Carraro India Limited IPO: 10 Key Things to Know Before Investing
Carraro India Limited, a leading supplier of axles, transmission systems, and gears for agricultural tractors and construction vehicles, is launching its Initial Public Offering (IPO) from 20th December to 24th December 2024. Backed by strong manufacturing capabilities and a dominant market share in its segment, the IPO presents an exciting opportunity for investors.
Here are the 10 key things you should know before investing in the Carraro India Limited IPO:
- What makes Carraro India Limited a good opportunity?
Carraro India Limited specializes in mission-critical components such as axles, transmission systems, gears, shafts, and ring gears, catering to off-highway vehicles like agricultural tractors and construction vehicles.
- The company holds a 60–65% market share in the non-captive construction vehicle transmission segment.
- Carraro India serves 38 OEM customers, including marquee names like Mahindra & Mahindra, TAFE, Escorts Kubota, and John Deere.
- It has demonstrated strong financial performance and caters to a diversified revenue base, with 64.13% of revenue from domestic sales and 35.87% from exports.
- What are the IPO dates, price band, and issue size?
Here are the key details of the Carraro India Limited IPO:
- IPO Dates: December 20th – December 24th, 2024
- Listing Date: December 30th, 2024
- Price Band: ₹668 – ₹704 per share
- Total Issue Size: ₹1,250 Cr (Offer for Sale: ₹1,250 Cr)
- Face Value: ₹10 per share
- Listing Exchange: BSE, NSE
- Lot Size: 21 shares
- Promoters: Tomaso Carraro, Enrico Carraro, Carraro S.p.A., and Carraro International S.E.
- What is the minimum investment for the IPO?
The minimum investment required to apply for the Carraro India Limited IPO is ₹14,028, based on the lot size of 21 shares at the lower price band of ₹668 per share. However, to increase your chances of allotment, we recommend applying at the upper price band, which would require ₹14,784 (21 shares at ₹704 per share).
- What does the company do?
Established in 1997, Carraro India Limited is a technology-driven supplier of axles, transmission systems, and gears for off-highway vehicles.
- Core Products: Axles, transmission systems (35 HP–150 HP), gears, and shafts for agricultural and construction vehicles.
- Manufacturing Facilities: Two advanced plants in Pune:
- Driveline Plant: Produces axles and transmission systems (capacity utilization: 81.07%).
- Gears Plant: Specializes in gears, shafts, and related components (capacity utilization: 89.94%).
- Production FY24:
- 68,961 axles
- 46,579 transmission systems
- 16,18,845 gears, shafts, and components
- What is the objective of the IPO?
The primary objectives of the Carraro India Limited IPO are:
- Offer for Sale (OFS): 1,77,55,680 equity shares with a face value of ₹10 each, aggregating to ₹1,250 Cr, by the promoter selling shareholders.
- Listing Benefits: To achieve the benefits of listing equity shares on stock exchanges, enhancing visibility and liquidity for shareholders.
- How much is reserved for retail and other investors?
The IPO allocation is as follows:
- Qualified Institutional Buyers (QIBs): Up to 50%
- Non-Institutional Investors (NIIs): At least 15%
- Retail Investors: At least 35%
- What are the key strengths and risks?
Strengths:
- Market Leader: Dominant position in tractor transmission systems (up to 150 HP and 4WD).
- Diversified Revenue: Balanced mix of domestic (64.13%) and export (35.87%) revenue.
- Marquee Clients: Long-term relationships with top OEMs like Mahindra & Mahindra, John Deere, and TAFE.
- Product Innovation: Advanced products like the T135 transmission system and electric drivelines.
- Efficient Manufacturing: High-capacity utilization at both plants.
Risks:
- Customer Concentration: Over 69.55% of revenue from the top 5 customers.
- Export Dependence: Heavily reliant on the European Union (34.64% of FY24 revenue).
- Litigation Risks: Pending tax litigations totaling ₹306.82 Cr.
- Operational Risks: Dependence on two plants in Pune, making operations vulnerable to disruptions.
- Quality Concerns: Past warranty claims due to product malfunctions.
- What is the financial performance of Carraro India Limited?
The company has shown steady growth over the years:
| Period Ended | Sep 30, 2024 | Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 |
| Assets (₹ Cr) | ₹1,093.41 | ₹1,072.89 | ₹1,072.39 | ₹1,012.44 |
| Revenue (₹ Cr) | ₹914.62 | ₹1,788.97 | ₹1,713.14 | ₹1,497.54 |
| Profit After Tax (₹ Cr) | ₹49.73 | ₹62.56 | ₹48.46 | ₹22.43 |
- What is the allotment and listing timeline?
- Basis of Allotment: December 26, 2024
- Refund Initiation: December 27, 2024
- Shares Credited to Demat Accounts: December 27, 2024
- Listing Date: December 30, 2024
- Should you invest in Carraro India Limited IPO?
Carraro India Limited boasts a strong market position, long-term client relationships, and a diversified revenue stream. However, the IPO also presents risks like customer concentration and litigation concerns.
Investors are advised to evaluate their risk appetite and investment goals carefully before participating in the IPO.
