Overview:
Two decade old fully integrated established manufacturer of Tractors 52.16% of revenue and & Pick & Carry Cranes (47.77% of revenue).
Also operate asset financing business (with focus on retail financing of tractors) through our wholly owned subsidiary named as “Barota Finance Limited”, which is a RBI registered NBFC
Business Description:
Indo Farm commenced commercial production of tractors in October 2000. In 2008, they diversified into manufacturing and marketing of Pick-N-Carry cranes of 9 tonnes – 30 tonnes capacity and commenced production of mobile tower cranes. Production unit is situated in Baddi, Himachal Pradesh, and it is spread over 34 acres. Installed Capacity of 12,000 tractors and 1,280 Cranes per annum. (expansion plans to add 3600 cranes p.a more capacity at is allotted land in Baddi. Currently capacity utilization has hit 99%. Portion of IPO proceeds will be used here). Within a year of their operations, they successfully indigenized the engine components, manufacturing and assembly processes and stopped import of engines. Engines being the company’s core competence area, they are now making engines for generator sets that are exported to more than 8 countries in Europe. The company has its state-of-the-art foundry equipped with induction furnaces in order to ensure better quality as well as to ensure uninterrupted supply. Indo Farm operates pan-India and is a well recognized brand, associated with quality and dependability. The company operates through 6 regional offices and a 173 strong dealer network (from various states such as Punjab, Haryana, Uttar Pradesh, Maharashtra, Gujarat, Rajasthan etc.) for sales and service.
Some more facts of the business:
– Their total sales for last three financial years include around 93% domestic sales and around 7% export sales
– Their top ten customers/ dealers contribute to 23.13%, 19.73% and 23.63% for the financial year ended March 31, 2024, March 31, 2023 and March 31, 2022
– This is a very small player among the major players like Mahindra & Mahindra, John Deere, International Tractors (Sonalika), Tractors & Farm Equipment (TAFE), Escorts and so they don’t have significant market share in the industry. Indo Farm ranks 12th for Tractors sales in India and has less than 50, which seems expensive when compared with listed peers
– Higher debt to equity ratio and lower net profit margin does not support the valuation which the company is asking.
– My take is to avoid the IPO as I don’t expect much listing gains. And prospects of rising share price after listing at this valuation is dim.
Please check the report attached for more details