Indo Farm Equipment IPO: Check strengths, risks, business model, competitors and other key details

Indo Farm Equipment Ltd, which manufactures tractors, cranes and farm equipment, will launch its initial public offering (IPO) on December 31.

The mainboard public offer comprises a fresh issue of 86 lakh shares and an offer-for-sale of 35 lakh shares by selling shareholders.

The company is yet to announce the price band for the IPO.

Here are the key details of about Indo Farm Equipment Ltd for the investors looking forward to participating in the IPO subscription.

Indo Farm Equipment business model

The company sells products under Indo Farm and Indo Power brands. It also exports products to Nepal, Bangladesh, Myanmar, Syria, Sudan and other countries. Exports account for around 7% of its sales revenue.

The company has manufacturing facilities at Baddi, Himachal Pradesh. The facilities include a captive foundry unit and dedicated machine shop, fabrication and assembling units for tractors, pick and carry cranes, and other equipment.

Key Financials

The company reported consolidated total income for the April-June period of FY25 was ₹75.53 crore, while the profit after tax was ₹2.45 crore.

For the financial year ended March 31, 2024, its total income was ₹375.95 crore compared to ₹371.81 crore in the preceding financial year. Its net profit stood at ₹15.59 crore in FY24.

Key performance metric (KPI) and ratios

Strengths and weaknesses

The company possesses various competitive strengths, which have enabled it to sustain and perform for over two decades in its industry.

• The company has fully integrated and established manufacturing setup at its facilities in Baddi, Himachal Pradesh. The facilities include a captive foundry unit and dedicated machine shop, fabrication and assembling units for Tractors, and pick and carry cranes.

• Critical parts of a tractor and cranes such as cylinder blocks, transmission housing, gear box, sheet metal components etc. are manufactured by its in-house facilities.

• The company has an in-house NBFC, Barota Finance Limited, to further complement and grow its business by providing tractor finance to buyers. As of June 30, 2024, the NBFC has a total Loan Book (Vehicle Finance) of ₹127.15 crore and served over around 5,900 active customers.

• The company manufactures a wide range of products – tractors from 16 HP – 110 HP in 2 WD and 4 WD range.

• The company sells products in multiple countries and a wide variety of financial institutions provide finance solutions for its products.

Weaknesses

• Tractors and cranes account for majority of its revenue. Any reduction in demand or in the manufacturing of such products could have an adverse effect on its business.

• The company has proposed expansion of production capacity which could face the risk of unanticipated delays in implementation and cost overruns.

• The company faces under-utilisation of tractor production capacity. Average Capacity utilisation for FY 2022 to FY 2024 is 32% for tractor while 87% for cranes.

• The company has recorded low growth in Revenue and PAT margins in the last three Fiscals of our Company and its Subsidiary.

Key competitors

In farm equipment segment, the company faces competition big players such as Mahindra, Escorts Kubota, John Dheere, Tafe, CNH, AGCO, Yanmar and Claas.

Top players in the Indian agricultural machinery market include Tirth Agro (Shaktiman), VST Tillers, Maschio Gaspardo India Pvt. Ltd. Buhler India and Tata International Vehicle Applications and Satrac Engineering Pvt. Ltd.

In the crane industry, the prominent players are Bauer AG, Kato Works Co., Ltd, Kobelco Construction Machinery Co., Ltd, Liebherr-International AG, Escorts Kubota and Manitex International, among others.