Kross · risk themes across the available quarters.
Bear-case history
Steel prices started increasing from December 2025, and while OEMs are expected to compensate, there may be a 1-2 quarter lag. With 30-35 days raw material inventory, the company holds some buffer but faces margin risk if price hikes exceed compensation.
The tipping jack is still in validation with only 35-40 assemblies dispatched; full commercial revenue delayed to FY27. Management acknowledged margins cannot be predicted at current low volumes. OEM validation (for 1.5+ years) remains a hurdle.
Other expenses as percentage of sales increased to 26.5% from 24.5% in Q3 FY25, with Q2 at 28%. Management attributed this to tooling, consumables, and freight for new projects not yet reflected in revenue. Analyst raised concern about 35% expense growth over FY22-25 exceeding topline growth—management provided no specific cost reduction timeline.
Management explicitly stated they will not charge a premium for extruded axles initially to ensure market acceptance, targeting 35% market share (vs current 26-28%) before pricing power. This delays margin upside from the new 7,500 beam capacity.
Rising steel and LPG costs may compress margins in Q1 FY27 before pass-throughs are settled with OEMs.
Management noted that cost pass-throughs to OEMs are typically delayed by one quarter, creating temporary margin pressure.
Management stated they cannot raise prices beyond competitors, limiting margin improvement despite cost pressures.
Rising fuel prices could increase operating costs for CV operators, potentially dampening demand.