Carraro India Limited has submitted its prospectus to the Securities and Exchange Board of India (SEBI) seeking to generate capital via an upcoming public stock offering (IPO). The company is headquartered in Pune and specializes in manufacturing transmission systems for tractors, off road vehicles as well as agricultural and construction machinery.
Carraro India IPO: Purely an Offer for Sale (OFS)
The Carraro India IPO is set at a face value of INR 10 per share. The upcoming IPO involves a total offer for sale (OFS) worth up to INR 1,811.65 crore by Carraro International S.E. Essentially all the shares available in the IPO will be put up for sale by its parent company, Carraro International. As a result Carraro India will not receive any funds from the proceeds of the IPO.Â
Carraro India IPO is being presented using the book building process where, up to 50 percent of the offer will be distributed proportionately to institutional buyers (QIB). At least 15 percent of the offer will be allocated to non institutional investors (NII) and a minimum of 35 percent of the offer will be reserved for retail individual investors.
Carraro India IPO: Business BackgroundÂ
Founded in 1997 Carraro India, a branch of Carraro S.p.A. embarked on its manufacturing venture by producing transmission systems in 1999 and axles in 2000. Utilizing intellectual property rights obtained from entities, within the Carraro Group the company focuses on developing intricate engineering products and solutions for original equipment manufacturers (OEMs). It operates as a stand alone tier 1 supplier specializing in axles and transmission systems for tractors and construction vehicles.
The Carraro Group plays a role as a supplier of axles for agricultural tractors and construction vehicles in India and has also positioned itself as the top provider of transmission systems for tractors with up to 150HP and four wheel drive functionalities, in the market.
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Carraro India IPO: In-house Design Capabilities + Early-mover Advantage
In the past, Carraro India’s design expertise came from Carraro Technologies India Private Limited (CTIPL) and the Carraro Group. However, taking over the IP rights in October 1st of 2023 and acquiring CTIPL in June 2024 has allowed Carraro India to provide design services to its clients. This move has bolstered the company’s edge in the Indian market. The company has expanded its operations in the market with a shift, from exporting nearly all products in Fiscal 1997 to about 64.82 % of revenue generated from domestic sales in Fiscal 2024.Â
The products from the company play a role in the end products of its customers such as off highway vehicles and various gears used in industrial and automotive vehicles like axles and transmission systems, for agricultural tractors and construction vehicles including backhoe loaders and cranes.
For 27 years in India, Carraro India has built a network of local and global clients and partners. The timely entry of the firm into the market has enabled it to gain an understanding of customer requirements and establish enduring connections. By 2023, Carraro India stands out as the supplier in the open market segment, for agricultural tractor transmissions and commands a market share of 60 to 65 percent in non captive construction vehicle transmissions.
Carraro India IPO: Manufacturing Base
In Pune, Carraro has two manufacturing facilities – one dedicated to drivelines and another for gears production. They are well equipped with machinery for casting and machining processes as well as assembly lines, for prototyping and testing products. Furthermore the facilities also include painting and heat treatment departments. The Driveline plant operated at 81.07 % capacity in the year 2024 while the Gears plant had a capacity utilization of 89.94 %.
By 31 March 2024, the business provided products to 38 Indian manufacturers and six more, across the globe. Its main clients consist of both domestic companies and international Original Equipment Manufacturers (OEM) that it has been partnering with for a minimum of 15 years. Cararro exports its products directly and indirectly to customers in Asia and beyond through Carraro Drive Tech Italia S.p.A. serving clients in the agricultural tractor industry such as CNJ MAFE John Deere India Private Limited The construction vehicle sector includes CNL Bull Machines Liugong Manitou Equipment Doosan Escorts Kubota Mahindra and Mahindra With a focus, on customer satisfaction and quality service. Moreover CNH plays a role as a major client, in various other industries.
Over the years, Carraro India has built a foundation in the agricultural tractor and construction vehicle sector in India with connections to 189 local suppliers spread across 8 states and 68 international suppliers as part of its network. Among the company’s suppliers, the top 10 have been long standing partners, for an average of 15 years.
Solid Financial Foundation Ahead of Carraro India IPO
In the year 2024 compared to the previous year 2023 at Carraro India’s operations saw a 4.44% rise in revenue amount from INR 1,695.12 crore to INR 1,770.45 crore mainly driven by an uptick in product sales. Profit after tax surged by a substantial margin of 29.44% from INR 46.80 crore in FY 2023 to INR 60.58 crore in FY 2024. The company reported Return on Capital Employed (ROCE) of 19.32% in FY 2024, up from 15.62% in FY 2023 and 9.3% in FY 2022.Â
