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PremiumIndo Farm Equipment IPO Day 3 Highlights: The initial public offering (IPO) of tractor manufacturer Indo Farm Equipment Ltd closed for subscription today. The public issue witnessed a strong demand as the IPO got heavily oversubscribed to the tune of nearly 230 times. The bidding for the Indo Farm Equipment IPO commenced on December 31, and concluded on January 2. Indo Farm Equipment IPO price band was set at ₹204 to ₹215 per share. At the upper end of the price band, the company raised ₹260.15 crore from the book-built issue, which is a combination of a fresh issue of 86 lakh equity shares worth ₹184.90 crore and an offer-for-sale of 35 lakh shares amounting to ₹75.25 crore.
Indo Farm Equipment IPO Highlights: The bidding for Indo Farm Equipment IPO has ended and the issue has been subscribed by a whopping 229.68 times in total
Indo Farm Equipment IPO was subscribed a whopping 229.68 times on the last day of the bidding. The IPO received bids for 1,94,53,89,519 shares as against 84,70,000 shares on offer.
In the QIB segment, the issue was booked 242.40 times and in the NII segment, it was subscribed 503.83 times. In the retail segment, the IPO garnered 104.92 times bids.
Indo Farm Equipment IPO was subscribed a whopping 229.31 times on the last day of the bidding. The IPO received bids for 1,94,53,88,070 shares as against 84,70,000 shares on offer.
In the QIB segment, the issue was booked 242.20 times and in the NII segment, it was subscribed 503.83 times. In the retail segment, the IPO garnered 104.92 times bids.
Indo Farm Equipment IPO was subscribed a whopping 228.45 times on the last day of the bidding. The IPO received bids for 1,93,49,77,074 shares as against 84,70,000 shares on offer.
In the QIB segment, the issue was booked 242.20 times and in the NII segment, it was subscribed 503.39 times. In the retail segment, the IPO garnered 104.36 times bids.
Indo Farm Equipment IPO was subscribed a whopping 227.57 times on the last day of the bidding. The IPO received bids for 1,92,75,47,637 shares as against 84,70,000 shares on offer.
In the QIB segment, the issue was booked 242.40 times and in the NII segment, it was subscribed 501.65 times. In the retail segment, the IPO garnered 101.64 times bids.
1. Augment capital base for scaling and expanding our operations
2. Reduce Debt Levels and improve Debt to Equity Ratio
3. Focus on the niche market of Pick and Carry Cranes
4. Augment our Dealer Network and Sales Force
Indo Farm Equipment, with over two decades of experience, is a fully integrated and established manufacturer of Tractors & Pick & Carry Cranes. The company also produces ancillary farm equipment such as harvester combines, rotavators, and related spare parts, although these do not significantly contribute to its total revenue.
Indo Farm’s fully integrated manufacturing facilities enhance product efficiency and ensure timely delivery to its customers. The company’s diverse tractor range meets around 80% of global market requirements, while its Pick & Carry Cranes are widely utilized in infrastructure development. Additionally, the company’s investment in its subsidiary NBFC is expected to drive tractor sales by facilitating easier financing options. Indo Farm also plans to expand its dealer network from 175 to 500 dealers over the next five years.
Financially, Indo Farm has maintained a profitable track record and consistent performance. It reported a PAT of Rs. 155.95 million, Rs. 153.72 million, and Rs. 137.19 million in FY24, FY23, and FY22, respectively, and has consistently achieved EBITDA margins of 16.63%, 15.79%, and 14.77% during the same periods.
The issue is priced at a P/E ratio of 51.8x on the upper price band, based on FY24 earnings, which is relatively high compared to its peers. However, given the company’s improving sales, growth-oriented investment in its NBFC, and favorable industry trends, we recommend a “SUBSCRIBE" rating for the issue.
Indo Farm Equipment IPO was subscribed a whopping 227 times so far on the last day of the bidding. The IPO received bids for 1,92,30,94,929 shares as against 84,70,000 shares on offer.
In the QIB segment, the issue was booked 242.40 times and in the NII segment, it was subscribed 501.42 times. In the retail segment, the IPO garnered 100.69 times bids.
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At the upper price band of ₹215, the company is valued at FY24 P/E and EV/EBITDA multiples of 66.2x and 17.9x respectively on post-issue capital.
On the financial side, the company’s Sales/EBITDA/PAT has shown a slightly slower CAGR growth of 3.2%/9.5%/6.6% respectively over the FY22-24 period; however, they have grown consistently. Additionally, the company’s Pick & Carry cranes sales have grown at a CAGR of ~45% in the last 3 years, with the plant operating at close to full capacity.
IFEL’s planned expansion of 3,600 units of cranes per annum is likely to start contributing from 2HFY26 onwards. The company will also double the capital base of its NBFC subsidiary, which will help improve its tractor sales performance.
We recommend investors subscribe to the issue at the cut-off price for long-term investment.
Source: RHP
Indo Farm Equipment IPO was subscribed a whopping 189 times so far on the last day of the bidding. The IPO received bids for 1,60,08,39,330 shares as against 84,70,000 shares on offer.
In the QIB segment, the issue was booked 156.74 times and in the NII segment, it was subscribed 461.27 times. In the retail segment, the IPO garnered 90.75 times bids.
IFEL is in a fairly strong position in both the segments it operates in. With the possibility of the market expanding substantially in both segments in the near future, IFEL should be able to grow along with the sector. Its capacity additions in the cranes segment would aid strong growth, and refinancing its own tractors through its subsidiary will improve tractor unit growth and margin expansion for the overall business.
IFEL has a fully integrated manufacturing plant, with 40-60% of products being made in-house. The company also has strong R&D product development capabilities, focusing on new designs and developments. Additionally, it enjoys strong entry barriers with attractive industry dynamics and a strong promoter pedigree, which augurs well for multifold growth in the coming years.
Hence, we recommend a SUBSCRIBE to the issue.
Incorporated in 1994, Indo Farm Equipment Limited, is a manufacturer of tractors and pick & carry cranes. The company also deals in other agricultural machinery, including harvester combines, rotavators, and various related spares and components. However, these additional products do not significantly contribute to the company’s total revenue.
Indo Farm has been steadily expanding its footprint both domestically and internationally. While approximately 93% of its total sales over the last three financial years have been driven by domestic demand, export sales make up the remaining 7%.
As of September 30, 2024, the company’s production facilities boast the capacity to manufacture 12,000 tractors and 1,280 pick & carry cranes annually. The product range includes tractors from 16 HP to 110 HP and pick & carry cranes spanning from 9 tons to 30 tons. To further enhance its manufacturing capabilities, Indo Farm has acquired industrial land adjacent to its current facility. The company plans to set up a new dedicated manufacturing unit for pick & carry cranes, which will increase production capacity by an additional 3,600 units per year.
Indo Farm Equipment IPO was booked over 130 times on the final day of subscription so far. The QIB segment was booked 57.96 times, the NII portion 349.31 times and the retail quota 78.56 times.
At the upper band, the IPO is valued at a PE of 75.3x/67.2x/66.2x on FY22/23/24 EPS. Indo Farm is one of the leading tractor and crane manufacturers in India with a distribution network of 175 dealers. The company has also expanded its product segment and manufactures cranes and other products like harvesters, rotavators, etc.
We believe the tractor industry is expected to reach ~1.25 million units by FY28E, implying a CAGR of 6%. This is led by the deployment of modern technology in agriculture, coupled with healthy growth in infrastructure activity. The company has grown its revenue/EBITDA/PAT at a CAGR of 3%/9%/7% over FY22-24, with a robust OPM of ~16.5%.
Given industry tailwinds and superior financial metrics, we assign a SUBSCRIBE rating to the IPO.
Ranbir Singh Khadwalia, aged 64 years, is a founding promoter and the Chairman & Managing Director of the Company. Prior to founding Indo Farm, he worked at Eicher Farm Machinery Limited in the Production department. With nearly three decades of experience in manufacturing agricultural equipment, he oversees the Company’s overall management, including setting up new plants and developing industry networks.
Anshul Khadwalia, aged 34 years, is the Whole-Time Director of the Company, appointed on May 31, 2014, and re-designated on August 14, 2023. He holds a Bachelor of Science in Business and Management from Aston University (U.K.). Anshul leads the Sales and Marketing strategies for Indo Farm's Tractor and Spare Parts Division and has been recognized as one of Hindustan Times' "Top 30 Under 30." He is also an active TED speaker.
Charan Singh Saini, aged 69 years, is the Whole-Time Director of the Company, appointed on July 12, 2024. He previously served from 2013 to 2021. Charan holds a Diploma in Mechanical Engineering from the Board of Technical Education, Haryana. With over 40 years of experience in the tractor and automobile industry, he is responsible for overseeing the Company's manufacturing operations.
Arshdeep Kaur, aged 34 years, is a Non-Executive Independent Director, appointed on June 15, 2022. She holds a Bachelor in Business Administration and a Masters in Finance and Control from Punjab University. A Qualified Company Secretary, she is also the Vice Chairperson at the Chandigarh Chapter of ICSI. Arshdeep has over 5 years of experience in company secretarial and corporate law.
Babita Dosajh, aged 53 years, is a Non-Executive Independent Director, appointed on September 12, 2023. She holds a Bachelor’s in Arts, an M.A. in Psychology, and a Ph.D. in Industrial Psychology from HP University. She also holds an MBA from Manonmaiam Sundaranar University, Tamil Nadu. Babita has over 20 years of teaching experience and is currently Associate Dean and Head of the School of Humanities at Amity University, Punjab.
Brij Kishore Mahindroo, aged 71 years, is a Non-Executive Independent Director, appointed on August 14, 2023. He holds a Bachelor’s and Master’s in Science from Himachal Pradesh University. Brij has 36 years of experience with Punjab National Bank, retiring as Deputy General Manager.
Approximately 52.16% of their revenue comes from tractors and 47.77% from Pick & Carry cranes in FY2024. Any decline in demand or production for these products could adversely impact their business and financial performance.
If they are not able to obtain, renew or maintain their statutory and regulatory licenses, registrations and approvals required to operate their business, it may have a material adverse effect on their business, results of operations and financial condition.
Their proposed expansion plans w.r.t their new manufacturing facilities being set up are subject to the risk of unanticipated delays in implementation and cost overruns.
Average Capacity utilization for FY 2022 to FY 2024 is 32% for tractors and 87% for cranes. Under-utilization of their manufacturing capacities and an inability to effectively utilize their expanded manufacturing capacities could have an adverse effect on their business, future prospects and future financial performance.
Indo Farm Equipment IPO was subscribed 100.42 times so far. The issue received bids for 85,05,52,236 shares as against 84,70,000 shares on offer. Here's how subscription status stands for different categories:
QIB: 17.42 times
NII: 282.94 times
Retail: 69.62 times
The global tractor market is projected to grow from USD 84.80 billion in 2024 to USD 114.5 billion by 2029, at a CAGR of 5.90% during the forecast period. Tractors have been one of the most essential machineries in mechanizing agricultural activities globally.
Globally, the mobile crane market size is anticipated to grow from USD 21.10 billion in 2024 to USD 29.10 billion by 2029, at a CAGR of 6.65% during the forecast period.
The global agriculture equipment market is projected to grow from USD 180.81 billion in 2023 to USD 296.61 billion by 2030, at a CAGR of 7.3% during the forecast period.
Indo Farm Equipment Limited currently has the capacity to produce 1,280 cranes annually. To cater to rising demand, the company is setting up a new manufacturing facility that will add 3,600 units to its capacity, increasing total production to 4,880 cranes per year. With a robust financing arm, Barota Finance, supporting affordability and providing stable revenue streams, the company is well-positioned for growth.
However, its reliance on five states for over 60% of its revenue highlights a potential regional dependency. The first-quarter revenue was lower compared to the previous quarter, primarily due to the impact of the general election and a severe heat wave that disrupted consumer spending and business activities. This is considered a one-off event and aligns with industry trends. Additionally, the company's first half typically experiences subdued performance due to the lengthy manufacturing cycle of its equipment.
As of March 2024, the issue is priced at a P/E ratio of 51.81x, compared to the industry average of 43.82x, which indicates a valuation that appears expensive relative to its peers.
Given the company's growth potential and market positioning, we recommend subscribing to this issue for the long term, for investors willing to take on high risks.
IPO subscription dates - December 31 to January 2
IPO allotment date - January 3
Initiation of refund - January 6
Credit of shares - January 6
Listing date - January 7
The company plans to use the funds for the following purposes:
1) ₹70 crore for setting up new dedicated unit for expansion of Pick & Carry Cranes manufacturing capacity
2) ₹50 crore for repayment or pre-payment, in full or part, of certain borrowings availed by the company
3) ₹45 crore for further investment in the NBFC subsidiary Barota Finance
4) Remaining for general corporate purposes
Indo Farm Equipment IPO was subscribed 69.48 times so far. The issue received bids for 58,85,22,735 shares as against 84,70,000 shares on offer. Here's how subscription status stands for different categories:
QIB: 12.03 times
NII: 183.82 times
Retail: 53.31 times
The issue is priced at a P/E ratio of 51.8x on the upper price band, based on FY24 earnings, which is relatively high compared to its peers. However, given the company’s improving sales, growth-oriented investment in its NBFC, and favourable industry trends, we recommend a “SUBSCRIBE" rating for the issue.
Indo Farm Equipment IPO Live: The bidding for Indo Farm Equipment IPO entered its third and final day today. Investors can start placing bids from 10 am till 5 pm. The issue closes for subscription at 5 pm.
Ranbir Singh Khadwalia and Sunita Saini are the Promoters of Indo Farm Equipment. They currently hold an aggregate of 30,976,748 equity shares.
Indo Farm Equipment IPO grey market premium or GMP today is ₹90. This means Indo Farm Equipment shares are trading ₹90 higher than the IPO price in the grey market. At the current GMP and the IPO price of ₹215, Indo Farm Equipment shares could list at ₹305, up 42% over issue price.
Indo Farm Equipment brings investors an opportunity to invest in a fully integrated and well-researched manufacturer of agricultural and construction equipment. The business model consists of 3 rewarding segments: tractors, pick-and-carry cranes, and the NBFC Company. The company manufactures a wide range of tractors from 16 HP to 110 HP and pick-and-carry cranes from 9 tons to 30 tons.
Additionally, the company's investment in Barota Finance, out of IPO proceeds, is anticipated to strengthen the dealer network, leading to higher tractor sales.
On valuation perspective at the upper band of ₹215/-, the issue is asking for a Market Cap of ₹10,331 Mn and EV/EBITDA at 17, which excludes the impact of interest outgo. Based on FY24 earnings, the company is asking a PE of 65x times, which is fully priced.
Therefore, we believe that Indo Farm, with its traditional business value, experienced promoters, and well-planned capacity expansion, debt repayment, and strengthening of its financial arm, is expected to capitalize over the long run. Hence, considering all parameters, we recommend that the issue be considered as “SUBSCRIBE for LONG TERM."
Indo Farm Equipment IPO Live: Indo Farm Equipment IPO has been subscribed 54.50 times til the end of the second day of the bidding process. The issue received bids for 46.16 crore equity shares as against 84.70 lakh shares on the offer, as per NSE data on Wednesday. The Retail Investors category has been booked 45.70 times, while the Non Institutional Investors (NII) segment has been subscribed 131.78 times so far. The Qualified Institutional Buyers (QIBs) portion has been booked 11.96 times.
Indo Farm Equipment IPO Live: Indo Farm Equipment IPO price band has been set at ₹204 to ₹215 per share. At the upper end of the price band, the company aims to raise ₹260.15 crore from the book-built issue, which is a combination of a fresh issue of 86 lakh equity shares worth ₹184.90 crore and an offer-for-sale of 35 lakh shares amounting to ₹75.25 crore.
Indo Farm Equipment IPO Live: The bidding for the Indo Farm Equipment IPO commenced on December 31, and will conclude today, January 2. Indo Farm Equipment IPO allotment is expected to be finalized on January 3. The company will credit the shares into the demat accounts of eligible allottees on January 6 and initiate refunds on the same day. The IPO listing date is likely January 7. Indo Farm Equipment shares will be listed on BSE and NSE.
Indo Farm Equipment IPO Live: The initial public offering (IPO) of tractor manufacturer Indo Farm Equipment Ltd enters the third and the last day of the bidding process today. The public issue is witnessing a strong demand as the IPO got heavily oversubscribed on the first two days of the bidding. Interested investors now have only one day left to apply for the Indo Farm Equipment IPO.
