Ludhiana-based auto components maker Kay Jay Forgings Limited has filed its Draft Red Herring Prospectus with markets regulator SEBI for a proposed initial public offering worth Rs 360 crore. The filing marks the company's maiden attempt to tap the public markets and comes as India's auto component sector continues on a growth trajectory.
The IPO comprises two parts. The fresh issue of equity shares is worth up to Rs 300 crore while the offer for sale component is valued at Rs 60 crore. Under the OFS existing promoters including Gopal Krishan Kothari Amit Kothari Madhu Kothari and GK Kothari will offload shares. The company may also consider a pre-IPO placement of up to Rs 40 crore and if completed the fresh issue size will be reduced accordingly. PL Capital Ltd is the sole book-running lead manager for the issue.
The company plans to deploy the fresh issue proceeds primarily toward capital expenditure and debt reduction. Around Rs 118.8 crore will go toward setting up a new forging and machining facility along with a solar power plant. Another Rs 90.51 crore will be used for debt repayment. The remaining funds are earmarked for general corporate purposes.
Kay Jay Forgings has shown steady financial progress in recent years. Revenue from operations grew to Rs 750.46 crore in FY25 from Rs 672.31 crore in FY24. Profit after tax also rose to Rs 29.01 crore from Rs 24.12 crore over the same period. The company's overall gearing improved significantly falling to 0.74x in FY25 from around 1.61x in FY23 reflecting a stronger balance sheet. Return on capital employed improved to 16.30 percent in FY25.
The company serves both automotive and non-automotive sectors though it carries a notable customer concentration risk. TVS Motor Company has historically accounted for a significant share of business and the company's efforts to diversify its client base will be closely watched by investors.
India's auto component sector is projected to reach $200 billion by 2030 and domestic OEM revenues are expected to grow 8 to 10 percent in FY2026. That backdrop provides a supportive environment for Kay Jay Forgings as it prepares for its public market debut.