Tuesday, August 26, 2014

SNOWMAN LOGISTS IPO - SUBSCRIBE................HERE'S WHY..................









Bangalore based Snowman Logistics Ltd, the Cold Storage Arm of Gateway Distriparks has come out with a public issue with a price band of Rs44-47 targetting to raise between Rs.185-Rs.197 crores.
The Issue opens on 26th August and closes on 28th August.
Minimum shares to be applied is 300 shares and minimum investment should be Rs.13200/-.

COMPANY BACKGROUND :
The Company is present across 14 locations and operates 23 Temperature Controlled Warehouses.
The Company is proposing to set up facilities in another 6 cities. Snowman operates 370 reefer vehicles for primary and secondary transportation as of 31st March 2014.


The Company is promoted by Gateway Distriparks, which is a big player in Logistics Sector with its operations in Container Freight Stations at Major Indian Ports. Gateway Distriparks present holding of 54% will get reduced to 40% post the IPO.
The Performance of the company is mixed. While the CAGR is 35% in terms of revenue, the EPS is a pathetic  1.7 due to low ROE.

Anchor investors subscribed to 9.45 million shares at Rs.47 each, the upper end of the price band of Rs.44-47 set for its initial public offer (IPO) that opens on Tuesday. These anchor investors include Faering Capital India Evolving Fund which subscribed to 3,492,000 shares, ICICI Prudential Growth Fund Series 2 which opted for 2,127,900 shares, ICICI Prudential Value Fund Series 4 which subscribed for 851,100 shares, IDFC Sterling Equity Fund which subscribed for 2,659,800 shares and IDFC infrastructure Fund which opted for 319,200 shares.



POSITIVES :

1.     Crisil has rated the IPO at 4/5 which indicates Above Average Fundamentals
2.     Snowman is growing at a CAGR of 79%
3.     Mitsubishi Corporation holds 12.57% state
4.     High Entry barrier
5.     Reputed Promoters


NEGATIVES :
1.     50% of the Revenues is contributed by 20 customers leading to concentration of clients which may hurt profitability.
2.     Heavily dependent on Third party Services Providers
3.     Low Return on Equity is denting profitability


WHAT OTHERS EXPERTS SAY :

Hindu Businessline says :
“For an investor who can stomach high risk, the initial public offer (IPO) of Snowman Logistics presents a good opportunity.

MyInvestmentIdeas  says :

Hem Securities “The issue looks attractive with strong growth prospects in Cold Chain Industry”
Sharekhan “Snowman Logistics will benefit from the experience of its promoters. One can subscribe to the IPO”
Ajcon Global says : “Tax benefits available to Snowman Logistics Ltd under Sec35Ad will help the company”
SBI Cap Securities says :” We expect the growth to unfold once the capex cycle for the company is over. We recommend a SUBSCRIBE rating with a long term perspective considering the EPS growth opportunity awaiting the company”
ICICI direct says “Given the possibility of a shift from the unorganised to organised segment, we believe, earnings CAGR of 21% over FY14-17E make valuations attractive for SLL. Consequently, we recommend SUBSCRIBE to the IPO”
K.R.Choskey says “Considering leadership, unique business model and growing industry we recommend “Subscribe” to SNOWMAN LOGISTICS IPO”
GEPL Capital says “The stock enjoys premium in terms of valuation as it is the only player in the organized cold storage industry with huge business potential & its pan India presence. Hence we recommend to SUBSCRIBE to the IPO.
Dilip Davda says “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.
Capital Mind says “The valuation is reasonable. Prudent to invest a small amount now”

Rakesh-Jhunjhunwala.in has boldly said "Missed Gati & TCI?....You can make up with Snowman Logistics IPO"


SRIKANTH SHANKAR MATRUBAI recommends :
The Company is a leader in the category with virtually NIL competition.  
The Narendra Modi Govt’s infra push too will help the business of Snowman.
The Markets too are in bullish mode. A definite Pop-up on Listing is a given.
Lack of peer listed players will force the Institutions to take exposure in Snowman as part of Industry exposure resulting in good support for the shares.
The retail portion is very small at just 42 lakh shares. I expect a strong listing gains.
SUBSCRIBE





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