Indo Farm Equipment to raise Rs 260 crore through maiden IPO

Chandigarh-based tractor manufacturing company Indo Farm Equipment Ltd is looking to raise between Rs 247 crore and Rs 260 crore through an Initial Public Offering (IPO), which opens on the stock exchange on December 31. The company reported operating revenue Rs 375 crore in FY24.

The IPO will be priced between Rs 204 and Rs 215 per share, with a face value of Rs 10 per share. Indo Farm also manufactures a range of agricultural equipment, including harvester combines, rotavators, and various spare parts, marketed under the Indo Farm and Indo Power brands. 

Investments and Business Plans

Over the past two decades, Indo Farm has invested nearly Rs 200 crore in its manufacturing facility located in Baddi, Himachal Pradesh, which currently has an installed capacity of 12,000 tractors (ranging from 16hp to 100hp) and 1,280 cranes.

Anshul Khadwalia, Joint Managing Director of Indo Farm, noted that the company significant investments have been in maintaining full backward integration over its manufacturing processes in-house, including foundry, gear shop, machining, transmission, engine, fabrication, and hydraulics shop. 

He also mentioned that the company plans to allocate Rs 45 crore to its in-house non-banking financial company, Barota Finance, to enhance lending to farmers purchasing tractors.

Post-IPO, the management aims to more than double its dealership network, expanding from approximately 170 existing dealerships for both tractors and cranes over the next two to three years—with targetted turnover to cross Rs 500 crores in FY25-26 from Rs 375 crore in FY 23-24., as per informed sources.

During a pre-IPO meeting in Mumbai, company officials informed Autocar Professional that they were confident of achieving growth and targets.  Informed sources envisaged of a projected 30 percent increase in overall turnover, anticipating growth from the current Rs 375 crore to easily cross over Rs 500 crore by the end of FY25-26. This growth is expected to be driven by strong demand for its tractors and crane operations.

The IPO will comprise a fresh issue of up to 8,600,000 equity shares and an offer for sale of up to 3,500,000 equity shares. Investors will be able to bid for a minimum of 69 equity shares, with multiples of 69 shares available.

The management is optimistic that, following the fund infusion, sales could increase to 6,500 units from the current annual run rate of 4,5000-5,000 units, with the potential to reach nearly 10,000 units by the end of FY 2026-27 as financing efforts gain momentum through the NBFC.

As a regional player, Indo Farm competes with larger companies such as Mahindra, Escorts Kubota, John Deere, and TAFE in the tractor market.

In the agricultural machinery sector, its competition is with VST Tillers, Maschio Gaspardo India Pvt. Ltd., Buhler India, Tata International Vehicle Applications, and Satrac Engineering Pvt. Ltd.

In the crane sector, key competitors include Bauer AG, Kato Works Co., Ltd., Kobelco Construction Machinery Co., Ltd., Liebherr-International AG, Escorts Kubota, and Manitex International, among others. RS Khadwalia, Chairman and Managing Director of Indo Farm, stated that the company, which began tractor production in 2001, has launched multiple tractor models and variants over the years.

It introduced a tractor model for the European market recently, as well as two new models for the domestic market.

Future Plans

Khadwalia mentioned, "We are leaders in the tractor sector, offering both two-wheel and four-wheel drive options, with products ranging from 16 HP to 100 HP, priced from Rs 3 lakh to Rs 12 lakh."

Farming experts state that with rising incomes among Indian farming households, farmers are investing in higher-horsepower tractors.

This trend is contributing to the growth of the Indian agricultural tractor market, which is projected to reach USD 7.42 billion by 2024, with a CAGR of 6.70% according to various analyst reports..

The company also indicated that they are in the process of developing an electric tractor prototype, which is expected to be ready for commercial production by FY26-27.