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Carraro India Limited IPO: Overview and Subscription Details – All You Need to Know

Carraro India Limited IPO- Overview

The Carraro India IPO is a book-built issue worth ₹1,250 crores, entirely comprising an Offer for Sale (OFS) of 1.78 crore shares. The IPO opens for subscription on December 20, 2024, and closes on December 24, 2024, with the allotment expected to be finalized on December 26, 2024. The tentative listing date is set for December 30, 2024, on the BSE and NSE. The price band is fixed at ₹668 to ₹704 per share. Retail investors can apply for a minimum lot size of 21 shares, requiring an investment of ₹14,784. For small non-institutional investors (sNII), the minimum investment is ₹2,06,976 for 294 shares (14 lots), while large non-institutional investors (bNII) need to invest ₹10,05,312 for 1,428 shares (68 lots). The IPO provides an opportunity to invest in a well-established entity while catering to a diverse range of investors. 

Period 

The Carraro India IPO is scheduled to open for subscription on December 20, 2024, and will close on December 24, 2024. The share allotment is expected to be finalized by December 26, 2024, with the tentative listing date set for December 30, 2024, on both the BSE and NSE. 

Pricing and Lot Details

The Carraro India IPO offers investors an opportunity to invest in a leading manufacturer of transmission systems and axles for off-highway vehicles. Below are the key details: 

• Price Band: ₹668 to ₹704 per share. The lower limit is ₹668, while the upper cap is ₹704. 
• Lot Size: A minimum investment requires 21 shares, amounting to approximately ₹14,784 at the upper price band.  
• Issue Size: The IPO aims to raise a total of ₹1,250 crore, entirely through an Offer for Sale (OFS) of 1.78 crore shares. 
• Face Value: ₹10 per equity share, with the IPO price reflecting a premium based on the company’s valuation and market demand. 
• The Carraro India IPO follows a structured bidding system that accommodates various investor categories, including Retail Investors, Small Non-Institutional Investors (sNIIs), and Large Non-Institutional Investors (bNIIs). Below is a breakdown of investment requirements: 

Category	Lots	Shares	Investment Amount (₹)
Retail Investors	Minimum: 1	34	14,784
Retail (Max)	Maximum: 13	273	1,92,192
Small HNIs (Min)	Minimum: 14	294	2,06,976
Small HNIs (Max)	Maximum: 67	1,407	9,90,528
Large HNIs (Min)	Minimum: 68	1,428	10,05,312

Reservation Structure 

The Carraro India IPO follows a structured reservation system to ensure participation from diverse investor categories: 

• Qualified Institutional Buyers (QIBs): 50% of the total issue is reserved for QIBs, including mutual funds, foreign institutional investors, banks, and other large financial institutions. 
• Non-Institutional Investors (NIIs): 15% of the issue is allocated to NIIs, including high-net-worth individuals (HNIs) who bid for larger lot sizes. 
• Small HNIs (sNIIs): Minimum 14 lots (294 shares), amounting to ₹2,06,976 at the upper price band.  
• Large HNIs (lNIIs): Minimum 68 lots (1,428 shares), totaling ₹10,05,312 at the upper price band.  
• Retail Investors: 35% of the total issue is reserved for retail investors. 
• Minimum lot size: 1 lot (21 shares), requiring an investment of ₹14,784 at the upper price band. 

This reservation system ensures balanced participation across institutional and individual investors while catering to varying investment capacities. 

Key Dates & Timelines 

Carraro India Limited IPO Timeline (December 2024) 

• IPO Open Date: Friday, December 20, 2024 
• IPO Close Date: Tuesday, December 24, 2024 
• Basis of Allotment: Thursday, December 26, 2024 
• Initiation of Refunds: Friday, December 27, 2024 
• Credit of Shares to Demat Accounts: Friday, December 27, 2024 
• Listing Date on BSE and NSE: Monday, December 30, 2024 

Book Running Lead Managers 

​ The Carraro India Limited is being managed by the following Book Running Lead Managers (BRLMs): 

• ICICI Securities Limited  
• HDFC Bank Limited 
• Kotak Mahindra Capital Company Limited 

The registrar for the IPO is Link Intime India Private Limited, responsible for processing applications, managing the allotment process, and handling refund-related activities for the IPO. 

Promoters Information 

Carraro India is led by a seasoned management team with extensive experience in the automotive components industry. 

• Balaji Gopalan, the Managing Director, has been with the company since September 1, 1998. He holds a Doctor of Philosophy in Human Resource Management from the University of Pune and is responsible for achieving revenue, EBITDA, and CSR targets. 
• Andrea Conchetto, a Non-Executive Director, holds a diploma in Electrotechnical Engineering from the University of Padua. He is associated with the Carraro Group, including Carraro S.p.A., Carraro Drive Tech Italia S.p.A., Carraro China Drive Systems Co. Ltd, and Siap S.p.A. 
• Enrico Gomiero, also a Non-Executive Director, holds a diploma as an accountant and commercial expert from the Technical Institute for Commercials and Surveyors of Padua. He is associated with various entities in the Carraro Group, including Carraro S.p.A., Carraro Drive Tech Italia S.p.A., Carraro Finance S.p.A., Carraro International S.E., and Siap S.p.A. 
• Davide Grossi, the Whole-time Director and Chief Financial Officer, holds an undergraduate degree in Business Administration and a Master’s in Accounting, Corporate Finance, and Control from Bocconi University. He has previously been associated with Alten Sverige AB, Isagro (Asia) Agrochemicals Pvt. Ltd., and Deloitte & Touche S.p.A. 
• Sudhendra Mannikar, the Whole-time Director and Chief Operating Officer, has been with the company since August 2, 1999. He holds a Bachelor’s degree in Engineering (Production) and an MBA from the University of Pune. He was previously associated with Essar Projects Limited. 

The promoters of Carraro India include Tomaso Carraro, Enrico Carraro, Carraro S.p.A., and Carraro International S.E. 

This leadership team brings a wealth of expertise and strategic vision to Carraro India, positioning the company for sustained growth and success in the automotive components sector. 

About Carraro India Ltd. 

Carraro India Limited, established in 1997, is a technology-driven and integrated supplier specializing in the development of complex engineering products and solutions for original equipment manufacturers (OEMs). The company focuses on axles, transmission systems, and gears tailored for the agricultural tractor and construction vehicle industries in India. As an independent Tier-1 solution provider, Carraro India offers mission-critical components that are integral to its customers’ final products. sThe company’s product portfolio includes axles and transmission systems designed for agricultural tractors and construction vehicles such as backhoe loaders, soil compactors, cranes, self-loading concrete mixers, and small motor graders. It also manufactures gears, shafts, and ring gears for industrial and automotive vehicles. Carraro India caters to a diverse range of off-highway vehicles, offering axles and transmission systems across various horsepower (HP) categories. 

The agricultural tractor segment, which dominates the Indian market with a 90% share, is driven by farm mechanization and favourable government policies. Meanwhile, the construction vehicle segment, holding the remaining 10%, is bolstered by significant infrastructure investments. The Indian government’s ₹10 lakh crore budget allocation for infrastructure development in 2023–24, alongside the ₹27 lakh crore National Infrastructure Pipeline (NIP) investment by FY2025 and ₹7 lakh crore for road and highway projects over the next 2–3 years, is expected to drive robust demand for construction vehicles. 

Financial Highlights Summary

1. Revenue Growth: The company achieved consistent growth in operating revenue, increasing from ₹1,497.54 Cr in FY22 to ₹1,788.96 Cr in FY24, showcasing robust demand and operational efficiency.
2. Profitability Metrics:
   • EBITDA: Improved from ₹82.86 Cr in FY22 to ₹149.99 Cr in FY24, with margins rising from 5.45% to 8.30%, highlighting better cost management.
   • PAT: Grew from ₹22.42 Cr in FY22 to ₹62.56 Cr in FY24, with PAT margins improving from 1.50% to 3.50%.
3. Return Metrics:
   • ROCE: Increased from 10% in FY22 to 19.35% in FY24, reflecting efficient resource utilization.
4. Cash Flow & Liquidity:
   • CFOA: Despite fluctuations, stable operational cash flows support liquidity and operational health.
5. Asset & Equity Growth:
   • Total assets grew from ₹1,012.44 Cr in FY22 to ₹1,072.89 Cr in FY24, while net worth rose from ₹292.49 Cr to ₹369.82 Cr, reinforcing financial stability.
6. Debt Management: Controlled borrowing with total debt at ₹212.55 Cr in FY24 indicates balanced financial management.

Overall: The company exhibits strong revenue growth, enhanced profitability, efficient capital use, and solid financial health, ensuring a positive outlook for stakeholders.

IPO Objectives 

The Carraro India Limited Initial Public Offering (IPO) is structured entirely as an Offer for Sale (OFS), wherein the promoter selling shareholder will divest a portion of their stake. Consequently, the company itself will not receive any proceeds from this offering. All funds generated will be directed to the promoter selling shareholder, net of offer-related expenses and applicable taxes.  

In an OFS, existing shareholders sell their shares to the public, allowing them to monetize their holdings. This approach does not result in capital inflow to the company but enables the promoters to reduce or liquidate their ownership stake. For investors, participating in such an IPO provides an opportunity to invest in a company with an established operational history and financial track record. 

It’s important to note that since the company won’t receive any proceeds from this IPO, there won’t be immediate capital available for business expansion or debt reduction. Investors should consider this aspect when evaluating the potential impact of the IPO on the company’s future growth and financial strategy. 

Subscription Status as of December 20, 2024, 05:00 PM 

Investor Category	Subscription (times)	Explanation
Qualified Institutional Buyers (QIB)	0	No subscription from QIBs on the current day.
Non-Institutional Investors (NII)	0.06	Limited participation from NIIs, indicating a 6% subscription of their portion.
– bNII (bids above ₹10L)	0.04	High-value bids (above ₹10L) accounted for only 4% of the allotted category.
– sNII (bids below ₹10L)	0.1	Smaller value bids (below ₹10L) achieved a 10% subscription.
Retail Investors	0.16	Stronger interest from retail investors with a 16% subscription rate.
Total	0.09	The overall subscription rate across all categories is 9%, reflecting moderate interest.

Conclusion: 

Carro India Limited, a company in the [specific industry, e.g., automobile, technology, etc.], presents both opportunities and risks for potential investors. Here are key factors to consider before deciding to invest: 

Positives: 

• Growth Potential: If the company operates in a high-growth sector with favorable macroeconomic trends, it may benefit from increased demand. 
• Financial Strength: Analyze its revenue growth, profitability margins, and debt levels. Consistent growth in revenue and profit would indicate a strong financial position. 
• Competitive Edge: The company might hold unique advantages, such as innovative technology, cost-efficiency, or a strong brand reputation in the market. 
• Industry Position: Evaluate the company’s standing compared to peers. A leadership position in a niche market could indicate long-term growth potential. 

Concerns: 

• Valuation: Assess the Price-to-Earnings (P/E) ratio and compare it with industry peers. A high valuation could indicate that the stock is overvalued. 
• Operational Risks: Analyze the risks in supply chain management, raw material costs, and dependency on specific markets or clients. 
• Market Sentiment: If subscription numbers (e.g., from QIBs, NIIs, retail investors) are low, it may suggest weak investor confidence. 
• Macroeconomic Risks: Factors like interest rate hikes, inflation, or geopolitical issues could impact the company’s growth prospects. 

Before investing, thoroughly review the company’s Red Herring Prospectus, assess the subscription demand across investor categories, and consult with a financial advisor. Investing in IPOs carries inherent risks, so ensure the investment aligns with your financial goals and risk appetite.