Snowman Logistics Ltd IPO Review (Subscribe)

Review By Dilip Davda on Aug 20, 2014

 

Snowman Logistics till now the subsidiary of Gateway Distriparks Ltd is now emerging as the separate company. It is the most preferred integrated temperature controlled warehouse and transport logistics company in the organized sector enjoying lion market share. The company has been also 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. Approx 62K pallets are in operations as of 2013-14 fiscal end. According to management, it will continue its aggressive plans of strategic investments and although it expects competitions to emerge going forward, it will focus on maintaining the lead in the segment. 

 

Its warehousing solutions cover the complete spectrum of temperature ranges from ambient to chilled and frozen (i.e. +25ºC to -20ºC). SLL offers blast freezing facilities at its temperature controlled warehouses in Bengaluru, Mevalurkuppam, (near Chennai), Visakhapatnam, Serampore (near Kolkata), Taloja (near Mumbai), Ahmedabad, Palwal (near Delhi), and Mubarakpur (near Chandigarh). Its integrated ‘Source to Stores’ operations comprise warehousing, primary distribution and secondary distribution and value-added services including kitting, labeling, sorting and bulk breaking. 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 products such as x-ray, and photo-imaging, films.

 

To part finance its expansion of capacities, meeting corporate funding, the company is coming out with a maiden IPO of 42000000 equity share of Rs. 10 each via a book building process and has fixed price band of Rs. 44-47 per share. Thus the company intends to raise between Rs. 184.8 to Rs. 197.4 crore on the basis of lower and upper price bands. Issue opens for subscription on 26.08.14 and will close on 28.08.14. Minimum application is to be made for 300shares and in multiples thereof, thereafter. Issue is lead managed by HDFC Bank Ltd and Link Intime (India) Pvt Ltd is the registrar to the issue. This issue is grades as IPO 4/5 by CRISIL. Post issue equity will be Rs. 166.44 crore. The company is inviting Anchor investors’ applications on 25.08.14. Shares will be listed on BSE and NSE post allotments. Public portion is of 10%, HNI 15% and rest for QIBs including Anchor Investors. 

 

On performance front, the company posted an average EPS of Rs. 1.70 for three fiscals ended 31.3.14. For fiscal 2013-14 it posted net profit of Rs. 22.48 crore on a turnover of Rs. 155.23 crore and if we attribute these earnings on expanded equity past IPO, the asking price is at a P/E of 32-35 on lower and upper price bands which makes it a pricey bet but considering its earnings and future plans, it is worth considering for medium to long term as the company has lion 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%. Its pallets installation too has marked CAGR of 53% and the management is confident of maintaining the same for coming years with aggressive plans that has many firsts to its credits in this segment. 

 

On merchant banker’s front, its past mandate had mixed trends for just two IPOs. One gave and the other one failed to give return on the day of listing. 

 

Although this IPO looks pricey, considering the performance parameters and this being the first IPO from new specialized segment; it is set to reward investors in medium to long term. It is said to be another Just Dial / Wonderla in the offing.


Conclusion / Investment Strategy

 

Apply.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Aug 20, 2014

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. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

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

Snowman Logistics IPO FAQs

  1. 1. Why Snowman Logistics IPO?

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

  2. 2. How is Snowman Logistics IPO?

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

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

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

  4. 4. Is Snowman Logistics IPO good?

    Our recommendation for Snowman Logistics IPO is to subscribe.

  5. 5. Is Snowman Logistics IPO worth Investing?

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

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

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

  7. 7. When will Snowman Logistics IPO list?

    The Snowman Logistics IPO will list on Friday, September 12, 2014, at BSE, NSE.
More Snowman Logistics IPO Views / Analysis / Recommendations ...








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