The Carraro India IPO is an exciting offering from a leading technology-driven supplier of complex engineering products. The company is well-known for developing solutions for original equipment manufacturers (OEMs) in the agricultural and construction vehicle industries. Carraro India is a Tier 1 independent solution provider, specializing in axles, transmission systems, gears, and other related components. With in-house design and manufacturing capabilities, Carraro India supports a full value chain of services in its industry.

IPO Details and Subscription Status

The Carraro India IPO is a Book Built Issue amounting to ₹1,250 Crores, consisting entirely of an Offer for Sale of 177.55 lakh shares. The IPO subscription period opens on December 20, 2024, and closes on December 24, 2024, with the listing date set for December 30, 2024, on the BSE & NSE. The IPO price band is ₹668 to ₹704 per equity share, positioning Carraro India at an estimated market capitalization of ₹4,002.34 Crores at the upper price band of ₹704.

The lot size of 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 14 lots (294 shares), amounting to ₹2,06,976. The IPO has been subscribed 1.12 times by 7:00 PM on December 24, 2024, reflecting healthy demand.

Grey Market Premium (GMP) Insights

As of December 21, 2024, the Grey Market Premium (GMP) for Carraro India IPO stood at ₹76, which represents a 10.84% potential listing gain over the upper price band of ₹704. However, investors must note that GMP trading is unregulated and not an official price discovery method. It is driven by demand and supply dynamics in the grey market and should be treated as informational rather than a definitive gauge of the listing price.

Despite the positive GMP, it is important to remember that GMP trends can fluctuate until the official listing. The expected listing price based on current trends is around ₹780, which indicates potential listing gains of 10.84%. GMP insights are often used by investors to gauge short-term listing expectations but are not definitive.

IPO Financial Performance and Key Metrics

Carraro India has demonstrated consistent growth in its financial performance. For the fiscal year 2024 (up to September 30, 2024), the company reported revenues of ₹9,227.39 million. The EBITDA for the same period stood at ₹1,010.96 million, with a Profit After Tax (PAT) of ₹496.32 million. Over the previous years, the company's revenues have increased steadily from ₹15,200.53 million in FY2022 to ₹17,332.98 million in FY2023, and ₹18,065.47 million in FY2024.

Carraro India’s key performance indicators show a pre-issue EPS of ₹11 and a post-issue EPS of ₹11 for FY24. With a pre-issue P/E ratio of 64x and a post-issue P/E ratio of 64x, the IPO appears fully priced, particularly when compared to the industry average P/E ratio of 32x. Return on Capital Employed (ROCE) for FY24 is 19.35%, and Return on Equity (ROE) is 17.69%, indicating efficient capital use.

The company's Annualized EPS based on the latest financial data is ₹17.5, which reflects growth potential, although the PE ratio stands at 40.22x, which is higher than the industry average. While the IPO may appeal to investors interested in long-term growth, the valuation metrics suggest that it is a fully priced offering, which may not offer immediate gains in terms of listing premium.

Carraro India IPO Objectives and Use of Funds

It is important to note that Carraro India will not receive any proceeds from the offer since this is an Offer for Sale. The entire amount raised will be received by the Promoter Selling Shareholder, after deductions for offer-related expenses and applicable taxes. The IPO’s primary goal is to provide an exit to existing shareholders, while the company plans to utilize proceeds for expansion, capital expenditures, and other corporate purposes.

IPO Allotment Process

Carraro India IPO’s allotment date is set for December 26, 2024, and investors can check their allotment status on the registrar’s website by entering their application number, PAN, or DP Client ID. The process for checking the allotment status is simple and quick, ensuring that investors can stay updated on their status after the IPO closes.

Carraro India IPO Review

Carraro India stands as a technology-driven leader in the design and supply of engineering solutions for the agriculture and construction vehicle industries. The company has demonstrated strong growth in its revenues and profits over the last few years, underpinned by a solid foundation in axles, transmission systems, and gears.

Despite the strong financial track record, the IPO is priced at a premium, with fully priced valuations compared to the industry’s average. Grey Market Premium (GMP) indicates listing gains, but given the premium valuation, we recommend investors to avoid the IPO for listing gains and consider the long-term prospects instead.

For those looking to stay updated on the latest IPOs, market trends, and share market insights, make sure to explore Best IPO to Apply Now and stay informed with live IPO subscription updates and news. Joining Trading with CA Abhay Telegram Channel and Finance Saathi Telegram Channel for stock market tips and IPO updates can also help in making informed investment decisions.

Additionally, for those beginning their stock market journey, we encourage you to open a free Demat account with Choice Broking FinX to get started with investments in stocks and IPOs.

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