Blue Water Logistics NSE SME IPO review (Apply)

•    The company is engaged in providing logistics and supply chain solutions.
•    It is operating in a highly competitive and fragmented segment.
•    The company posted growth in its top and bottom lines for the reported periods.
•    The sudden boost in its bottom lines from FY24 onwards attributed to its aggressive expansion plans for providing all related services under one-roof.
•    Well-informed investors may park funds for long term.

ABOUT COMPANY:
Blue Water Logistics Ltd. (BWLL) is engaged in the business of providing logistics and supply chain solutions to customers. Its key services include freight forwarding, custom clearance and transportation handling services. BWLL is a Multimodal Transport Operator registered under the Multimodal transportation of Goods Act 1993 to carry on the business of multimodal transportation.

It operates from registered office situated in the city of Hyderabad and through 5 branch offices situated in the city of Chennai, Delhi, Jaipur, Visakhapatnam and Thane, respectively. It majorly provides services to customers who are engaged in imports and exports of different commodities. Over the years, it has served customers in different industries including confectionary products, chemicals, crockery, natural stones, textile, electronics and fitness equipments.

In the course of its business operations, the company arranged various goods transportation services, including arranging commercial vehicles, air freight space, rail transport, and, when necessary, warehouse/ custom freight station facilities for the storage and handling of goods. As of March 31, 2025, it owns 25 commercial vehicles used for diverse transportation purposes. Further, the company also intends to purchase 20 commercial vehicles as one of the Objects of this Issue. Access to such large vehicle network enables it to scale business as the demand increases and also cater to various business opportunities.

It has also associated with different international logistics network platforms like JCtrans and Global Logistics Alliance to facilitate international logistics. Further, it can issue house bill of lading for the consignments moving as per customers’ requirements or as per company’s planning through such agency arrangements which provides an additional layer of security to customers for their goods moving from India to other countries or vice-versa. Ocean Freight has the lion share in its total revenue. As of March 31, 2025, it had 83 employees on its payroll. It also hires temporary workers as and when required.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 3000000 equity shares of Rs. 10 each to mobilize Rs. 40.50 cr. at the upper cap. It has announced a price band of Rs. 132 – Rs. 135 per share. The issue opens for subscription on May 27, 2025, and will close on May 29, 2025. The minimum number of shares to be applied is for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 27.27% of the post-IPO paid-up capital of the company. The company is spending Rs. 4.81 cr. for this IPO process, and from the net proceeds, it will utilize Rs. 10.52 cr. for capex on purchase of vehicles and its body building, Rs. 20.00 cr. for working capital, and the rest for general corporate purposes. 

The IPO is solely lead managed by Smart Horizon Capital Advisors Pvt. Ltd., (erstwhile known as Shreni Capital Advisors Pvt. Ltd.), and Maashitla Securities Pvt. Ltd., is the registrar to the issue. Smart Horizon Group’s Shreni Shares Ltd. Ltd. is a market maker as well as a syndicate member.

The company has issued initial equity shares at par value. It has also issued bonus shares in the ratio of 3 for 1 in July 2024. The average cost of acquisition of shares by the promoters is Rs. NIL, and Rs. 28.75 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 8.00 cr. will stand enhanced to Rs. 11.00 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 148.50 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 84.72 cr. / Rs. 1.04 cr. (FY22), Rs. 98.07 cr. / Rs. 1.54 cr. (FY23), and Rs. 138.74 cr. / Rs. 5.94 cr. (FY24). Rs. 196.29 cr. / Rs.10.67 cr. (FY25). Bumper performance in a pre-IPO period appears to be a window dressing to fetch fancy valuations. Margins reported by the company appears cooked as no peers are enjoying such margins. It is operating in a highly competitive and fragmented segment. 

For the last three fiscals, the company has reported an average EPS of Rs. 11.37 and an average RoNW of 56.19%. The issue is priced at a P/BV of 5.40 based on its NAV of Rs. 25.19 as of March 31, 2025, but the offer document is missing its post-IPO NAV data. There is a repetition of its NAV data on page no. 102 of the offer document.

If we attribute FY25 annualized super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 13.92. Based on FY24 earnings, the P/E stands at 25.0. The issue relatively appears fully priced.

For the reported periods, the company has posted PAT margins of 1.23% (FY22), 1.57% (FY23), 4.28%, (FY24), 5.44% (FY25), and RoE margins of 14.84%, 35.02%, 91.24%, 72.02%, respectively for the referred periods.  

According to the management, they have lined up aggressive fleet expansion and additional related services plans and have thus turned most preferred logistics company providing all related services under one-roof. With this type of niche play, it is able to generate higher margins which has been indicated in its recent period results. 

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Shreeji Translogistics, and Shree Vasu Logistics, as their listed peers. They are trading at a P/E of 26.4, and 341.0 (as of May 23, 2025). However, they are not truly comparable on an apple-to-apple basis. These peers compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
This is the 5th mandate from Smart Horizon in the last two fiscals including the ongoing one.  From the last 4 listings, 1 opened at par, 1 at discount, and the rest listed with a premium ranging from 6.67% to 90.0% on the listing date.