Jet Freight RI review (May apply)

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•    JFLL is in the logistics business primarily for perishable commodities.
•    It is witnessing pressure on margins due to the highly competitive segment. 
•    The issue appears fully priced based on its financial track records.
•    Well-informed/cash surplus/risk seekers only may consider the investment. 

The company originally filed its draft documents for this RI through Navigant Corporate Advisors Ltd. (LM - Lead Manager) for an issue size of Rs. 40 cr. on November 14, 2022. But now that we have the RI opening announcement ad in newspapers, surprisingly Lead Manager's name is missing. And when we get the final Latter of Offer, LM's name appears. The promoter's holding has been reduced from 70.15% to 51.18% in the last three quarters. These are the lapses/points to be noted by the investors. 

Jet Freight Logistics Ltd. (JFLL) started with a logistics business and it's been doing it for the past 36 years. It has branches located in various cities in India. The company is registered with International Air Transport Association (IATA) agent for Air cargo. JFLL has an established name in the field of providing services for Perishable cargo, Time sensitive cargo and it also provides services for Hazardous cargo, ODC consignments, pharmaceutical cargo, temperature-controlled, and general cargo. Its main segment is the transport of perishable cargo which includes handling frozen and chilled meat, seafood, vegetables, fruits, cut flowers, and pharmaceutical products. 

It has tie-ups with various airlines in the world in order to provide tailor-made solutions based on customer needs. JFLL is also a member of FIATA and the World Cargo Alliance. As of December 31, 2022, it has 235 employees on its payroll.

The company is offering a rights issue (RI) of 23201892 equity shares of Rs. 5 each at a fixed price of Rs. 16.25 per share to mobilize Rs. 37.70 cr. JFLL is issuing 1 share against 1 share held by the eligible shareholders as of the record date of January 11, 2023. The issue is opening for subscription on January 20, 2023, and will close on January 31, 2023. The full money is to be paid along with the application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 0.50 cr. for this RI, and from the net proceeds, it will utilize Rs. 20.00 cr. for the purchase of a warehouse, Rs. 8.20 cr. for working capital, and Rs. 9.00 cr. for general corporate purposes. 

Navigant Corporate Advisors Ltd. is the sole lead manager and Bigshare Services Pvt. Ltd. is the registrar of the issue. 

Post-RI, JFLL's current paid-up equity capital of Rs. 11.60 cr. will stand enhanced to Rs. 23.20 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 75.41 cr. 

On the financial performance front, for the last two fiscals, JFLL has (on a consolidated basis) posted a turnover/net profit of Rs. 352.48 cr. / Rs. 2.09 cr. (FY21), and Rs. 462.06 cr. / Rs. 2.97 cr. (FY22). 

As per BSE filings, for H1 of FY23, it posted a net profit of Rs. 0.55 cr. on a turnover of Rs. 241.06 cr., indicating pressure on margins as it is operating in a highly competitive segment.

The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects. 

The scrip last closed on cum-right basis at Rs. 22.35 on January 10, 2023, and opened at Rs. 20.80 on an ex-right basis on January 11, 2023. Since then, it marked a high/low of Rs. 22.35 /Rs. 18.90. The scrip last closed at Rs. 19.35 on January 17, 2023. The scrip has posted the last 52 weeks' high/low of Rs. 40.76 / Rs. 15.77. The counter is well managed with a thin volume. The promoter's shareholding has declined from 70.15% as of June 30, 2022, to 51.18% as of December 31, 2022.

Conclusion / Investment Strategy

The company is operating in a highly competitive segment and witnessing pressure on margins. This is indicative of the H1 FY23 performance of the company. Well-informed/risk-seekers/cash surplus investors only may consider parking funds with a long-term perspective.

Review By Dilip Davda on Jan 17, 2023

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

More Jet Freight Logistics Limited RI Views / Analysis / Recommendations ...

The Jet Freight Logistics Rights Issue 2023 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Jet Freight Logistics Rights Issue 2023 worth investing. The Jet Freight Logistics Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if Jet Freight Logistics Rights Issue 2023 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Jet Freight Logistics Rights Issue 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.


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