6 IPOs Set to List This Week: Will They Deliver Blockbuster Returns?

Company Overview

• Founded in 1994, Indo Farm Equipment Limited specializes in the production of tractors, pick-and-carry cranes, and other harvesting machinery.  
• The company operates under two brands, Indo Farm and Indo Power, and exports its products to markets such as Nepal, Syria, Sudan, Bangladesh, and Myanmar.  
• Indo Farm manufactures tractors ranging from 16 HP to 110 HP and pick-and-carry cranes with capacities of 9 to 30 tons. Its manufacturing facility, located in Baddi, Himachal Pradesh, spans 127,840 square meters and includes an in-house foundry, machine shop, and assembly units. The facility has an annual production capacity of 12,000 tractors and 1,280 pick-and-carry cranes.  
• Additionally, the company has acquired new industrial land near its existing facility to establish a dedicated manufacturing unit for pick-and-carry cranes, which will boost capacity by 3,600 units annually.  

IPO Details

• Indo Farm Equipment IPO is a book-built offering valued at ₹260.15 crores. This includes a fresh issuance of 0.86 crore shares amounting to ₹184.90 crores and an offer for sale of 0.35 crore shares worth ₹75.25 crores.  
• The IPO will be open for subscription from December 31, 2024, to January 2, 2025. The allotment of shares is anticipated to be finalized on Friday, January 3, 2025. The company is expected to debut on the BSE and NSE, with a tentative listing date set for Tuesday, January 7, 2025.  
• The price band for the IPO has been set between ₹204 and ₹215 per share.

Strengths

• Integrated Manufacturing and R&D: Indo Farm boasts a fully integrated manufacturing setup, which includes in-house research and development capabilities. This allows the company to innovate and customize its products, particularly in the tractor and crane segments, enhancing its competitiveness in the market.
• Robust Dealer Network: The company has established a strong dealer network, particularly in North India, which facilitates effective distribution and customer service. Plans to expand this network to over 500 dealerships in the next three years indicate a proactive approach to increasing market reach.

Weaknesses

• Geographical Concentration: Indo Farm's manufacturing operations are heavily concentrated in Himachal Pradesh, making it vulnerable to regional economic fluctuations and labour disruptions. This reliance on a single geographic area can adversely affect its business continuity.
• Limited Market Presence: Compared to larger competitors like Mahindra and Escorts Kubota, Indo Farm has a smaller market presence and revenue generation capacity. This limitation is compounded by its dependency on a few key states and major dealers for sales, which poses risks if these relationships falter.

Use of Proceeds

The IPO proceeds will be utilized for setting up a new dedicated unit to expand the manufacturing capacity of Pick & Carry Cranes, repaying or prepaying certain borrowings, investing further in the NBFC subsidiary Barota Finance Ltd. to augment its capital base for future requirements, and for general corporate purposes.

Technichem Organics Limited

Company Overview

• Established in 1996, Technichem Organics Limited specializes in manufacturing a diverse range of chemicals, including speciality chemicals, pigment and dye intermediates, and air oxidation chemistry that serves multiple industries, including
• pharmaceuticals, agriculture, coatings, pigments, dyes and others.  
• The company caters to various industries, such as pharmaceuticals, agriculture, coatings, pigments, and dyes, reflecting the broad applicability of its product portfolio.  
• Technichem Organics delivers precise chemical compounds and raw materials tailored to meet the needs of the agrochemical, coatings, pharmaceutical, dye, pigment, and speciality chemical industries. All production processes are carried out in-house.  
• The company’s facility spans 26,079 square meters and houses three manufacturing plants with an annual production capacity of 950,000 kilograms. Technichem Organics has a global footprint, exporting to around 11 countries, with China being one of its key markets.  

IPO Details

• The Technichem Organics IPO is a book-built offering valued at ₹25.25 crores, consisting entirely of a fresh issue of 45.90 lakh shares.  
• The IPO opens for subscription on December 31, 2024, and closes on January 2, 2025. The allotment of shares is expected to be finalized on Friday, January 3, 2025. Technichem Organics plans to list on the BSE SME platform, with the tentative listing date set for Tuesday, January 7, 2025.  
• The price band for the IPO is set between ₹52 and ₹55 per share.

Strengths

• Diverse Product Portfolio: Technichem Organics specializes in a wide range of chemical products, including pyrazoles, speciality chemicals, and pigment intermediates. This diversification allows the company to serve multiple industries, such as pharmaceuticals, agriculture, and coatings, which helps mitigate risks associated with downturns in any single sector.
• Strong Global Presence: The company operates in 11 countries, with a significant focus on exports to China. This international footprint enhances its market reach and competitiveness, supported by robust research and development capabilities that enable the production of high-quality, cost-effective chemical solutions.

Weaknesses

• Reliance on Key Customers: The company depends on a few very major key customers for a large portion of its revenues. Often, 36% to 47% of total revenues come from the top five customers in recent years. The company does not have long-term contracts with such customers, thus increasing the risk.
• Inventory and Supply Chain Management: Improper inventory handling or delays in sourcing raw materials and machinery may harm the company’s goodwill and operational results.

Use of Proceeds

The IPO proceeds will be utilized for funding the capital expenditure required to set up a new plant named “Plant 4,” repaying or prepaying certain borrowings availed from banks, financial institutions, and non-banking financial companies, and for general corporate purposes.

Six Stock Listings to Watch

In addition to the aforementioned IPOs, six companies, with four in the mainboard segment, are preparing to make their debut on the stock exchanges during the final week of the year. 

On December 30th, Ventive Hospitality, Carraro India, and Senores Pharmaceuticals debuted on the stock exchanges. Ventive Hospitality Limited was listed at ₹718.15 on the BSE, reflecting a 12% premium over its IPO price of ₹643. Carraro India Limited had a subdued debut, opening at ₹660 on the BSE, a 6.25% discount from its IPO price of ₹704. In contrast, Senores Pharmaceuticals Limited delivered a strong performance, listing at ₹593.70 on the BSE, a 52% premium over its IPO price of ₹391. 

Unimech Aerospace and Manufacturing's IPO listing is scheduled for December 31st.

The SME IPOs of Anya Polytech and Fertilizers Ltd and Citichem India Ltd will make market debut on January 2 and 3, respectively.