Carraro India Plans Rs 1,812 Crore IPO; Submits Draft Papers to SEBI

Carraro India, a prominent manufacturer of axles and transmission systems for agricultural tractors and construction vehicles, is gearing up for an Initial Public Offering (IPO) aimed at raising Rs.1,812 crore. The company, which submitted its draft papers to the Securities and Exchange Board of India (SEBI) on August 23, 2024, is set to become a significant IPO player in the auto parts manufacturing sector.

IPO Structure and Purpose

The Carraro India IPO is structured entirely as an offer-for-sale, where the promoter, Carraro International SE, will sell shares worth Rs 1,811.65 crore. As a result, all proceeds from the IPO will go directly to Carraro International SE, leaving Carraro India without any direct financial gain from the public offering. Carraro International SE, headquartered in Italy, serves as the holding company for the Carraro Group, which is globally recognized for its expertise in manufacturing transmission systems for off-highway agricultural and construction equipment. 

Financial Performance and Market Position

Carraro India’s financial performance has shown promising growth. Despite modest revenue increases, the company’s profit surged by 29.4% to Rs 60.6 crore in FY24, driven by strong operational efficiency. The revenue for FY24 stood at Rs 1,770.5 crore, reflecting a 4.4% rise from the previous year. The company also reported a significant improvement in its EBITDA, which grew by 27.2% year-on-year to Rs 128.2 crore, with the EBITDA margin increasing by 130 basis points to 7.2%. 

Established in 1997, Carraro India competes with major industry players like Escorts Kubota, Schaeffler India, and Sona BLW Precision Forgings, offering a diverse product portfolio that includes backhoe loaders, soil compactors, and gears for industrial and automotive applications.

Conclusion:

Carraro India’s upcoming IPO highlights the company’s strong market position and robust financial health. However, with the entire offering being an offer-for-sale by the promoter, the IPO will not inject fresh capital into the company. This move primarily benefits the selling shareholder, Carraro International SE, while the company continues to build on its operational successes and market presence.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.