Subscribe to Snowman Logistics IPO: Sharekhan

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Sharekhan's report on Snowman Logistics (SLL) IPO

"Snowman Logistics (SLL) is coming out with an initial public offering (IPO) of 4.2 crore equity shares of face value of Rs10 each. Post-issue, the shareholding of the promoters in the company will fall to 40.4% from the current holding of 54.0%. The issue is priced at Rs44-47 per share and the company intends to raise Rs197 crore at the upper price band. The company plans to use the proceeds to set up new temperature-controlled and ambient warehouses and meet its long-term working capital requirement."

"The size of the Indian temperature-controlled (storage and transportation) logistic industry is estimated at Rs12,000- 15,000 crore and the industry is expected to grow at 15- 20% per annum over the next five years. SLL is set to reap the benefits of this growth as it is the largest player with a capacity of 63,000 pellets (way ahead of the competition with the second largest player having a capacity of around 5,000 pellets). SLL has reputed investors like Norwest Venture Partners, Mitsubishi Corporation and International Finance Corporation, and none of the investors is divesting in the public issue."

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"At the upper price band of Rs 47, the company is priced at enterprise value/earnings before interest, tax, depreciation and amortisation of 24.0x FY2014 earnings. However, the company’s aggressive expansion plan for increasing its pellet capacity from 61,543 pellets in FY2014 to 85,000 pellets in FY2015 and further to 100,000 pellets by FY2016 is likely to boost the operating performance of the company over the next two years. Further, the company’s presence in a niche segment with a strong management pedigree improves its growth prospects. We recommend subscribe", says Sharekhan research report.


Link to report CLICK HERE