Kay Jay Forgings gets SEBI observations for Rs 360 crore IPO

The Development

Kay Jay Forgings Limited, a Ludhiana-based maker of forged and machined automotive components, has received observations from the Securities and Exchange Board of India (SEBI) on its draft offer document, clearing the way for the company to proceed with an initial public offering of up to Rs 360 crore. The clearance was reported on 31 July 2026 by The Economic Times, which noted that Kay Jay Forgings and power-infrastructure EPC firm Polite Powertech both secured the regulator's nod in the same window.

The company had filed its draft red herring prospectus (DRHP), dated 30 March 2026, with SEBI in April 2026. The draft offer document is on the record with SEBI. SEBI's observations mark a procedural milestone rather than an approval: the regulator's standard disclaimer, reproduced in the prospectus, states that the equity shares "have not been recommended or approved" by SEBI, nor does SEBI guarantee the accuracy or adequacy of the document. The observations allow the company to move to the red herring prospectus stage, at which the price band, lot size and issue dates will be set.

The Company

Kay Jay Forgings describes itself in the DRHP as a precision-engineering integrated manufacturer of forged and machined components, primarily supplying original equipment manufacturers (OEMs) in the automotive sector. Per the DRHP, citing a CARE report, the company was the largest supplier of crankshafts and crankshaft assemblies to OEMs in India for two-wheelers, with an estimated domestic market share of around 36% in Fiscal 2025. In the six months to 30 September 2025 it supplied a portfolio of 286 products, including crankshafts, lower-bracket assemblies, gear-shift lever assemblies, propeller shafts and steering yokes.

The company discloses that it operates six manufacturing facilities - four in Ludhiana, Punjab, and two in Hosur, Tamil Nadu - and serves customers including TVS Motor Company, Honda Motorcycle and Scooter India and Mahindra and Mahindra, alongside exports to Hungary, France, Germany, Sweden and the USA. Its promoters are Gopal Krishan Kothari and Amit Kothari.

On financials, the DRHP reports revenue from operations of Rs 750.46 crore in Fiscal 2025, up from Rs 672.32 crore in Fiscal 2024 and Rs 602.69 crore in Fiscal 2023. Profit after tax was Rs 29.02 crore in Fiscal 2025, against Rs 24.13 crore and Rs 13.81 crore in the two preceding years. For the six months to 30 September 2025, the company discloses revenue of Rs 466.06 crore and profit after tax of Rs 21.36 crore.

The Offer Structure

Per the DRHP, the offer comprises a fresh issue of equity shares aggregating up to Rs 300 crore and an offer for sale of up to Rs 60 crore, for a total of up to Rs 360 crore, each share carrying a face value of Rs 5. The selling shareholders in the offer for sale are promoter Gopal Krishan Kothari (up to Rs 52 crore), promoter Amit Kothari (up to Rs 3 crore) and promoter-group holders Madhu Kothari (up to Rs 3 crore) and G K Kothari and Sons (up to Rs 2 crore). The company will not receive any proceeds from the offer for sale.

The stated objects of the fresh issue are funding capital expenditure towards a proposed forging facility, a proposed machining facility and a proposed solar plant (Rs 118.80 crore), repayment or pre-payment of certain borrowings (Rs 90.51 crore), and general corporate purposes. The draft prospectus also flags a possible pre-IPO placement of up to Rs 40 crore, which if completed would reduce the fresh issue. The book-running lead manager is PL Capital Markets Private Limited and the registrar is Bigshare Services Private Limited; the shares are proposed to be listed on the NSE and BSE. Readers working through the arithmetic of an allotment can use Oquilia's lumpsum calculator or CAGR calculator, and prior primary-market coverage sits on the /news desk.

Risk Factors

The risks below are drawn from the risk-factors section of the company's own draft prospectus and are reported as disclosure, not as an assessment. The DRHP lists customer concentration first: the top 10 customers contributed roughly 90% of revenue from operations in Fiscal 2025, and the loss of any of them could materially affect the business. The company discloses that it does not have long-term agreements with its customers, so purchase volumes can be reduced or withdrawn.

The DRHP also flags heavy dependence on the automotive sector, which contributed around 93.5% of revenue from operations in Fiscal 2025, exposing the company to any cyclical downturn. Among the risk factors the company discloses are its reliance on the availability and cost of steel, its primary raw material, much of which is procured without long-term binding agreements, and the geographic concentration of manufacturing in Ludhiana and Hosur. The prospectus separately notes that a substantial share of revenue comes from crankshafts, and that a shift towards electric vehicles could structurally affect long-term demand for that product.

What Happens Next

With SEBI's observations in hand, the standard sequence from here runs through the red herring prospectus, at which the company sets its price band, lot size and issue dates, followed by the anchor-investor book one working day before the offer opens. The three-day public subscription window then runs across the qualified-institutional, non-institutional and retail categories, with bidding data published by the exchanges.

After the issue closes, the basis of allotment is finalised with the registrar, refunds and unblocking of application amounts follow for unsuccessful applicants, and the shares are credited before listing on the NSE and BSE. None of these dates has been announced yet; they will appear in the red herring prospectus and exchange notices when the company launches the offer.

FAQ

Should I apply for this IPO?

Oquilia does not make recommendations. This report is informational and is not investment advice or a recommendation to subscribe. The RHP, including the complete risk-factors section, is available on SEBI's website and the exchanges - read it directly before making any decision.

What do SEBI's observations mean?

Observations are SEBI's clearance for the company to proceed with its offer. They are not an approval of the issue's merits or an endorsement. SEBI's own disclaimer, reproduced in the prospectus, states that the shares have not been recommended or approved by SEBI and that it does not guarantee the accuracy of the document.

What is the size of the Kay Jay Forgings IPO?

Per the DRHP, the offer aggregates up to Rs 360 crore - a fresh issue of up to Rs 300 crore and an offer for sale of up to Rs 60 crore by promoter and promoter-group selling shareholders. The face value is Rs 5 per share, and the company receives no proceeds from the offer-for-sale portion.

What is the price band and lot size?

These are not yet set. The price band, lot size and issue dates are fixed only when the company files its red herring prospectus with the registrar, after SEBI's observations. The draft prospectus leaves these fields blank, marked for completion at the later stage.

Where can I read the RHP?

The draft red herring prospectus is available on SEBI's website at sebi.gov.in and on the NSE and BSE websites, as well as the book-running lead manager's site. Read the full risk-factors section before forming any view.

This report is based on the draft red herring prospectus filed with SEBI. It was surfaced via coverage in The Economic Times.