KVS Castings Makes Strong Debut with 24.30% Premium

KVS Castings Limited, the manufacturer of cast iron, SG iron, alloy steel, and stainless steel castings serving the automobile, locomotive, and engineering sectors, made a strong debut on BSE SME on October 6, 2025. After closing its IPO bidding between September 26-30, 2025, the company commenced trading with an 18.39% premium, opening at ₹66.30 and rising to ₹69.61 with gains of 24.30%.

KVS Castings Listing Details

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KVS Castings Limited launched its IPO at ₹56 per share with a minimum investment of 4,000 shares costing ₹2,24,000. The IPO received a moderate response with a subscription of 4.09 times - individual investors at moderate 2.60 times, NII at solid 5.02 times, and QIB at strong 6.03 times.

First-Day Trading Performance Outlook

• Listing Price: KVS Castings share price opened at ₹66.30, representing a premium of 18.39% from the issue price of ₹56, and rose to ₹69.61, delivering exceptional gains of 24.30% for investors, reflecting positive market sentiment towards the castings sector.

Growth Drivers and Challenges

Growth Drivers:

• Diversified Product Portfolio: Comprehensive range of over 150 products including suspension brackets, brake drums, gearbox housing, pump bodies, oil filters, gear shifters, compressor housings, and leaver shifts made from cast iron to stainless steel serving automobile, locomotive, and engineering sectors.
• Integrated Manufacturing Capabilities: In-house tool and pattern making facilities, strategic location advantages, dedicated workforce of 121 permanent employees, and comprehensive casting solutions tailored to specific customer requirements ensuring operational excellence.
• Strong Financial Metrics: Impressive PAT growth of 11% to ₹6.63 crore despite 8% revenue decline, healthy ROE of 22%, strong ROCE of 23.78%, low debt-to-equity ratio of 0.11, and impressive margins with PAT margin of 13.22% and EBITDA margin of 19.65%.

Challenges:

• Revenue Decline Concerns: Top line decreased 8% from ₹54.70 crore in FY24 to ₹50.43 crore in FY25 raising concerns about demand sustainability and market positioning in highly competitive and fragmented castings segment.
• Full Valuation Metrics: Post-issue P/E of 15.85x and price-to-book value of 2.89x appearing fully priced despite strong listing performance, requiring sustained revenue recovery and profit growth to justify premium valuation.
• Competitive Industry Landscape: Operating in highly competitive and fragmented ferrous castings manufacturing segment with numerous established players requiring continuous innovation and quality maintenance to sustain market position and customer base.

Utilisation of IPO Proceeds

• Capital Expenditure: ₹21.50 crore for capital expenditures enhancing manufacturing capabilities, expanding production capacity, and improving operational efficiency in castings manufacturing business.
• General Corporate Purposes: Supporting business operations, working capital requirements, and strategic initiatives for sustained growth in competitive castings manufacturing segment.

Financial Performance of KVS Castings

• Revenue: ₹50.43 crore for FY25, showing concerning decline of 8% from ₹54.70 crore in FY24, reflecting challenges in demand generation and market conditions in automobile and engineering sectors.
• Net Profit: ₹6.63 crore in FY25, representing solid growth of 11% from ₹5.95 crore in FY24, indicating operational efficiency improvements and margin expansion despite top-line decline demonstrating strong cost management.
• Financial Metrics: Healthy ROE of 22%, strong ROCE of 23.78%, low debt-to-equity ratio of 0.11, impressive PAT margin of 13.22%, solid EBITDA margin of 19.65%, and estimated market capitalisation of ₹130.54 crore.