Carraro India is a technology-driven integrated supplier, specializing in the development and manufacturing of complex engineering products and solutions for its original equipment manufacturer (OEM) customers. The company operates as an independent tier 1 solution provider for axles, transmission systems, and gears used in agricultural tractors and construction vehicles across India. Carraro India offers a comprehensive value chain of services, including product design, manufacturing capabilities, and engineering solutions for the automotive sector.

The Carraro India IPO is a book-built issue of ₹1,250 crores, which consists entirely of an offer for sale of 177.55 lakh shares. The price band for the issue is set between ₹668 and ₹704 per equity share, with the market capitalization of the company at the upper price band standing at ₹4,002.34 crores. The lot size for the IPO is 21 shares, and retail investors are required to invest a minimum of ₹14,784. For High-Net-Worth Individuals (HNIs), the minimum investment is in 14 lots (294 shares), amounting to ₹2,06,976.

The subscription period for the Carraro India IPO opens on December 20, 2024, and closes on December 24, 2024. The allotment date is expected to be December 26, 2024, with shares being listed on the BSE and NSE around December 30, 2024.

The book-running lead managers for the issue are Axis Capital Limited, BNP Paribas, and Nuvama Wealth Management Limited, while Link Intime India Private Limited serves as the registrar.

As of December 21, 2024, the Grey Market Premium (GMP) stands at ₹76, indicating a potential listing gain of 10.84%. While this suggests some upside potential, it is important to note that Grey Market Premium is a non-official indicator and does not guarantee actual listing prices.

Carraro India's financial performance has shown consistent growth. For the period ending September 30, 2024, the company recorded revenues of ₹9,227.39 million, EBITDA of ₹1,010.96 million, and Profit After Tax (PAT) of ₹496.32 million. This is reflective of the company’s steady financial performance over the last few years. The pre-issue EPS for FY24 stands at ₹11, and the post-issue EPS is also ₹11. The pre-issue P/E ratio is 64x, which is higher than the industry average of 32x, suggesting that the IPO is fully priced.

While the Grey Market Premium indicates some potential listing gains, the high P/E ratio and premium pricing suggest that the IPO is already fully priced for the expected returns. The company’s ROCE for FY24 stands at 19.35%, ROE at 17.69%, and RoNW at 16.92%, which are respectable, but may not justify the premium valuation when compared to the industry’s performance.

Given the premium pricing and market conditions, we recommend investors to avoid the Carraro India IPO for listing gains.

The Upcoming IPOs in this week and coming weeks are Citichem India, Indo Farm, Technichem Organics, Leo Dry Fruits, Solar91 Cleantech, Rosmerta Digital and Avanse Financial.

The Current active IPO is Anya Polytech and Unimech Aerospace.

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