Indo Farm Equipment Limited will launch its Initial Public Offering (IPO), consisting of a fresh issue and an offer for sale (OFS). The fresh issue is expected to raise Rs. 184.9 crore, and the OFS aims to raise Rs. 75.25 crore, totalling Rs. 260.15 crore.
The IPO aims to use funds for debt repayment and the company’s growth opportunities. It will open for bidding on December 31, 2024, with a price range of 204 to 215, and close on January 1, 2025. Indo Farm Equipment Limited shares are likely to be listed on January 7, 2025, in the NSE and BSE shortly.
Indo Farm Equipment
Founded in 1994, Indo Farm Equipment Limited has established itself as a premier manufacturer of world-class tractors, pick-and-carry cranes, and farm equipment. The company, with over two decades of experience, produces products under its trusted brand names, catering to both domestic and international markets. Its manufacturing facilities span 127,840 sq. meters in Baddi, Himachal Pradesh, and include a comprehensive range of equipment and units for fabrication, assembly, and quality control.
Indo Farm Equipment’s integrated operations allow for efficient in-house production, reducing reliance on third parties and ensuring high-quality outputs. With a production capacity of 12,000 tractors and 720 pick-and-carry cranes annually, the company remains at the forefront of the agricultural and construction sectors. It is also expanding its capabilities with the addition of a new unit to increase crane manufacturing capacity by 3,600 units per year.
With a robust sales network across India and exports to several countries, Indo Farm Equipment is committed to providing reliable machinery and financial solutions through its retail financing company. As the company continues to grow, its dedication to innovation and quality remains central to its success.
GMP of Indo Farm Equipment Limited:
The share price of Indo Farm Equipment Limited in the grey market was trading at 37.21% premium as of December 30, 2024. The shares in Grey Market traded at Rs. 295. This gives it a premium of Rs. 80 per share over the cap price of Rs. 215.
Shares offered by Indo Farm Equipment Limited:
The offering includes shares for various investor categories: QIB shares at 37.6 crore (50%), and HNI shares accounting for 11.3 crore (15%). Retail investors have been allocated 26.3 crore (35%). The total shares offered in the IPO amount to 75.25 crore (100%).
Promoters of Indo Farm Equipment Limited
The promoters of Indo Farm Equipment include Ranbir Singh Khadwalia and Sunita Saini. They hold significant influence over the company’s strategic direction and decision-making.
The selling shareholder for the IPO is Ranbir Singh Khadwalia. It offers equity shares worth up to Rs. 0.35 crore. The issue is a combination of a fresh issue of 0.86 crore shares aggregating to Rs 184.90 crores and an offer for sale of 0.35 crore shares aggregating to Rs 75.25 crores.
Book running Lead Managers of Indo Farm Equipment Limited:
The Indo Farm Equipment IPO’s lead managers are Aryaman Financial Services Limited. The registrar of the offer is MAS Services Limited, ensuring the IPO process remains smooth and compliant with regulatory standards.
IPO Objectives of Indo Farm Equipment:
The primary objectives of the Indo Farm Equipment IPO are:
- Raise funds for setting up a new dedicated unit to expand Pick & Carry Cranes manufacturing capacity.
- Repay or pre-pay, in full or in part, certain borrowings availed by the company.
- Further invest in the NBFC subsidiary (Barota Finance Ltd.) to augment its capital base for future requirements.
- Utilise funds for general corporate purposes to support ongoing operations and growth.
- Benefit from the listing of equity shares on stock exchanges to increase brand visibility.
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Financials Highlight
Indo Farm Equipment’s revenue has increased from Rs 622.84 crore in FY23 to Rs. 647.95 crore in FY24, which has grown by 4.03%. The company net profit increased from Rs. 15.37 crore in FY23 to a net profit of Rs. 15.60 crore in FY24, a 1.5% increase.
The PAT margin is 4.16% in FY24 and has a debt-to-equity ratio of 0.01. ROE and ROCE are 5.13% and 8.96%, respectively. Furthermore, they are continuously reducing their debt from Rs. 280.65 crore in FY23 to Rs. 270.54 crore in FY24, a 3.60% reduction.
Key ratios & Competitors
Indo Farm Equipment Limited has a P/E ratio of 54.39, which is higher than its competitors Escorts Kubota Limited (P/E of 36.79) and Action Construction Equipment Limited (P/E of 47.42).
Indo Farm Equipment’s EPS (basic) of 4.15 and EPS (diluted) of 4.15 are also much lower compared to Escorts Kubota Limited (EPS Basic of 27.56 and EPS Diluted of 96.24) and Action Construction Equipment Limited (EPS Basic and Diluted of 27.56).
In terms of Price to Book Value (P/B), Indo Farm Equipment has a ratio of 2.55, which is higher than Escorts Kubota Limited (P/B of 2.28) but lower than Action Construction Equipment (P/B of 10.23).
Overall, Indo Farm Equipment appears at a higher valuation compared to its peers based on P/E and EPS, while its P/B ratio is in the middle range.
Strengths of Indo Farm Equipment:
- Fully integrated and established manufacturing setup.
- Well-educated and experienced management.
- In-house NBFC setup.
- Manufacturing a Wide Range of Products.
- Product acceptability in multiple countries and wide variety of financial institutions.
Weaknesses of Indo Farm Equipment:
- Legal proceedings involving our company and its promoters could negatively affect our business and financial condition.
- A decline in demand or manufacturing of tractors and Pick & Carry cranes may impact our revenue and operations.
- Delays or cost overruns in our expansion plans could harm our business prospects and financial performance.
- Risks related to raw material availability, supplier agreements, and pricing pressure could affect profitability and operations.
- Geographical concentration, dependency on financing, seasonality, transportation issues, and employee disputes could adversely affect our business.
Conclusion
Indo Farm Equipment Limited’s IPO represents a strategic move for expansion, showing modest but steady financial growth. While the company demonstrates strong manufacturing capabilities and diverse product offerings, its higher P/E ratio compared to competitors and various operational risks suggest investors should carefully evaluate the investment opportunity against market alternatives.
Written By Fazal Ul Vahab C H
Disclaimer
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