The Carraro India IPO is one of the major public offerings to watch out for in 2024, offering an exciting opportunity for investors looking to participate in the engineering solutions and manufacturing space. The company is a technology-driven integrated supplier that designs and manufactures complex engineering products such as axles, transmission systems, and gears. Carraro India caters to the agricultural tractor and construction vehicle industries, making it an essential player in India's OEM supply chain.

IPO Details and Market Capitalization

The Carraro India IPO is a Book Built Issue, with an offer size of ₹1,250.00 crores, consisting entirely of Offer for Sale (OFS) of 177.55 lakh shares by the selling shareholders. The IPO price band has been set between ₹668 to ₹704 per equity share, with a market capitalization of ₹4,002.34 crores at the upper price band of ₹704. The lot size for the IPO is 21 shares, requiring a minimum investment of ₹14,784 for retail investors, and a higher investment amount of ₹2,06,976 for High-Net-Worth Individuals (HNIs).

Subscription Status and Grey Market Premium

As of December 24, 2024, the Carraro India IPO has been subscribed 1.12 times on the final day of the subscription period. The Grey Market Premium (GMP) for the IPO is trending at ₹76, suggesting a potential listing gain of 10.84%. The GMP reflects the demand-supply balance in the unregulated grey market, which can offer a rough idea of the potential listing price, though this is not an exact prediction and should be treated as informational.

IPO Allotment and Key Dates

The Carraro India IPO allotment is scheduled to be finalized by December 26, 2024, with shares set to list on the BSE & NSE by December 30, 2024. Investors can check their allotment status on the registrar’s website. Here's a quick guide to check your allotment status:

• Visit the IPO allotment status page.
• Select Carraro India Limited IPO from the dropdown.
• Enter the application number, PAN, or DP Client ID.
• Submit the details to know your allotment status.

Financial Overview and Performance

Carraro India’s financial performance indicates a steady growth trajectory. As per the latest figures for the period ending September 30, 2024, the revenues from operations stood at ₹9,227.39 million, marking a significant increase from ₹17,332.98 million in FY2023. The EBITDA for the same period was ₹1,010.96 million, and the Profit after Tax (PAT) was ₹496.32 million, reflecting consistent profitability. These metrics suggest that the company is on a stable growth path.

Key Ratios and P/E Valuation

The pre-issue EPS stands at ₹11, with the post-issue EPS also expected to be ₹11 for FY24, which translates to a P/E ratio of 64x—higher than the industry’s average of 32x. This makes the IPO fully priced, as the company’s financial ratios, including a ROCE of 19.35% and ROE of 17.69%, suggest strong returns but may not justify the high P/E for immediate listing gains. The Annualised EPS based on the latest financials is ₹17.5, and the PE ratio is 40.22x.

Expert Review and Recommendation

Given the financial metrics and high P/E ratio, the Carraro India IPO is fully priced and does not offer significant upside potential in the short term, especially considering the listing price expectations from the grey market premium. Experts suggest that investors avoid the IPO for listing gains, as the company's valuation appears to be stretched. However, for those interested in long-term exposure to a market leader in axles and transmission systems for agricultural and construction vehicles, the company may offer growth potential.

Market Maker and Anchor Investors

The IPO has raised ₹375 crores from Anchor Investors, with shares allotted at ₹704 per share. These shares were allocated by the Book Running Lead Managers to institutional investors, ensuring robust demand and support for the issue. The list of Anchor Investors is available for public reference, showcasing the interest from prominent investors in Carraro India’s future growth.

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

The Current active IPO is Citichem India and Anya Polytech.

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