Company Overview

Kay Jay Forgings Limited is a precision engineering integrated manufacturer of forged and machined components primarily catering to original equipment manufacturers (OEMs) in the automotive sector, with 93.8% of revenue from automotive in H1 FY26. The company operates six manufacturing facilities across Ludhiana, Punjab and Hosur, Tamil Nadu, and is India's largest supplier of crankshaft assemblies to two-wheeler OEMs with estimated 36% market share in FY25. Key products include crankshafts, connecting rods, lower bracket assemblies, and steering yokes, serving major customers including TVS Motor Company, Honda Motorcycle, and Mahindra & Mahindra.

Offer Details

The company has filed a Draft Red Herring Prospectus for an Initial Public Offering (IPO) of up to ₹3,600 million comprising:

  • Fresh Issue: Up to ₹3,000 million
  • Offer for Sale: Up to ₹600 million by selling shareholders (Gopal Krishan Kothari, Amit Kothari, Madhu Kothari, and G K Kothari & Sons)

The offer includes reservations for retail investors (35%), non-institutional bidders (15%), qualified institutional buyers (50%), and employees (up to 5%), with shares having a face value of ₹5 each. Price band will be determined prior to the bid opening.

Financial Performance

The company demonstrates consistent financial growth:

  • Revenue: ₹4,660.63 million (H1 FY26), ₹7,504.64 million (FY25), ₹6,723.16 million (FY24), ₹6,026.92 million (FY23)
  • PAT: ₹213.57 million (H1 FY26), ₹290.15 million (FY25), ₹241.26 million (FY24), ₹138.13 million (FY23)
  • EBITDA Margin: 9.56% (H1 FY26), 9.53% (FY25), 9.62% (FY24), 8.31% (FY23)
  • ROE: 17.81% (FY25), 17.98% (FY24), 12.51% (FY23)

The company executed a 15:1 bonus issue in August 2025 and increased authorized share capital from ₹15.50 million to ₹400 million. Total borrowings stood at ₹838.06 million as of September 2025.

Use of Proceeds

Net proceeds from the Fresh Issue will be utilized for:

  • Capital expenditure for new manufacturing facilities in Punjab: ₹943.77 million (forging facility ₹591.04 million, machining facility ₹352.73 million)
  • Solar power plant establishment: ₹243.40 million
  • Debt repayment/prepayment: ₹1,200 million
  • General corporate purposes and working capital: ₹706.23 million
  • Offer expenses: ₹150 million

Risk Factors

Business Risks: High customer concentration (top 10 customers contribute 91.51% of H1 FY26 revenue), dependence on automotive sector, raw material price volatility (steel constitutes major raw material), working capital intensity, and competition from established players.

Market Risks: Economic cycles affecting automotive demand, transition to electric vehicles impacting traditional component demand, global supply chain disruptions, and exchange rate fluctuations affecting export competitiveness.

Regulatory Risks: Compliance with environmental regulations, SEBI and stock exchange requirements, labor law compliance under new labor codes, and pending trademark applications.

Management & Promoters

Promoters: Gopal Krishan Kothari (Chairman and MD, 87.03% holding) with over 37 years experience, and Amit Kothari (Executive Director, 5.59% holding). Pre-IPO promoter holding is 92.62%, which will reduce post-IPO to meet minimum public shareholding requirements.

Management Team: Includes Naveen Behl (Whole-time Director), Ashok Bansal (CFO), and Amit Verma (Company Secretary and Compliance Officer). The company has established detailed investor grievance redressal mechanisms with no investor complaints in the past three years.

Market & Industry Position

The company operates in the precision forged components industry, which grew from USD 3.1 billion (FY20) to estimated USD 4.7 billion (FY25), projected to reach USD 7.5 billion by FY30. Kay Jay Forgings maintains leadership in crankshaft assemblies for two-wheelers and benefits from customer relationships spanning 2 to 37 years. The industry faces gradual shift towards electrification which may impact demand for traditional ICE components.

Competitors: Ramkrishna Forgings Limited, Kalyani Forge Limited, Sansera Engineering Limited, and Rolex Rings Limited.

Legal & Compliance

The company has obtained in-principle approvals from BSE and NSE for listing. Ongoing legal proceedings include certain regulatory and criminal proceedings involving ₹2.47 million (by company), tax proceedings (₹10.87 million against company), and other statutory matters. The company maintains IATF 16949:2016, ISO 14001:2015, and ISO 45001:2018 certifications across its manufacturing facilities.