Business News

ET Intelligence Group: Indo Farm Equipment, a manufacturer of tractors and pick-and-carry cranes, plans to raise up to ₹185 crore through a fresh issue of shares and up to ₹75 crore through an offer for sale. The promoter stake will fall to over 69% after the IPO from nearly 94%.Of the fresh issue proceeds, ₹70 crore will be used to expand the capacity of the crane unit, ₹50 crore for part debt repayment, and ₹45 crore for increasing the capital base of the tractor financing subsidiary. Currently, the company's financial parameters lag peers while the asked price-earnings (P/E) looks stretched due to the impact of higher interest outgo on the bottom line. However, the planned capacity expansion, debt repayment, and strengthening of the financing arm are expected to brighten prospects. Given these factors, long-term investors with high risk appetite may consider the IPO.116780852Business: Incorporated in 1994, Indo Farm's manufacturing facilities located in Baddi, Himachal Pradesh, have capacities of 12,000 tractors and 1,280 cranes per annum as of September 2024. Tractors contribute around 49% to revenue and cranes 45%, while the remainder is from related products. The company derives 7% of its revenue from exports to regions including Africa, Latin America, the Gulf, and Central and South Asia. It produces 16-110 HP tractors and cranes with a capacity between nine and 30 tonnes. It currently runs the crane facility at near capacity and plans to add a capacity of 3,600 tonnes. Besides, the augmentation of the capital base of the financing subsidiary will improve financing to tractor customers, which may support capacity utilisation of the tractor division, which was around 25% in FY24.Financials: Revenue from operations increased to ₹375.2 crore in FY24 from ₹352 crore in FY22 while net profit rose to ₹15.6 crore from ₹13.7 crore. The operating margin before depreciation and amortisation (Ebitda margin) expanded to 16.7% from 14.8% during the period. Total debt gradually reduced to ₹302 crore as of June 2024 from ₹345 crore in FY22. The debt reduction after the IPO is likely to reduce the interest burden by around 18%. The company incurred an interest outgo of ₹28.3 crore in FY24. In addition, net debt/ Ebitda at over four in FY24 was on the higher side. It is expected to fall amid debt repayment and likely improvement in business.Valuation: Indo Farm's price-earnings (P/E) multiple works out to be 66, which is steeper compared with 48 for Action Construction and 29 for Escorts Kubota. However, on an EV (enterprise value)/Ebitda basis, which excludes the impact of interest outgo, Indo Farm demands a multiple of over 17 compared with 31 for Action and 26 for Escorts Kubota.

New York: For all the Trump Trade triumphalism and hysteria for AI, it's been a tough year to make money across markets. Now even the trade that powered US stocks is starting to show signs of wavering.A fickle Fed and inflation's refusal to go quietly has been a recipe for cross-asset malaise. The biggest exchange-traded fund tracking long-dated Treasuries swung violently in 2024 before finishing deeply in the red. Commodities rode the hopes and dreams of Chinese stimulus, up and down. Gains were even squeezed in the safest credits, where spiking yields pushed BlackRock's $30 billion investment-grade ETF to its worst fourth quarter in eight years.The one bright spot was equities, and US companies again stole the show. The advance was the furthest thing from a uniform march, though - including Friday, when a normally sleepy year-end session saw the S&P 500 fall as much as 1.7% on no obvious news. That drop capped a year when value and small-cap shares struggled, and the S&P 500's 25% return masked a gain of half that in its average member.Ominously, it was also the second shellacking in as many weeks for the one equity strategy that has worked reliably in 2024: momentum investing, or riding the market's winners. A record year for momentum has rewarded its faithful handsomely - while also raising risk that blowups like Friday's will become more common."Momentum is great until it's not, until something changes," said Melissa Brown, head of applied research at SimCorp, which offers factor risk models.Even with this week's pullback, the popular quant trade that buys the past year's top names and sells the losers has gained 31% in 2024, set for the best year ever in data going back to 2002, a S&P Dow Jones index shows. In short, the stock leaderboard proved remarkably consistent, with Big Tech favorites like Nvidia Corp. and Meta Platforms Inc. sitting steadily at the top. While that's handed an easy gain to anyone with an index fund, the all-too-familiar setup is adding fuel to concerns that stock gains have become too concentrated and crowded.That's against a backdrop of too many twists to count, starting with a US central bank that was at times dovish, then hawkish again, and encompassing everything from worldwide election drama and simmering geopolitical tension to China's varying postures toward economic stimulus.So numerous were the cross-currents that a strategy built for all-weather success, the multi-asset portfolio model known as risk parity, ended the year roughly unchanged, as measured by the RPAR Risk Parity ETF.