SNOWMAN LOGISTICS IPO
ABOUT THE COMPANY :
Incorporated in 1993, Snowman Logistics Limited is an integrated temperature controlled logistics service provider with 23 temperature controlled warehouses across 14 locations in India. It caters to industries like - Dairy products including butter and cheese; Ice-cream; Poultry and meat; Sea food; Ready-to-eat / ready-to-cook food products;
Confectioneries including chocolate and baked products; Fruits and vegetables; Healthcare and pharmaceutical products; and Industrial product such as x-ray, and photo-imaging, films.
It is the most preferred integrated temperature controlled warehouse and transport logistics company in the organized sector enjoying lion’ market share. The company has also been providing additional services like repacking of products for direct marketing in retail market to the manufacturers, exporters etc and adding value addition of services to its clients that include Hindustan Unilever, Cadbury, Baskins Robbins etc and has PAN India presence at 14
locations with 23 warehouses and fleet of 370.
Company Promoters:
Gateway Distriparks Limited is the Promoter of the Company
Market lot:
The investors have to apply minimum for 300 shares .
Objects of the Issue:
Capital expenditure for setting up new temperature controlled and ambient warehouses;
Long term working capital; and
General corporate purposes.
Strengths
Growing middle class and increase in consumer spending: India’s discretionary spending has increased
considerably over the past few years and this would benefit the logistics industry, as the import and export of goods would go up in a booming economy.
Export oriented policy of Government: The prime minister has maintained that we need to improve the export
competitiveness of Indian goods and services. The logistics sector would be a key beneficiary of this impetus.
Large market share: The Company has a large market share in the warehouse and logistics sector, this would augur well for the company in the future as this space is set to expand.
Pan India presence: The Company has a PAN India presence, this would help the company reap the benefits of a renewed economic traction in the country.
Reputed Client list: The Company has some of the best global companies on its client list and that would help it get more traction as these companies expand their footprint in the Indian growth story.
. Weaknesses
Concentration risk: The top 20 customers of the company contribute about 39% of the total revenue of the
company and hence the company faces a concentration risk.
Delay in setting up new warehouses: The process of setting a new warehouse is very cumbersome as it takes a lotof capex and also there is a lot of time lag as there are a lot of approvals needed.
Increase in lease rentals: Some of the warehouses are on leased land hence increase in lease rentals may be a
cause of concern for the company.
Valuation
Net sales were Rs 155.2 crore and PAT Rs 22.5 crore in FY 2014. On performance front, the company posted an average EPS of Rs. 1.70 for three fiscals ended 31.3.14. if we attribute these earnings on expanded equity post IPO, the asking price is at a P/E of 32-35 on lower and upper price bands which makes it an average bet, but considering its earnings and future plans, it is worth considering for medium to long term as the company has lion’s share in the segment of temperature controlled warehouse and logistics. For last five fiscals it has outperformed on Y-o-Y basis with a CAGR of 35% in Revenues and PAT of 72%. The issue is fairly priced at the current levels.
Snowman IPO Grading
This Issue has been graded by CRISIL Limited as “CRISIL IPO Grade 4/5”, indicating that the fundamentals of the Issue are above average relative to other listed equity securities in India. The IPO grading is assigned on a five point scale from 1 to 5 with an IPO grade 5 indicating strong fundamentals and IPO grade 1 indicating poor fundamentals.
- Date: 26th -28th August 2014
- ISSUE HIGHLIGHTS
- Offer size (in Rs crore)
- - On lower price band 184.80
- - On upper price band 197.40
- Offer size (in no. of shares ) 4.20 crore
- Price band (Rs)* 44-47
- Issue open date 26/08/2014
- Issue closed date 28/08/2014
- Listing BSE,NSE
ABOUT THE COMPANY :
Incorporated in 1993, Snowman Logistics Limited is an integrated temperature controlled logistics service provider with 23 temperature controlled warehouses across 14 locations in India. It caters to industries like - Dairy products including butter and cheese; Ice-cream; Poultry and meat; Sea food; Ready-to-eat / ready-to-cook food products;
Confectioneries including chocolate and baked products; Fruits and vegetables; Healthcare and pharmaceutical products; and Industrial product such as x-ray, and photo-imaging, films.
It is the most preferred integrated temperature controlled warehouse and transport logistics company in the organized sector enjoying lion’ market share. The company has also been providing additional services like repacking of products for direct marketing in retail market to the manufacturers, exporters etc and adding value addition of services to its clients that include Hindustan Unilever, Cadbury, Baskins Robbins etc and has PAN India presence at 14
locations with 23 warehouses and fleet of 370.
Company Promoters:
Gateway Distriparks Limited is the Promoter of the Company
Market lot:
The investors have to apply minimum for 300 shares .
Objects of the Issue:
Capital expenditure for setting up new temperature controlled and ambient warehouses;
Long term working capital; and
General corporate purposes.
Strengths
Growing middle class and increase in consumer spending: India’s discretionary spending has increased
considerably over the past few years and this would benefit the logistics industry, as the import and export of goods would go up in a booming economy.
Export oriented policy of Government: The prime minister has maintained that we need to improve the export
competitiveness of Indian goods and services. The logistics sector would be a key beneficiary of this impetus.
Large market share: The Company has a large market share in the warehouse and logistics sector, this would augur well for the company in the future as this space is set to expand.
Pan India presence: The Company has a PAN India presence, this would help the company reap the benefits of a renewed economic traction in the country.
Reputed Client list: The Company has some of the best global companies on its client list and that would help it get more traction as these companies expand their footprint in the Indian growth story.
. Weaknesses
Concentration risk: The top 20 customers of the company contribute about 39% of the total revenue of the
company and hence the company faces a concentration risk.
Delay in setting up new warehouses: The process of setting a new warehouse is very cumbersome as it takes a lotof capex and also there is a lot of time lag as there are a lot of approvals needed.
Increase in lease rentals: Some of the warehouses are on leased land hence increase in lease rentals may be a
cause of concern for the company.
Valuation
Snowman IPO Grading
1 comment:
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