Carraro needs better product profile, R&D to gain traction
Carraro India's stock has fallen by 38% since February 6 after the auto ancillary company reported a sharp drop in net profit for the December quarter amid muted revenue growth.
This has extended its discount over the IPO price of ₹704 to 52%. For the company, which was listed on bourses on December 30, the short-term outlook appears to be bleak amid pressure on profitability and weakness in the international market.
In the long term, strong partnerships with original equipment manufacturers (OEMs), new product categories and growing engineering services hold the promise.
Established as a subsidiary of Italy-based Carraro SpA in 1997, the company manufactures axles, transmission systems, and gears for agricultural tractors and construction vehicles.
In the December 2024 quarter, Carraro India's revenue grew by 3% year-on-year to ₹448.7 crore while net profit fell by 24% to ₹14.7 crore. On a sequential basis, the fall in profit was sharper at 33% following an unfavourable product mix wherein the sales volume of high-margin products such as gears, engineering and spare parts was lower.
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