial runs.
Result quality: strong — Margin expansion. Management sentiment: optimistic.
The take
Q2FY27 Revenue from Operations ₹235 Cr ( +80% YoY ) . Guidance raised — Q3-Q4FY27 trailer segment revenue sustain… ₹115-116 Cr . But missed . New story: Backward integration & self-reliance .
Results
Revenue grew 80% YoY to ₹235 Cr with EBITDA of ₹30.6 Cr (13.0% margin) and PAT up 143% YoY to ₹19.69 Cr.
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Revenue from Operations | ₹235 Cr | +80% | yoy · Q2FY27 |
| EBITDA | ₹30.6 Cr | none · Q2FY27 · 13.0% margin | |
| Profit Before Tax | ₹26.95 Cr | +>100% | yoy · Q2FY27 |
| Profit After Tax | ₹19.69 Cr | +143% | yoy · Q2FY27 |
| Revenue from Operations | ₹419.4 Cr | +55.3% | yoy · H1FY27 · vs ₹270 Cr in H1FY26 |
| EBITDA | ₹53.32 Cr | none · H1FY27 | |
| Profit After Tax | ₹33.16 Cr | none · H1FY27 | |
| Trailer Segment Revenue | ₹115 Cr | +98.3% | yoy · Q2FY27 · 49% of Q2FY27 revenue, vs ~₹58-60 Cr in Q2FY26 |
| Term Loan Debt | ₹80 Cr | point_in_time · Q2FY27 · Sep-26 | |
| Working Capital Debt | ₹32 Cr | point_in_time · Q2FY27 · Sep-26 |
Guidance
Management expects H2FY27 volumes to grow 20% over H1FY27, with seamless tube trials starting in Feb-Mar 2027 and full backward integration by H1FY28 yielding 3-4% margin expansion on trailer axles.
What management committed to
- Management guided that Q3 and Q4 volumes in the CV and trailer segments will be stronger than Q2, consistent with the historical trend of H2 being 20% up on H1. — H2FY27
- Sumeet guided that trailer segment revenue numbers will sustain at the Q2 run-rate (INR115-116 crores) for the remaining quarters of FY27. — INR115-116 crores, Q3-Q4FY27
- Kunal guided that tipping jack capacity utilization will reach 50-60% by Q4 FY27. — 50% to 60%, Q4FY27
- Kunal guided that captive use of seamless tubes for axles will improve overall business margin by approximately 3-4%. — 3% to 4%, post-backward integration ramp-up (likely H1FY28+)
- Kunal guided that total capex in H2 FY27 will be approximately INR110 crores, comprising the final seamless tube spend (~INR50 crores) and INR60 crores on shaft lines, robotics, and automation funded via warrants. — ~INR110 crores, H2FY27
- Kunal guided that Phase 1 production of the seamless tube plant will utilize approximately 30% of its total capacity. — 30%, post-commissioning (H1FY28+)
Key themes
Capacity expansion and backward integration ramp-up
How the narrative shifted
- CV industry recovery from H2FY27: Demand momentum sustained with robust OEM schedules, GST rationalization tailwinds, and improved regional demand (e.g., Chhattisgarh); management expects H2 volume to be even stronger.
- Backward integration & self-reliance: Broadened from 'first-mover advantage' to a multi-stream program funded by a preferential issue, with quantified margin targets (3-4% improvement from captive tube usage).
- Export diversification and new orders: Export share target unwinding: metric respecified from total revenue to component business without addressing the shift.
- Sequential margin recovery through pass-through: Shifted from 'margin improvement from Q2 onward' to 'difficult to predict, compensations will be retrospective'.
- Strategic capex and preferential funding: Aggressive capacity expansion (seamless tube, shaft lines, cold drawn tubes, robotics) is being funded through a INR63.6 crore preferential issue and term loans, limiting equity dilution and debt stress.
Operational commentary
- Extruded axle beam commercial production commenced; currently 80% of trailer axle production is via extrusion, targeting 100% by Q3/Q4 FY27.
- Seamless tube project (₹170 Cr capex; ₹120 Cr spent to date) has sizing and straightening mills installed, with furnace ready; production trials scheduled for February-March 2027.
- Planned forward integration into Cold Drawn Tubes (precision sizes for captive tipping jacks and external sales) with ₹20-25 Cr capex funded via ₹63.6 Cr preferential issue.
- Tipping jacks capacity installed at 800 units/month (realization ~₹1.4 lakh/set), targeting 50-60% capacity utilization by Q4FY27.
- Added a new European customer for propeller shaft components, currently in validation stage.
Analyst Q&A
Q. Why did gross margins compress sequentially in Q2 despite earlier price hikes, and when can margins reach 14-15%?
Continuous raw material inflation in steel and consumable costs hit margins with a lag; retrospective price compensations from OEMs/Tier 1s are settled and will reflect in Q3 and Q4 FY27.
Q. How does the ₹120 Cr spent on seamless tube capex reconcile with ₹55 Cr reported Capital Work-in-Progress (CWIP) on the balance sheet?
Management stated they would have to verify the CWIP figures offline and clarify later.
Q. What is the exact margin accretion expected once the seamless tube facility becomes operational?
Phase 1 captive use will reduce tube procurement costs by 8-10%, delivering an estimated 3-4% margin improvement on the trailer axle business once fully integrated by H1FY28.
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