IPO listed on 7 Jan'25
Indo Farm Equipment Ltd
Minimum Investment
₹ 14,835 / 69 shares
Grey market premium
₹ 76 (35% premium)
Issue price
₹ 215
Listing price
₹ 256
Listing gains
41 (19%)
Listing on
January 7, 2025
Our Verdict:
Subscribe
- Indo Farm Equipment Ltd (Indo Farm) has experienced steady but slightly slower CAGR growth in sales, EBITDA, and PAT over the FY22-24 period. A significant expansion is underway, with the addition of 3,600 crane units annually, expected to begin impacting results in the second half of FY26.
- Over the past three years, sales of Indo Farm’s pick & carry cranes have grown at a CAGR of 53%, with the facility operating at nearly full capacity. Additionally, the company aims to double the capital base of its non-banking financial company (NBFC) subsidiary, likely enhancing tractor sales.
- The IPO is set at a P/E multiple of 52x based on FY24 earnings. The grey market premium suggests a solid debut on the stock exchanges.
- Although the valuation appears steep, the company presents potential. Investors with a higher risk appetite might consider subscribing to the IPO for the long term, whereas others may choose to invest post-listing after the stock price stabilizes in the secondary market.
About the company
Founded in
5 Oct'94
Managing director
Ranbir Khadwalia
- Indo Farm is a well-established, fully integrated manufacturer of tractors and pick & carry cranes. Its expansive manufacturing operations cover 127,840 square meters. Originally an agricultural equipment producer, Indo Farm is transitioning into a construction equipment company. The pick & carry crane division has seen an impressive compounded annual growth rate (CAGR) of 53% from FY22 to FY24, operating at full capacity.
- To accommodate increasing demand, Indo Farm has purchased additional land near its current plant to set up a specialized pick & carry crane facility. Scheduled to begin production in November 2025, this new unit aims to manufacture 3,600 cranes annually, bolstering the company's foothold in the niche crane market.
STRENGTHS
- Consistent Growth: Indo Farm has shown steady financial growth, with operational revenue, EBITDA, and net profit registering compounded annual growth rates (CAGRs) of 3%, 10%, and 7% respectively, from FY22 to FY24.
- Solid Profitability Margins: Indo Farm stands out for having some of the highest profitability margins in the industry, with an EBITDA margin of 16.66% as of FY24. Its strong backward integration allows for high cost efficiency. This approach enables the production of a wide variety of tractors and cranes in numerous variants while maintaining most component manufacturing in-house, supporting a solid EBITDA margin.
- Extensive Dealer Network: Indo Farm's products are distributed through an extensive network of dealers, which includes 159 tractor dealers and 16 crane dealers across India. With recent equity investments, the firm plans to expand its dealer network to 500 within the next three years. Additionally, Indo Farm has a significant international presence, with operations in over 30 countries.
RISK FACTORS
- Modest Return Metrics: While Indo Farm's EBITDA margin has improved due to the higher margin contributions from crane products, the overall returns remain unimpressive. The Return on Equity stands at 5.13%, and the Return on Capital Employed is at 8.96%, both of which are significantly lower than those of its listed peers.
- Leverage Ratios: The Debt Service Coverage Ratio (DSCR) was recorded at 0.75 as of March 2024. Operating in a capital-intensive industry, Indo Farm requires continuous capital injections, which have led to high levels of debt.
- Seasonal Revenue Fluctuations: Tractor sales are closely linked to agricultural cycles, particularly the harvest season, which precedes the next planting period. As a result, about 60-65% of the company’s annual revenue is concentrated in the second half of the calendar year, leading to significant seasonal variations in earnings.
Issue details
Issue type
Mainstream
Issue size
₹ 260.15 crore
Fresh Issue
₹ 184.90 crore
OFS
₹ 75.25 crore
Price range
₹ 204 - 215
Lot size
69 shares
Issue Objective
Indo Farm intends to utilise the net proceeds from the fresh issue to:
- Establish a new unit for expanding Pick & Carry Cranes production;
- Repay or partially prepay specific company borrowings;
- Invest further in its NBFC subsidiary, Barota Finance Ltd., to boost its capital base; and
- Address general corporate needs.
Dates
Bidding open
31 Dec'24
Bidding close
2 Jan'25
Allotment date
3 Jan'25
Refund date
6 Jan'25
Listing
7 Jan'25
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
This document has been issued by Liquide Solutions Private Limited for information purposes only. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall Liquide Life Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein.