Aqua Logistics IPO Valuation
Aqua Logistics plans to launch an Initial Public Offer to garner up to Rs 150 crore on January 25 and has fixed its price-band between Rs 220-230 per equity share.
Strengths
The company is consistently moving up the value chain and has been building capabilities across the logistics value chain. Strong relationship with international as well as domestic logistic players will help the company to tap the growing logistics market in the country with lower investments.
The company services multiple industry verticals namely power, heavy engineering, pharmaceutical, telecom, retail, sports and events. Moreover, the top five clients of the company contributed just 30% and the top 10 clients account for about 37.7% of the revenue of the company. Hence, any downturn in any one of the verticals or loss of a clientele will not impact the operation of the company much.
The company entered into a MoU with Enkorr Powergen to provide end to end project logistics service comprising the entire range of advisory consultancy and execution for the 3X4000 MW UMPP coal based thermal power plant one each in Tamil Nadu, Andhra Pradesh and Gujarat. The conclusion of the firm contract will provide strong traction to revenue as well as profitability given the high margin nature of the logistic business compared to freight forwarding business.
Weaknesses
The company follows asset light model and does not have its own fleet of equipment or any other logistics infrastructure. The company has not seen positive operating cash flow in the last five fiscals.
Valuation
Sales of the company increased by 96% to Rs 213.40 crore for the fiscal ended March 2009 and net profit was higher by 75% to Rs 9.84 crore. At the offer price band of Rs 220-230, the post issue equity capital of the company works out to 20.44 crore at the lower price band and Rs 20.15 crore at the upper price band. Consequently, the EPS at the lower price band was Rs 5.2 and at the upper price band it was Rs 5.3 for FY 2009. Resultantly, the P/E works out to 42.3-43.4 times on the offer price band of Rs 220-230. Comparatively, Arshiya International and Gateway Distripark are available at a PE of 18 times and 19.1 times their FY 2009 consolidated earning. Even on first-half annualized EPS of Rs 9.1-9.2 on post-IPO equity, AL’s P/E works out to 24.2-25.
Source: capitalmarket
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