Kross · Material risks, their source context, and severity in the latest available quarter.
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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.
