The initial public offering (IPO) of Indo Farm Equipment continued to attract a strong response from the investors during the third and final day of the bidding process. The issue was overall subscribed nearly 18 times on day one while it ended the day two with about 55 times subscription.
The Indo Farm Equipment is selling its shares in the price band of Rs 204-215 apiece. Investors can apply for a minimum of 69 shares and its multiples thereafter. It is looking to raise Rs 260.15 crore via IPO, which includes a fresh share sale of 86 lakh worth Rs 184.90 crore and an offer-for-sale (OFS) of up to 35 lakh equity shares.
According to the data, the investors made bids for 1,08,57,80,205 equity shares, or 128.19 times, compared to the 84,70,000 equity shares offered for the subscription by 12.55 pm on Thursday, January 02, 2025. The three-day bidding for the issue, which opened on Tuesday, December 31, 2024 shall conclude today.
The allocation for retail investors was subscribed 78.02 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 346.22 times. However, the quota set aside for qualified institutional bidders (QIBs) was subscribed 52.48 times as of the same time.
Incorporated in 1994, Chandigarh-based Indo Farm Equipment is engaged in manufacturing tractors, pick & carry cranes, and other harvesting equipment. It operates two brands: Indo Farm and Indo Power. They export their products to countries like Nepal, Syria, Sudan, Bangladesh, Myanmar and more.
The grey market premium (GMP) of Indo Farm Equipment has been holding firm following the strong bidding for the issue. Last heard, the company was commanding a premium of Rs 90-95 per share in the unofficial market, suggesting a listing pop of over 42-44 per cent for the investors. The GMP stood around Rs 80 on the first day of the bidding.
Brokerages are mostly positive on the issue suggesting investors to subscribe to it citing its integrated manufacturing hub, experienced management, focus on NBFC setup, diverse product range and global approach. However, inventory risk, dependence for financial support, operations issues, demand issue and more are the major concerns.
At the upper band, the IPO is valued at a PE of 66.2 times on FY24 EPS. Indo Farm is one of the leading tractor and crane manufacturers in India with a distribution network of 175 dealers. The company has also expanded its product segment and manufactures cranes and other products like harvesters, rotavators, said Indsec Research.
"We believe deployment of modern technology in agriculture coupled with healthy growth in infrastructure activity. It has grown its revenue, Ebitda and PAT at a CAGR of 3 per cent, 9 per cent and 7 per cent, respectively, over FY22-24 with a robust OPM of 16.5 per cent. Given industry tailwinds and superior financial metrics, we assign a 'subscribe' rating to the IPO," it added.
Ahead of IPO, Indo Farm Equipment raises Rs 78 crore from 11 anchor investors by allocating them 36,30,000 equity shares for Rs 215 apiece. Indo Farm Equipment reported a net profit of Rs 2.45 crore with a revenue of Rs 75.54 crore for the quarter ended on June 30, 2024. It reported a net profit of Rs 15.6 crore with a revenue of Rs 375.95 crore for the financial year 2023-24.
Indo Farm Equipment has reserved 50 per cent equity shares for qualified institutional bidders (QIBs), while 15 per cent of the offer has been allocated towards the non-institutional investors (NIIs). Retail investors will get the remaining 35 per cent of the allocation in the IPO.
"We recommend ‘subscribe’ to the IPO for the long term investors due to the company's expansion plans, debt repayment of Rs 50 crore and focus on niche Pick and Carry cranes that are expected to boost profitability and improve margins going ahead, making it a promising investment opportunity," said AUM Capital. Aryaman Financial Services is the book running lead manager of the Indo Farm Equipment IPO, while MAS Services is the registrar for the issue. The company shall command a total market capitalization of 1,033.11 crore. Shares of the company shall be listed at the bourses on both NSE and BSE on January 7, 2025, Tuesday.