 "This recently listed IPO tanked 35% in 2 days; down 50% from issue price")
Shares of Carraro India hit a new low of Rs 352.85 as they slipped 19 per cent on the BSE in Monday’s intra-day trade, extending its Friday’s decline after the company reported weak earnings for the quarter ended December 2024 (Q3FY25). In the past two trading days, the stock price of auto ancillary company has tanked 35 per cent.
Currently, Carraro India was quoting 50 per cent below its issue price of Rs 704 per share. The company made its stock market debut on December 30, 2024. At 02:28 PM; the stock was trading 17 per cent lower at Rs 360.30, as compared to 0.88 per cent decline in the BSE Sensex. The average trading volumes at the counter jumped nearly 10-fold. A combined 2.1 million equity shares changed hands on the NSE and BSE.
Carraro India is technology driven integrated supplier that develops complex engineering products and solutions for original equipment manufacturer (OEM) customers. The company is an independent Tier-I solution provider for axles, transmission systems, gears and other related components with in-house product design manufacturing capabilities which support the full value chain of services. Part of the Carraro Group which designs, manufactures, and sells transmission systems (axles, transmissions, and drives) mainly for agricultural and construction equipment and off-highway vehicles.
In Q3FY25, Carraro India reported 24 per cent year-on-year (YoY) decline in profit after tax (PAT) at Rs 14.8 crore. Total income grew 3 per cent YoY to Rs 452.8 crore from Rs 439.7 crore in a year ago quarter. Earnings before interest, tax, depreciation and amortization (EBITDA) margin was down to 8.1 per cent from 9.8 per cent in Q3FY24. The margin was lower for this quarter, mainly due to reduced turnover discounts from suppliers, and the evolving nature of the company’s technologies.
In Q3FY25, Gears business has reported slightly declining sales compared to the same period last year. The business is expected to be stable, with no significant growth in the near term, the company said.
While the company’s domestic business remains strong, driven by robust demand for locally sold products, overall performance has been affected by weak exports (incl. indirect exports) through Indian OEMs, the management said. They anticipate sustained growth in the domestic market with an exception of the indirect exports business. The recovery in overall export business is expected to take a little longer, the management said.
Carraro India derived 69.55 per cent/ 87.88 per cent of its revenue in H1FY25 and 69.37 per cent/ 85.39 per cent of its revenue in FY24 from top 5 and top 10 customers respectively. Any inability to retain key customers or attract new customers and expand customer network could negatively affect the business and results of operations. The company’s agricultural tractor business is seasonal in nature and a decrease in the sales during some quarters could have an adverse impact on the financial performance, SBI Securities had said in IPO note.