Jalan Transolutions NSE SME IPO review (Apply)

Jalan Transolutions (India) Ltd (JTIL) that started its progressive journey in 2003 as a two wheeler transport solution provider with MNC automobile company has over the years became the leading automobile transportation company with net work across the country. Through its IT enabled and value added services, a fleet of about 400 Company Owned Trucks and extensive network, JTIL strives to provide innovative, integrated and satisfactory customized solutions to its clients as per their specific needs. Company's goods transportation business is carried under the banner of 'Jalan Transolutions' and can accommodate all of client's transport requirements. It also hires third party transportation services for carrying out its logistics operations. It has also set up a Jalan Business Centre in association with Ashok Leyland and JK Tyres to provide truck repairs, maintenance and breakdown solutions with updated team and machines.

To part finance purchase of goods transport vehicles, repayment of certain debt and working capital needs the company is coming out with a maiden IPO of 3849000 equity share of Rs. 10 each at a fixed price of Rs. 46 per share to mobilize Rs. 17.71 crore. Issue opens for subscription on 18.05.17 and will close on 23.05.17. Minimum application is to be made for 3000 shares and in multiples thereof, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is jointly lead managed by Sarthi Capital Advisors Pvt Ltd and Navigant Corporate Advisors Ltd. Karvy Computershare Pvt Ltd is the registrar to the issue. After equity issue at par on MoA it raised further equity at par from 2007 to 2015. It has also issued equity in the price range of Rs. 130 to Rs. 210 between 2004 and 2007. It has also issued bonus shares in the ratio of 1 for 1 in November 2011 and 2 for 1 in January 2017. Post issue its present paid up equity capital of Rs. 10.69 cr. will stand enhanced to Rs. 14.54 cr.

On performance front, it has posted turnover/net profits of Rs. 46.96 cr. / Rs. 1.18 cr. (FY13), Rs. 74.16 cr. / Rs. 0.70 cr. (FY14), Rs. 93.42 cr. / Rs. 0.69 cr. (FY15), Rs. 115.69 cr. / Rs. 2.92 cr. For the first 10 months of the current fiscal (ended on 31.01.17) is has reported net profit of Rs. 3.36 crore on a turnover of RS. 106.27 crore. For FY14-16 it suffered on bottom line due to higher provisions for depreciations and finance cost. If we annualize the latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of 16 plus and at a P/BV of 3.6. Its RoNW is around 14.44 (with last fiscal higher net) on an average of last three completed fiscals. Its peers are trading at a composite P/E of 22 plus. Thus issue appears to have been priced reasonably.

On merchant banker's front, this is the 26th mandate from Sarthi on SME front and last 10 listings have given positive rewards on the listing day. On Navigant's part this is the 4th mandate from its stable and in earlier three listings 1 gave positive, 1 quoted at par and 1 quoted at discount on listing day. (as per details in the prospectus).

Conclusion: Investors may consider investment from short to long term in this reasonably priced issue.