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Indo Farm Equipment Limited is engaging in manufacturing Tractors, Pick & Carry Cranes, and other harvesting equipment. Indo Farm Equipment IPO is a book built issue of Rs 260.15 crores. The issue is a combination of fresh aggregating to Rs 184.9 crores and offer for sale shares aggregating to Rs 75.25 crores.

About Indo Farm Equipment Limited

• Indo Farm Equipment Limited is a manufacturer of tractors and pick and carry cranes.
• 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.
• The company also manufactures in-house. most of the components used in its products
• The company sells its tractors through a network of 159 dealers located across various states and UTs. .
• It also has a dedicated network of 16 dealers for cranes i.e. towards managing sales, service and spare parts.
  Additionally, 12 dealers focus exclusively on stocking spare parts.
• The company provides financing for tractors through a combination of its own NBFC (Barota Finance Limited)
  and through partnerships with other banks and financial institutions.

Financials : Indo Farm Equipment IPO

Anchors: Indo Farm Equipment IPO

Indo Farm Equipment raised ₹78 crore from anchor investors ahead of its IPO . The investors included Negen Undiscovered Value Fund, Niveshaay Hedgehogs, Rajasthan Global Securities, Subham Capital, India Equity Fund I, Saint Capital Fund and Vikasa India EIF I Fund – Share Class P, among others.

Salient Points: Indo Farm Equipment IPO

• Promoter 93% stake to drop to 69% post theb IPO.
• The company offers a comprehensive tractor range from 16 HP to 110 HP in 2WD and 4WD variants,
• The 4WD models ( 4 wheel drive) are tailored for export markets, including Africa, Latin America, the Middle East, Central Asia, and Southeast Asia and some other models for Europe.
• 93% of total sales were from domestic markets, while 7% came from exports.
• Use of IPO Proceeds:
  • Setting up new Dedicated Unit for Expansion of their Pick & Carry Cranes Manufacturing Capacity at Baddi.
  • Investment in NBFC Subsidiary (Barota Finance Ltd.) for financing the augmentation of its capital base to meet its future capital requirements
  • Repayment or pre-payment, of borrowings availed by the Company
• Total outstanding borrowings amounted to Rs 245.36 crore as of June 30, 2024. Rs. 50 crore of debt will be repaid from the issue proceeds aiding profitability.
• Company’s investment in its captive NBFC, Barota Finance out of the IPO proceeds is anticipated to result in higher tractor sales which presently are almost standstill.
• Peers: company has shown, Escorts Kubota, Action Construction Equipment, as their listed peers. They are trading at a P/E of 30.4, and 47.8
• It is in significant expansion mode for its pick and carry cranes capacities to meet rising demands.
• PE FY24 66x
• At present both tractors (16 to 110 horse power capacity) and pick and carry cranes (i9-30 tons capacity),contributing equally to their Rs. 375 cr. annual topline.
• Going forward contribution from cranes is projected to increase significantly. In fact in Q1Fy25, cranes accounted for 56% of the revenue mix. Cranes business also has higher margins.
• Company has presented financials only up to 30^th June, Incidentally 31 Dec is the last date when a company can come with an IPO based on June quarter results and they are making use of this window.
• Company undertook pre-IPO placement of Rs. 35 cr at Rs. 185 per share in Apr-May 2024. Present IPO is priced about 15% higher.
• I intend to apply in Indo Farm Equipment  IPO even as Pricing is quite aggressive. Much hinges on whether their projected big share of market in cranes fructifies or not. I will apply only for any listing gains if allotted. Based on pure fundamentals the issue price is not convincing.
• GMP as per social media ruled about Rs.95 (44%)
• This post is exploratory and educational purposes only.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.