Auto parts maker Carraro India, known for producing axles and transmission systems for agricultural tractors and construction vehicles, is gearing up to raise close to Rs 1,812 crore. This will be achieved through an initial public offering (IPO), as reported by Moneycontrol. The company took a significant step by submitting its draft papers to the capital markets regulator SEBI on August 23.
Initial Public Offering (IPO)
Carraro India is a part of the larger Carraro Group, headquartered in Italy. The parent company, Carraro SpA, leads the way in producing transmission systems, including axles, transmissions, and drives, specifically designed for agricultural and construction equipment that are used off-highway.
The IPO is entirely structured as an offer-for-sale, summing up to Rs 1,811.65 crore, by the promoter Carraro International SE. Serving as a holding entity for various investments, Carraro International SE will receive all the proceeds from the public offering. This means that Carraro India will not directly benefit financially from this IPO.
Carraro India’s Financial Performance
Carraro India has shown a commendable improvement in its financial performance. In FY24, the company witnessed a 29.4 percent increase in profit, which rose to Rs 60.6 crore, compared to Rs 47 crore in the previous year. This remarkable growth is attributed to strong operational performance.
For the fiscal year that ended in March 2024, Carraro India’s revenue climbed to Rs 1,770.5 crore, marking a 4.4 percent increase from the previous year. Meanwhile, its EBITDA (earnings before interest, tax, depreciation, and amortisation) saw a substantial rise of 27.2 percent year-on-year, reaching Rs 128.2 crore. Additionally, the company’s EBITDA margin improved by 130 basis points, standing at 7.2 percent in FY24, as noted by Moneycontrol.
Established in 1997, Carraro India is in competition with several publicly listed companies, including Escorts Kubota, Schaeffler India, Sona BLW Precision Forgings, Ramakrishna Forgings, Happy Forgings, and Action Construction Equipment. The company manufactures a variety of equipment such as backhoe loaders, soil compactors, cranes, self-loading concrete mixers, and small motor graders catering to the agricultural and construction sectors. Besides, it also supplies gears, shafts, and ring gears for industrial and automotive applications.
Operating from two manufacturing facilities in Pune, Carraro India served 38 manufacturers across India in the fiscal year FY24. The domestic sales alone contributed to 64.82 percent of its revenue for the last fiscal year, according to the report.
This IPO marks a significant moment for Carraro India as it continues to expand its financial and operational horizon. The funds from the offer-for-sale will primarily benefit the promoter, Carraro International SE, rather than being reinvested into the company’s growth. The decision to proceed with an IPO aligns with many companies’ strategies to unlock the value of their investments and create a more flexible and efficient capital structure.
Conclusion of Carraro India IPO
In conclusion, the move to go public by offering nearly Rs 1,812 crore has set Carraro India on the path to greater financial transparency and investor participation. With a solid financial foundation and a clear business strategy, the company looks poised to continue its growth trajectory, contributing significantly to the agricultural and construction sectors not only in India but potentially across global markets.
