| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 668 to ₹ 704 | 21 | 20th Dec, 2024 – 24th Dec, 2024 | ₹ 1,250.00 Cr |
About Carraro India Limited IPO
The company is a technology-driven integrated supplier that develops complex engineering products and solutions for its original equipment manufacturer (“OEM”) customers. It is also an independent Tier-I solution provider of axles, transmission systems, and gears for India’s agricultural tractor and construction vehicle industries. The company primarily manufactures axles and transmission systems for agricultural tractors and construction vehicles such as backhoe loaders, soil compactors, cranes, self-loading concrete mixers, and small motor graders. The company’s products are mission-critical for its customers, as they constitute important components of the customer’s final products. The company provides a diverse range of products, including axles and transmission systems of different HP ranges for off-highway vehicles in the agricultural tractor and construction vehicle sectors and gears, shafts, and ring gears for industrial and automotive vehicles. The company owns and operates two manufacturing plants in Pune, Maharashtra, India, which include the driveline manufacturing plant, occupying a plot area of approximately 84,000 square meters and the gears manufacturing plant, occupying a plot area of approximately 78,000 square meters. Over the years, the company has built customer relationships through decades of close collaboration and the supply of customized products. As of September 30, 2024, the company supplies to 38 manufacturers in India. The company also supplies to international manufacturers, with some exports facilitated through Carraro Drive Tech Italia S.p.A., the Carraro Group’s driveline business leader. The company has developed expertise in the agricultural tractor and construction vehicle industry in India and has established a network of 220 suppliers based in eight states in India and 58 suppliers internationally.
Objective of the Carraro India Limited IPO
The company will not receive any proceeds from the issue as the entire issue is comprised of OFS.
Rationale To Carraro India Limited IPO
One of the leading tier 1 suppliers of transmission systems and a key supplier of axles in the agricultural tractor and construction vehicle industries in India
The company is one of the leading independent tier 1 suppliers of axles, transmission systems and gears for the agricultural tractor and construction vehicle industries in India. As of March 31, 2024, the company has established itself as the market leader in providing transmission systems for tractors up to 150HP and 4-wheel drive capabilities. As of 2023, the company is the leading sole supplier in the non-captive segment of the agriculture tractors transmission market and the market leader with a 60-65% share of the non-captive construction vehicle transmission market. Their axles and transmission system products are mission-critical for their customers, as their products constitute important components of their customers’ final products. The company’s axles and transmission system products are not easily replaceable with components from other suppliers due to their complexity and the time required to adapt them for use by an OEM customer in its products. The company believes the complexity of its products and the length of its customer relationships position it favourably compared to competition from other suppliers.
Strong, in-house R&D capabilities with proprietary IP rights to facilitate innovation of future-ready products
The company was among the first to enter the agricultural tractor and construction vehicle component market with its dedicated R&D team and centre, as the Carraro Group entered India in 1997 and established its manufacturing facility in Pune and R&D centre in 2006. As part of the Carraro Group, the company use the Carraro corporate name, logo and trademarks pursuant to an agreement with Carraro S.p.A. (Parent company). On October 1, 2023, Carraro S.p.A. transferred the worldwide exclusive rights, title and interest in the IP rights of certain products customized for the Indian market to the company and entered into an engineering service agreement with the company to provide engineering support services on the maintenance of products and child parts to support their development needs. This has decreased royalties paid to the Carraro Group from Rs. 40.75 crores in FY22 to Rs. 25.60 crores in FY24. After the company’s acquisition of CTIPL (subsidiary) in June 2024, they also acquired the R&D centre in Pune, Maharashtra, India and the R&D team of CTIPL. CTIPL will continue providing service support to the Carraro Group’s R&D departments. The transfer of the foregoing IP rights, acquisition of CTIPL, together with the engagement of Carraro S.p.A. to support their development needs, has enabled the company to strengthen their R&D offering further and integrate the design, R&D and manufacturing capabilities of their products.
Valuation of Carraro India Limited IPO
Carraro India was incorporated on April 11, 1997. It is one of the leading independent Tier 1 suppliers of axles, transmission systems, and gears for India’s agricultural tractor and construction vehicle industries. As the Indian subsidiary of the Carraro Group, Carraro India plays a significant role in the global driveline systems market, particularly for off-highway vehicles like tractors and construction machinery. In India, agricultural tractors and construction vehicle sales are projected to grow driven by factors such as farm mechanization, infrastructure development, and favourable government policies. Further, Rs. 27 lakh crores investment under the National Infrastructure Pipeline (NIP) and Rs. 7 lakh crores allocated for road and highway projects over the next 2-3 years are expected to increase the demand for construction vehicles significantly. Overall, agricultural tractors dominate the market with a 90% share due to their essential role in farming, while construction vehicles account for the remaining 10%. This construction segment is further supported by Rs. 10 lakh crores allocated to infrastructure in the 2023-24 budget. In terms of financial performance, the company’s revenue from operations increased by 4.4% YoY to reach Rs 1,770.5 crores in FY24. Additionally, the PAT saw a rise of 29.4% YoY to Rs 60.6 crores in FY24, with margins significantly lower than its peers at 3.50%. The issue is valued at a price-to-earnings (P/E) ratio of 64x on the upper price band based on FY24 earnings, which is comparatively expensive compared to its peers. Considering the company’s sluggish financial performance and relatively high valuation compared to its peers, we recommend an “AVOID” rating for this issue.
What is the Carraro India Limited IPO?
Carraro India IPO is a book built issue of Rs 1,250.00 crores. The issue is entirely an offer for sale of 1.78 crore shares. Login to your account now.
How to apply for the Carraro India Limited IPO through StoxBox?
To apply for the Carraro India Limited IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Carraro India Limited IPO open?
Carraro India Limited IPO is opening on 20th December 2024. Apply Now
What is the lot size of the Carraro India Limited IPO?
The Lot Size of Carraro India Limited IPO is 21 equity shares . Login to your account now
When is the Carraro India Limited IPO allotment date?
The allotment Date for Carraro India Limited IPO is 26th December 2024. Login to your account now.
When is the Carraro India Limited IPO listing date?
The listing Date for Carraro India Limited IPO is 30th December 2024. Login to your account now
What is the minimum investment required for the Carraro India Limited IPO?
In the Retail segment the minimum investment required is Rs. 14,784. Login to your account now
What is the maximum investment allowed for the Carraro India Limited IPO?
In the Retail segment the maximum investment requirement is Rs. 192,192. Login to your account now
What are the risks associated with investing in the Carraro India Limited IPO?
- The company’s top 5 and top 10 customers generated 69.6% and 87.9% of its revenue in the six months ended September 30, 2024, while in FY24, it derived 69.4% and 85.4% of its revenue from them, respectively. If the company is unable to retain key customers, attract new ones, or expand its customer network, it could negatively impact its business and financial results .
- The company’s performance heavily relies on the tractor and construction vehicle markets, which accounted for 45.1% and 41.3% of its FY24 revenue, respectively. Any negative changes in the conditions affecting these markets could adversely impact the company’s business, financial condition, operational results, cash flows, and future prospects.
- The company’s agricultural tractor business is seasonal, and a decrease in sales during certain quarters could adversely impact its financial performance.
When will the Carraro India Limited IPO shares be credited to my Demat account?
The Carraro India Limited IPO be credited to the account on allotment date which is 27th December 2024. Login to your account now
Where can I find the Carraro India Limited IPO prospectus?
The prospectus of Carraro India Limited IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to Carraro India Limited IPO?
| IPO Open Date | Friday, December 20, 2024 |
| IPO Close Date | Tuesday, December 24, 2024 |
| Basis of Allotment | Thursday, December 26, 2024 |
| Initiation of Refunds | Friday, December 27, 2024 |
| Credit of Shares to Demat | Friday, December 27, 2024 |
| Listing Date | Monday, December 30, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on December 24, 2024 |
