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According to market observers, the shares of Indo Farm Equipment are commanding a grey market premium of ₹85 in the unlisted market, indicating a premium listing gain of nearly 40%.
Considering renewed market sentiments and massive subscription demand, Prashanth Tapse of Mehta Equities expects the company to list with strong listing gains of over 40% above its issue price.
Tapse believes the overwhelming demand was due to the company’s strategic use of IPO proceeds to strengthen its dealer network, which is expected to drive higher tractor sales in the future.
Additionally, the company is in expansion mode, enhancing its pick-and-carry crane capacities to meet rising demand. Its strong backward integration business model enables it to achieve high EBITDA margins, compared to peers. The company also has promising growth prospects in the agriculture and crane segments, fueled by significant infrastructure investments from both government and private industries.
The IPO of Indo Farm Equipment included a combination of fresh equity issue of up to ₹185 crore and an offer of sale (OFS) of up to 35 lakh shares, taking the total issue size to ₹260 crore.
Around ₹50 crore of the amount raised from the IPO will be utilised for repayment or pre-payment, in full or part, of certain borrowings availed by the company, further investment in NBFC subsidiary (Barota Finance) for financing the augmentation of its capital base to meet its future capital requirements (₹45 crore) and the rest towards general corporate purposes.
The company had undertaken a pre-IPO placement of 19 lakh equity shares at the rate of ₹185 per share aggregating to ₹35.1 crore. Accordingly, the size of the fresh issue has been reduced from 1.05 crore equity shares to 86 lakh equity shares.
Company description
Incorporated in 1994, Indo Farm Equipment is a fully integrated and established manufacturer of tractors and pick-and-carry cranes. It also deals in other farm equipment such as Harvester Combines, Rotovators and other related spares and components, which do not materially contribute to total revenue of the company. Its products are being exported to various countries.
As of fiscal 2024, the company’s revenue from operations was ₹375 crore with a profit after tax of ₹15.5 crore.
Aryaman Financial Services Ltd. was the book running lead manager of the Indo Farm Equipment IPO, while Mas Services Ltd. was the registrar for the issue.
