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The ₹500 crore Kross IPO opens for subscription today. Analysts advise subscribing for long-term investment due to strong growth potential despite some risk factors.
The much-anticipated Kross IPO opens today, aiming to raise ₹500 crore. Kross Ltd., a Jamshedpur-based auto parts manufacturer, plans to use the proceeds for debt repayment and business expansion, which is expected to enhance future earnings.
Several analysts noted that the issue appears fairly valued with a price-to-earnings (P/E) ratio of 34.5 times at the upper price band of ₹240. They recommend the IPO as a solid long-term investment.
However, potential investors should be mindful of key risk factors. Kross Ltd. has a high customer concentration, with 66% of its revenue coming from just five clients. Any disruption in these relationships could significantly impact its business. The company also faces stiff competition from both domestic and global players, some of whom are better resourced. Additionally, volatile steel prices and fluctuations in freight costs pose potential risks to Kross's profitability.
Despite these concerns, the company's robust growth outlook and planned debt reduction are likely to boost its earnings potential. Kross has already secured ₹150 crore from anchor investors ahead of the IPO launch.
For investors seeking long-term value, the Kross IPO share price at ₹240 may present an opportunity, they must also factor-in inherent risks before applying for the IPO. The subscription window remains open until September 11.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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