AVG Logistics NSE SME IPO review (Subscribe)

Review By Dilip Davda on Mar 21, 2018

AVG Logistics Ltd. (AVG) is an organized third-party logistics service operator offering logistics solutions to a wide range of customers. It offers Full Truck Load (FTL) and “hub-and-spoke” transportation model and warehousing services to select clients with pan-India distribution network and automated technology systems. Its customers operate in various sectors across India, including automotive and heavy engineering, telecom, food and agro, fast-moving consumer goods (“FMCG”), paint and dairy.

AVG offers customers services in three key areas (1) Transportation whereby it provides point-to-point, less than truck-load, time-definite transportation services; (2) Warehousing whereby it provides warehousing, distribution and cold-chain warehousing, and (3) Value-added Services including, temperature-controlled logistics, supply chain solutions and cargo handling services at integrated check posts. As of September 30, 2017, it has five (5) trans-shipment centres at Guwahati, Bangalore, Hyderabad, Delhi-UP border, and Kundli (Delhi-Haryana border) and forty nine (49) branches across India, covering 23 states as of September 30, 2017. It operates 264 owned containerised vehicles which are GPS-enabled vehicles, of which 85 are refrigerated (reefer) trucks. It has warehouses in Modinagar, Ghaziabad, Delhi and Panipat. AVG is in the process of setting up additional large format, multi-user warehouses in certain strategic locations and have acquired land at Agartala in Tripura and Mysore in Karnataka adding 1.08 lakhs square feet which will enable the expansion of warehousing space to 4.62 lakhs square feet by April, 2019.

To part finance setting up of warehouse facilities at Agartala, Tripura and Mysuru, working capital and general corpus needs, AVG is coming out with a maiden IPO of 3090000 equity shares of Rs. 10 each via book building route with a price band of Rs. 105 - Rs. 107 to mobilize Rs. 32.45 cr. – Rs. 33.06 cr. (based on lower and upper price bands). Issue opens for subscription on 28.03.18 and will close on 03.04.18. Minimum application is to be made for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Systematix Corporate Services Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Issue constitutes 30.01% of the post issue paid up capital of the company. Average cost of acquisition of shares by the promoters is Rs. 5.88, Rs. 6.05 and Rs. 6.95per share. Having raised initial equity in the price range of Rs. 20 and Rs. 50 per share from inception till May 2010, it raised further equity at par between January 2012 and March 2016. It has also issued bonus shares in the ratio of 10 for 7 in Februay 2018. Post issue, its current paid up equity capital of Rs. 7.21 cr. will stand enhanced to Rs. 10.30 cr.

On performance front, AVG has posted turnover/net profits of Rs. 130.41 cr. / Rs. 2.62 cr. (FY14), Rs. 183.32 cr. / Rs. 3.19 cr. (FY15), Rs. 192.29 cr. / Rs. 3.80 cr. (FY16) and Rs. 194.386 cr. / Rs. 4.43 cr. (FY17). For first six months of the current fiscal, it has earned net profit of Rs. 3.46 cr. on a turnover of Rs. 103.59 cr. Thus it has shown consistent growth in top and bottom lines. For last three fiscals, it has posted an average EPS of Rs. 5.99 and an average RoNW of 21.76%. Issue is priced at a P/BV of 3.01 on the basis of its NAV of Rs. 35.55 as on 30.09.17 (on ex-bonus basis). If we annualize latest earnings and attribute it on fully diluted post issue equity then asking price is at a P/E of around 16 against industry average of 45. It is considering Sicals Logi, Tiger Logi, Total Transport, VRL Logi and Snowman as its listed peers that are trading at a P/E of around 33, 19, 11, 39 and -431 respectively (as on 21.03.18 on BSE/NSE). Thus issue pricing appears reasonable.

On merchant banker’s front, this is the 3rd mandate from its stable and out of last two listings, both opened at a premium to offer price ranging between 16 to 20% on the day of listing.


Conclusion / Investment Strategy

Considering consistent outperformance and reasonable price, investors may consider investment for short to long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Mar 21, 2018

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

AVG Logistics IPO FAQs

  1. 1. Why AVG Logistics IPO?

    The initial public offer (IPO) of AVG Logistics Limited offers an early investment opportunity in AVG Logistics Limited. A stock market investor can buy AVG Logistics IPO shares by applying in IPO before AVG Logistics Limited shares get listed at the stock exchanges. An investor could invest in AVG Logistics IPO for short term listing gain or a long term.

  2. 2. How is AVG Logistics IPO?

    Read the AVG Logistics IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. AVG Logistics IPO what should investors do?

    AVG Logistics IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the AVG Logistics IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is AVG Logistics IPO good?

    Our recommendation for AVG Logistics IPO is to subscribe.

  5. 5. Is AVG Logistics IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the AVG Logistics IPO.

  6. 6. When will AVG Logistics IPO allotment status?

    The AVG Logistics IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit AVG Logistics IPO allotment status to check.

  7. 7. When will AVG Logistics IPO list?

    The AVG Logistics IPO will list on Wednesday, April 11, 2018, at NSE SME.

1 Comments

rajkot rajkot
1. rajkot rajkot  Mar 27, 2018 15:18
the fundamentals looks good.. though price to book value is hight at 2.. but PE of 16 is kind of reasonable.. not high nor less..

would have subscribed but skeptic since market is bad..








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