Indo Farm Equipment Limited IPO Review

Indo Farm Equipment Limited IPO Review

Key Highlights

• IPO Opening Date: December 31, 2024
• IPO Closing Date: January 2, 2025
• Issue Price: To Be Determined (TBD)
• Lot Size: To Be Announced
• Grey Market Premium (GMP): As of December 13, 2024, the GMP is ₹0, indicating no premium in the grey market. 

About Indo Farm Equipment Limited

Indo Farm Equipment Limited is a prominent Indian manufacturer specializing in tractors, cranes, and other agricultural machinery. Established in 1994, the company has a significant presence in both domestic and international markets, offering products under the brand names Indo Farm and Indo Power. Their manufacturing facility in Baddi, Himachal Pradesh, boasts an annual production capacity of 12,000 tractors and 720 pick-and-carry cranes. 

IPO Details

• Issue Size: 12.1 million equity shares
• Fresh Issue: 8.65 million shares
• Offer for Sale: 3.5 million shares by promoter Ranbir Singh Khadwalia
• Face Value: ₹10 per share
• Listing At: BSE and NSE
• Retail Quota: Not less than 35% of the net issue
• Promoter Holding Pre-IPO: 93.45%
• Promoter Holding Post-IPO: 69.44%
• Basis of Allotment Date: January 3, 2025
• Refunds Initiation: January 6, 2025
• Credit of Shares to Demat: January 6, 2025
• IPO Listing Date: January 7, 2025

Objectives of the IPO

• Expansion of Manufacturing Capacity: Establishing a dedicated production line to increase annual crane production capacity by 3,600 units, with an estimated cost of ₹706.15 million.
• Repayment of Borrowings: Allocating approximately ₹600 million to repay or pre-pay certain borrowings.
• Investment in NBFC Subsidiary: Investing ₹450 million in Barota Finance Ltd. to support future growth in the NBFC business. 

Financial Performance

As of March 31, 2023, the company's standalone outstanding borrowings were ₹1,704.86 million. The company also had a total loan book of ₹1,500.51 million in vehicle finance, serving over 5,900 active customers. 

Risks and Considerations

• Market Competition: The agricultural machinery sector is highly competitive, with several established players.
• Dependence on Agricultural Sector: The company's performance is closely tied to the agricultural sector, which can be affected by factors like monsoon patterns and government policies.
• Debt Levels: The company has significant outstanding borrowings, which it plans to reduce using IPO proceeds.

Conclusion

Indo Farm Equipment Limited's IPO presents an opportunity to invest in a well-established player in the agricultural machinery sector. Potential investors should consider the company's growth prospects, the objectives of the IPO, and the associated risks before making an investment decision.