Indo Farm Equipment Ltd.'s initial public offering is scheduled to open on Dec. 31, as the agricultural equipment manufacturer aims to raise up to Rs 260.15 crore via the IPO.
The price band for the issue has been set in the range of Rs 204 to Rs 215 per share. The market value at the upper end of the price band is Rs 1,033 crore, as per NDTV Profit's calculations.
The proposed public offering consists of a fresh issue of Rs 184.9 crore and an offer-for-sale component of Rs 75.25 crore, according to the red herring prospectus.
The company has downsized its maiden public offer's fresh issue from 1.05 crore shares to 86 lakh shares. The OFS component consists of 35 lakh shares, which will be offloaded by promoter Ranbir Singh Khadwalia.
Aryaman Financial Services Ltd. is the book-running lead manager of the IPO, while Mas Services Ltd. is the registrar for the issue. The anchor book for the IPO will be launched on Dec. 30.
The three-day subscription window for the IPO will close on Jan. 2.
The equity shares are proposed to be listed on both the BSE and the National Stock Exchange.
Indo Farm IPO Details
Issue opens: Dec. 31.
Issue closes: Jan. 02.
Issue price: Rs 204–215.
Offer for sale: Rs 75.25 crore.
Fresh issue: Rs 184.90 crore.
Total issue size: Rs 260.15 crore.
Lot size: Minimum 69 shares, and then in multiples thereof.
Business
Indo Farm Equipment manufactures tractors and pick and carry cranes, with over two decades of industry experience. The company also produces a range of agricultural equipment, including Harvester Combines, Rotavators, and related spares and components.
While these additional products do not significantly contribute to the company's overall revenue, Indo Farm’s primary focus remains on its core offerings.
With a strong domestic presence, accounting for approximately 93% of its sales, the company also exports its products to international markets. Indo Farm operates manufacturing facilities featuring advanced infrastructure like a captive foundry, machine shop, and dedicated assembly units.
Financial Performance
The company reported a marginal rise in revenue to Rs 375.23 crore in fiscal 2024 from Rs 370.75 crore in the previous fiscal. Net profit rose from Rs 15.37 crore to Rs 15.59 crore.
Operating income, or earnings before interest, taxes, depreciation, and amortisation, slipped to Rs 52.16 crore in the same period. The Ebitda margin contracted to 13.9% from 15.6%.
As of Sept. 30, 2024, the company's debt pile stood at Rs 247.3 crore.
Use Of Proceeds
The company plans to utilise the net proceeds from the fresh issue in the following manner:
Rs 70.1 crore to be used for setting up new dedicated unit for expansion of pick and carry cranes manufacturing capacity.
Rs 50 crore for repayment or prepayment of outstanding borrowing.
Rs 45 crore for further investment in the company's NBFC subsidiary Barota Finance Ltd. for financing the augmentation of its capital base to meet future capital requirements.
And the remaining for general corporate purposes.
Indo Farm IPO: Key Risks
The company derives around 52.16% of its revenue from tractors and 47.77% from pick and carry cranes, so any reduction in demand or manufacturing of these products could negatively impact business performance and financial condition.
Expansion plans for new manufacturing facilities may face unanticipated delays and cost overruns, which could disrupt operations.
Average capacity utilisation for fiscal 2022 to fiscal 2024 is 32% for tractors and 87% for cranes, indicating under-utilisation of manufacturing capacity, which could harm future business prospects and financial performance.
The capacity expansion for pick and carry cranes is based on expected domestic demand in India, with no confirmed orders, making the company vulnerable to market fluctuations, regulatory changes, and economic downturns.
The geographical concentration of manufacturing facilities in Himachal Pradesh may limit operational flexibility and pose risks to business continuity and financial performance.
Indo Farm IPO GMP
The grey market premium of Indo Farm IPO is Rs 80 as of 12:30 p.m. on Dec. 30, according to InvestorGain platform. This implies that shares of the company could likely list at Rs 295 apiece, indicating a 37.21% premium to the upper end of the price band.
It should be noted that GMP or grey market price is not an official price quote for the stock and is based on speculation.
Watch The IPO Adda Here
Disclaimer: Investments in initial public offerings are subject to market risks. Please consult with financial advisors and read red herring prospectus thoroughly before placing bids.
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