The Carraro India IPO, a significant public issue worth ₹1,250 crore, opened for subscription on December 20, 2024, and will remain open until December 24, 2024. With shares priced in the range of ₹668-704 apiece, this IPO has generated considerable interest, especially among long-term investors.
Key Details of the Carraro India IPO
| Details | Information |
|---|---|
| IPO Dates | December 20, 2024 – December 24, 2024 |
| Price Band | ₹668 – ₹704 per share |
| Minimum Investment Lot | 21 shares and multiples thereafter |
| Issue Size | ₹1,250 crore |
| Type of Issue | Offer-for-Sale (OFS) |
| Promoter | Carraro International BE |
| Anchor Investors Allocation | ₹375 crore (53.26 lakh shares at ₹704/share) |
| Tentative Listing Date | December 30, 2024 |
| Book Running Lead Managers | Axis Bank, BNP Paribas, Nuvama Wealth Management |
| Registrar | Link Intime India |
| Reservations | QIBs: 50%, NIIs: 15%, Retail Investors: 35% |
| Market Cap Post IPO | ₹4,002.3 crore |
| Return on Net Worth (RONW) | 16.92% |
| P/E Ratio at Upper Price Band | 45.83 times |
| EV/EBITDA | 31.6 times |
About Carraro India
Incorporated in 1997, Carraro India specializes in manufacturing a wide range of components, from the smallest gear to complete tractor systems. The company:
- Designs and manufactures transmission systems for agricultural and construction equipment.
- Operates two state-of-the-art manufacturing plants in Pune, Maharashtra.
- Driveline Plant: Includes technologies for casting, machining, assembly, prototyping, testing, and painting.
- Gear Plant: Features heat treatment processes like carburizing, induction, and nitriding.
Carraro India has established a robust supplier network comprising:
- 220 domestic suppliers across eight Indian states.
- 58 international suppliers.
Financial Performance
Carraro India has demonstrated notable financial growth:
- Revenue: ₹922.74 crore for the six months ending September 30, 2024.
- Net Profit: ₹49.73 crore during the same period.
- Growth over FY22-FY24:
- Revenue: 9.3% CAGR.
- EBITDA: 48.1% CAGR.
- PAT: 67.0% CAGR.
Key Highlights and Strengths
- Leading Tier-1 Supplier: The company is a key player in axles, transmission systems, and gears for tractors and construction vehicles.
- Diverse Client Base: Supplies components to leading industrial and automotive OEMs.
- Global Presence: Exports 33% of components to its parent company, Carraro SPA in Italy.
- Technological Innovation: Focused on creating future-ready products with advanced manufacturing capabilities.
- Growth Potential: Indian tractor and construction vehicle industries are projected to grow at a CAGR of 7-8% over FY24-FY29E.
Concerns and Risks
- Complete OFS: The IPO is purely an Offer-for-Sale, meaning proceeds will not be reinvested into the company’s growth or operations.
- Seasonality of Business: The company’s performance is subject to seasonal demand variations.
- Dependence on Select Clients: A significant portion of revenue comes from a limited number of clients.
- Royalty Payments: Obligations to pay royalties to the parent company could impact profitability.
Analyst Recommendations
SBI Securities:
- Recommends subscribing at the cutoff price for the long term.
- Highlights the growth potential of the domestic tractor industry and Carraro India’s market positioning.
Indsec Research:
- Assigns a subscribe rating citing strong growth potential in the Indian tractor industry and export opportunities.
Anand Rathi Research:
- Rates the IPO as fairly priced with a “subscribe for long term” recommendation.
- Highlights the company’s P/E ratio of 45.83 times and robust financial performance.
Canara Bank Securities:
- Suggests subscribing to the IPO for long-term investors willing to take on higher risks.
Investment Rationale
Carraro India’s strong market position, advanced manufacturing capabilities, and established relationships with marquee clients position it well for long-term growth. However, the purely OFS nature of the IPO and reliance on select clients warrant careful consideration.
FAQs
What is the IPO price band for Carraro India?
The price band is ₹668-704 per share.
What is the minimum investment for retail investors?
Investors can apply for a minimum of 21 shares, requiring an investment of approximately ₹14,112-14,784.
When does the IPO close for subscription?
The IPO closes on December 24, 2024.
Is the IPO purely an Offer-for-Sale (OFS)?
Yes, the IPO is entirely an OFS, with no proceeds being reinvested into the company.
When will the shares be listed on the stock exchanges?
The tentative listing date is December 30, 2024.
Who are the lead managers for the Carraro India IPO?
The lead managers are Axis Bank, BNP Paribas, and Nuvama Wealth Management.
Should I apply for this IPO?
Analysts recommend subscribing for the long term, considering the company’s growth potential, strong market position, and financial performance. However, investors should be mindful of the risks associated with a purely OFS structure.
