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Carraro India IPO Details: Launch Date, Share Price, Size & Review

Carraro-India-IPO-Details-Launch-Date,-Share-Price,-Size-&-Review

Business Profile of the Carraro India Limited

Carraro Group, an Italian company, is a global leader in agricultural machinery and transmission systems. Its subsidiary, Carraro India, a leading independent Tier 1 supplier of axles, transmission systems, and gears for the agricultural tractor and construction vehicle industries in India, has been a major global player in the driveline systems industry since 1997.

The company's comprehensive service offering, including initial design and customization, material procurement, in-house manufacturing, supply chain management, delivery, and after-sales service, sets it apart from other players in the Indian market. Carraro India plans to leverage its strong position in axles and transmissions to innovate its product line and increase its share in the Indian market.

The company owns and operates two manufacturing plants in Pune, Maharashtra, India, with technologies such as casting machining, assembly, prototyping, testing, and painting. Carraro India's Pune plant produces axles, transaxles, and transmissions for construction vehicles. The company's R&D capabilities enable it to manufacture a diverse range of products, including gears, shafts, and ring gears for industrial and automotive vehicles.

In June 2024, the company completed the acquisition of CTIPL, which has become a subsidiary. This acquisition has allowed the company to further strengthen its R&D offering and integrate the design, R&D, and manufacturing capabilities of its products, which is pivotal in enhancing its competitive position in India.

As of March 31, 2024, the Company supplied to 38 manufacturers in India and international manufacturers, some of whom are exporting through Carraro Drive Tech Italy S.p.A.

The Main Objectives to Launch the Carraro India Limited IPO

As per the draft red hearing prospects, the IPO issue consists only of an Offer for sale by promoter. Nothing from those proceeds of OFS will be allotted to company.

IPO Details of Carraro India Limited:

IPO Open Date N.A.
IPO Close Date N.A.
Basis of Allotment N.A.
Listing Date N.A.
Face Value ₹10 per share
Price N.A.
Lot Size N.A.
Total Issue Size Up to [●] Equity Shares
Aggregating up to ₹ 18,116.52 million
Fresh Issue N.A.
N.A.
Offer For Sale Up to [●] Equity Shares
Aggregating up to ₹ 18,116.52 million
Issue Type Book Built Issue IPO
Listing At BSE & NSE
QIB Shares Offered Not more than 50% of the Net Issue
Retail Shares Offered Not less than 35% of the Net Issue
NII (HNI) Shares Offered Not less than 15% of the Net Issue

 

Carraro India Limited IPO Issue Price & Size

The issue price of Carraro India Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between these price ranges. The company only has an OFS of up to [●] equity shares consisting of Rs. 1811.65 crores.

Launch Date of Carraro India Limited IPO

The IPO of Carraro India Company is launching on (Opening Date XXXX), hence the opening date for bidding is (Open Date) and the IPO is closing on (Closing Date). Investors can bid in this IPO between these days during the primary market hours.

Carraro India Limited Financial Statements

Particulars FY24 FY23 FY22
Income
Revenue from operations 17704.54 16951.17 14815.62
Other income 171.79 198.43 219.8
Total income 17876.33 17149.6 15035.42
Expenses
Cost of materials consumed 13372.42 12905.08 11408.61
Changes in inventory of finished

goods and work-in-progress

-240.94 -147.8 -187.77
Employee benefits expense 1315.48 1203.5 1075.43
(d) Finance costs 222.29 195.07 158.85
Depreciation and amortisation expenses 413.99 377.2 343.08
Other expenses 1975.88 1982.71 1952.12
Total expenses 17059.12 16515.76 14750.32
Restated Profit for the year 605.81 468.01 207.69

 

 

KPIs

As of 2024

Carraro India Limited Escorts Kubota Limited Schaeffler India Sona BLW Precision Forgings Ramakrishna Forgings Happy Forgings Action Construction Equipment
Revenue from Operations 17704.54 88496.2 2509.1 31847.7 39548.83 13581.36 29138
Revenue growth (yoy) 4.44% 4.99% 5.58% 19.95% 23.87% 13.51% 34.92%
EBIT 1039.5 14147.4 12180.4 6971.04 6106.99 3361.64 4571.1
EBIT Margin (%) 5.81% 15.30% 16.51% 21.73% 15.33% 24.51% 15.28%
EBITDA 1453.49 15816.4 14410.5 9173.29 8682.69 4008.92 4803.5
EBITDA Margin (%) 8.13% 17.10% 19.54% 28.59% 21.79% 29.23% 16.06%
PAT 605.81 10490.8 8990.2 5177.76 3414.35 2429.84 3282
PAT Margin (%) 3.42% 11.85% 12.40% 16.26% 8.63% 17.89% 11.26%
ROE (%) 16.57% 12.06% 19.78% 20.34% 17.05% 18.69% 30.51%
ROCE (%) 18.32% 15.28% 25.63% 26.59% 15.19% 18.87% 36.92%
Net Financial Position (Net Debt) -1135.86 125051.9 13220 -2215.12 -10734.2 1505.67 3039.3
Net Debt/EBITDA -0.78 7.91 0.92 -0.24 -1.24 0.38 0.63
Net Working Capital 1565.4 39995.6 27010.1 7429.95 8205.56 4999.11 3482
Operating Working Capital 1575.68 11836.1 13160.6 6976.49 9334.77 5255.46 297.6
Revenue by geographical split (%)
Domestic 64.82% 95% 77% 41% N.A. 80% 95%
Exports 35.18% 5.00% 23.00% 59.00% N.A. 20% 5.50%
Revenues split by end market (%)
Agricultural Equipment 45.05% N.A. N.A. N.A. N.A. N.A. N.A.
Construction Equipment 41.29% N.A. N.A. N.A. N.A. N.A. N.A.
Others 13.66% N.A. N.A. N.A. N.A. N.A. N.A.

 

Carraro India Limited Promoters & Shareholding

As of date of filing the DRHP, the company has four promter i.e. Tomaso Carraro, Enrico Carraro, Carraro S.p.A. and Carraro International S.E. The prompters in aggregate hold 56,851,532 equity shares, comprising 99.99% of the paid-up equity share capital of the company.

Name of Promoter Number of Equity Shares Selling Shareholder
Tomaso Carraro 1 -
Enrico Carraro 1 -
Carraro S.p.A. 1 -
Carraro International S.E. 56851531 Aggregating to Rs. 18116.52

 

Should You Subscribe to Carraro India Limited IPO or Not

While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.

Competitive Strengths of Carraro India Limited:

Leading tier 1 supplier

The company entered the Indian market in 1997 and has grown its business since, generating approx 64.82% of its revenues from domestic sales in FY24. The company is a leading independent tier 1 supplier of axles, transmission systems, and gears for the agricultural tractor and construction vehicle industries in India. As of 2023, the company became 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.

Provide customized solutions

The Carraro Group is a one-stop-shop tier 1 OEM supplier that develops customized solutions for India-based customers, including those with Indian subsidiaries or operations. They cover full value chain from R&D to manufacturing of axles and transmission systems.

In past times, the Carraro Group has provided solutions to Mahindra Motor Graders, Mahindra Haulage Tractor, and Bull Machines backhoe loader and loaders series. Mahindra identified a demand for customized models in the motor grader market, and the Carraro Group worked with them to address this demand. They proposed a modified version of backhoe loader drivelines (Transmission TCB80 with two rigid axles per vehicle) in 2016 to produce a more cost-efficient result than traditional bogie axles.  As of March 31, 2024, the Carraro Group has a customer base of 38 customers in India and supplied to international customers, primarily OEMs.

Provide-customized-solutions

In-house R&D capabilities

Carraro India's design capabilities were previously provided through Carraro Technologies India Private Limited (CTIPL) and the Carraro Group. However, with the transfer of IP rights on October 1, 2023, and the acquisition of CTIPL in June 2024, the company now offers integrated design services to its customers, strengthening its competitive position in India. The company maintains close connections with global R&D centers owned by the Carraro Group, collaborating on product design and development.

CTIPL has supported the Carraro Group's R&D team in launching various products, including the 120 HP tractor transmission, 20.09/20.14/20.16 series of planetary axle, steering axle, SCOM axle with hypoid design, 40.16 series of planetary axle, and AG Evo transmission.

Particulars 2024 2023 2022
Number of R&D employees of CTIPL 57 50 58
Number of new prototypes developed by company 20 4 5
Number of prototypes brought into production by company 7 4 1

 

Large production capacities

As of the fate of filing the document, the company operates two manufacturing plants in Pune, Maharashtra, India. The driveline plant, located in close to key suppliers, primarily manufactures agricultural and construction equipment, axles, and transmission systems. It is equipped with machining, assembly, and painting facilities, supported by technologies like casting machining, assembly, prototyping, testing, and painting.

The gears manufacturing plant mainly manufactures various types of gears and gear shafts for captive consumption and third-party customers. It is equipped with soft machining facilities, heat treatment facilities, and hard machining facilities, supported by technologies like gears machining and heat treatment.

Particulars FY24 FY23 FY22
Number of axles produced 68961 74342 72654
Number of transmission systems produced 46579 47055 47129
Number of other components produced

(loose trumpet and loose drop box)

14066 10772 11503
Capacity utilization (%) 81% 80.20% 82.27%

 

Future strategy

The company is committed to maintaining its strong position in axles and transmission systems, focusing on innovation, operational excellence, and strategic expansion into new and existing markets. 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. To drive growth, the company plans to introduce new products and product application innovation, including advanced agricultural tractor drivelines, tele-handler axles and transmission systems, and entry into new product categories.

To cater to emerging technological requirements in the Indian agricultural market, the company plans to enhance its manufacturing plants in Pune, Maharashtra, India. The company will continue to digitalize its production flow and generate a visual shop flow for easier tracking and quality assurance. The company will also expand its driveline and gears manufacturing plants, focusing on automation and reducing carbon balance.

Risk Factors of Carraro India Limited:

Revenue concentration

As can be seen from table below, the company has been heavily dependant on top five – 10 consumes for generating of majority of its revenue. Loss of any one of the top five customers could have a material adverse effect on the business, its operations, financial condition, and cash flows. Even though if company clients remain intact, fluctuation in order flow and volume can influence companies financials directly.

Particulars FY4 FY23 FY22
Revenue from top 5 customers on

consolidated customer groups basis

70.10% 73.19% 73.98
Revenue from top 10 customers on

consolidated customer groups basis

86.29% 87.83% 89.16%

 

Dependence on Global OEMs’

The company relies on its global customer base of original equipment manufacturers (OEM) to sell its products in India and globally. The company exports directly to some customers in Asia and indirectly to some customers in Asia and outside of Asia through Carraro Drive Tech Italia S.p.A. The success of the business depends on maintaining good relationships with OEM customers, ensuring they find their products commercially remunerative, and maintaining demand. The company enters long-term contracts with customers, but there is no assurance that they will renew them on favorable terms or continue to do business with them.

Particular FY24 FY23 FY22
India 64.82% 62.48% 63.87%
Exports 35.18% 37.52% 36.13%
Europe 33.93% 33.83% 32.22%
Asia (excluding India) 0.81% 0.62% 0.81%
America 0.44% 3.10% 3.09%

 

Business seasonality

The sales of agricultural tractor products are influenced by cyclical and seasonal demand in the countries where they operate. In India, tractor demand typically peak between June and November due to the monsoon, Karif crop season, rabi planting season, increased harvesting activities, and improved rural cash flow. The demand for exported products also depends on these cyclical and seasonal factors.

Dependence on agriculture sector

As can be seen from table below, the company generates around 45% of the revenue from agriculture agricultural tractors. Factors that affect the agriculture business in any economy are monsoon, government MSP prices, incentive on fertilizers and input that are used while harvesting. While the construction vehicle industry is also heavily influenced by factors such as economic activity, government spending, economic growth, rate of urbanization & industrialization, etc. De-growth or slowdown in economy activity can affect operations and financials in long term.

Particular 2024 2023 2022
Revenue by product sector 17611.93 16857.21 14743.27
- Agricultural Tractors 7933.86 8323.09 7459.03
- Construction Vehicles 7271.77 6477.44 5325.7
- Others 2406.3 2056.68 1958.53

 

Impact of foreign currency

The company reports its financial statements in Indian rupee but a portion of the financial results is accounted for in other currencies before being converted into and reported in the Indian Rupees. The company's exposure to foreign exchange rate fluctuation risks is mainly derived from the import of parts, royalty payments, and export of products.

% of total cost of materials consumed
2024 2023 2022
Cost of materials sourced from domestic suppliers 73.18% 74.58% 73.17%
Cost of materials sourced through imports 26.82% 25.42% 26.83%

 

Carraro India Limited Grey Market premium

Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.

Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable

However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share

According to various online sources, the Grey Market Premium or GMP of the International Gemmological Institute (India) is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.

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