The highly anticipated Indo Farm Equipment IPO has opened for bidding as of December 31, 2024. The Chandigarh-based manufacturer, incorporated in 1994, specializes in producing tractors, pick-and-carry cranes, and other harvesting equipment. With a solid reputation in the commercial vehicle segment, the company seeks to raise ₹260.15 crore through this public offering.
Key Details of the IPO
- Issue Price Band: ₹204-215 per share
- Lot Size: Minimum application of 69 shares and multiples thereafter
- Total Issue Size: ₹260.15 crore (Fresh issue of ₹184.90 crore and offer-for-sale worth ₹75.25 crore)
- IPO Dates: December 31, 2024, to January 2, 2025
- Anchor Investor Allocation: Raised ₹78 crore from 11 anchor investors by allocating 36,30,000 shares at ₹215 per share
The proceeds from the IPO will be used for expanding manufacturing facilities, repaying debts, and strengthening the company’s NBFC subsidiary, Barota Finance.
Business and Operational Overview
Indo Farm Equipment operates under two main brands, Indo Farm and Indo Power, exporting products to countries like Nepal, Syria, Sudan, Bangladesh, and Myanmar.
- Manufacturing Facility: Located in Baddi, Himachal Pradesh, spanning 127,840 square meters
- Annual Production Capacity:
- Tractors: 12,000 units
- Cranes: 1,280 units (to expand to 4,880 units by FY26)
- Product Range: Tractors (16 HP to 110 HP) and pick-and-carry cranes (9 to 30 tons)
The planned capacity expansion for cranes is expected to significantly boost production and meet rising demand.
Financial Performance
Indo Farm Equipment has shown consistent growth in revenues and profits, though the pace has been moderate in recent years.
| Metric | Q1 FY25 | FY24 |
|---|---|---|
| Revenue | ₹75.54 crore | ₹375.95 crore |
| Net Profit | ₹2.45 crore | ₹15.6 crore |
| Market Capitalization | ₹1,033.11 crore | – |
Despite challenges like high inventory levels and working capital management, the company is poised for long-term growth with its strategic investments and expansions.
Expert Opinions and Ratings
Several brokerage firms have weighed in on the IPO, offering insights into its potential as an investment.
Anand Rathi Research
- Rating: Subscribe for long-term
- Insight: A fully integrated manufacturer with promising expansion plans and strong promoter backing. The investment in Barota Finance is expected to bolster sales.
Arihant Capital Markets
- Rating: Subscribe
- Insight: Diversified customer base, growing manufacturing facilities, and solid growth potential. Valued at a P/E of 66.25 times based on FY24 EPS.
KR Choksey Research
- Rating: Neutral
- Insight: While expansion plans are promising, challenges like cyclical tractor sales and competition make the valuation appear expensive.
SBI Securities
- Rating: Subscribe for long-term
- Insight: Consistent financial growth with promising crane sales CAGR of 45%. Expansion of NBFC subsidiary is expected to support growth.
Canara Bank Securities
- Rating: Subscribe with caution
- Insight: Strong growth potential but high valuations. Suitable for investors with a high-risk appetite.
Bajaj Broking
- Rating: Subscribe for long-term
- Insight: Industry trends favor growth in the second half of the year. Capacity expansions and financial arm support will drive profitability.
Should You Subscribe?
Investors should consider the following factors:
- Pros:
- Expanding production capacities
- Diversified product portfolio and global presence
- Strong promoter backing and strategic investments
- Cons:
- High inventory levels
- Cyclical demand for tractors
- Valuation appears steep compared to peers
With expert recommendations largely favoring long-term investment, Indo Farm Equipment’s IPO presents a viable opportunity for investors willing to accept moderate risks.
Disclaimer
This article is for informational purposes only and should not be considered as financial advice. Investors are advised to consult their financial advisors before making any investment decisions.
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