Shreeji Translogistics BSE SME IPO review (Apply)

Shreeji Translogistics Ltd. (STL) is a Pan-India surface logistics and parcel delivery service provider. It has grown into an integrated national logistical solution provider, catering a wide range of logistical requirements from Import-Export Container movement to local parcel delivery. The various types of services provided by it include: Full Truck Load Transport Services, Parcel and Part Truck Load Services/ less than Truck Load (LTL), Import- Export Services and Bonded Trucking Services. Full Truck Load Transport service is its core business and in this space, it has been a trusted name for Time-Bound Deliveries. Bonded Trucking Service, which was a new concept introduced in India in the year 2000, was initially started by STL in the year 2002, wherein it handle import- export cargo of various national and international airlines from many air cargo complexes. STL is certified by ISO 9001:2015 for provision of Customs Bonded Trucking Services and is Indian Bank Association (IBA) approved transporter.

STL owns and operates a strong fleet of commercial vehicles consisting of 229 owned trucks (as on July 31, 2017) and more than 500 outsourced trucks. It operates different types of trucks on the basis of design and size along with varying capacities. The company serves a broad range of industries, including the fast moving consumer goods (FMCG), white goods, food, textiles and apparel, furniture and fixture, pharmaceutical, plastics and metal. It’s truck load delivery services operates through a hub-and-spoke model which enables it to transport various parcel sizes and provide customers with access to multiple destinations for booking and delivery of goods.

To part finance working capital and general corpus fund needs, STL is coming out with a maiden IPO of 954000 equity share of Rs. 10 each with a fixed price of Rs. 130 per share to mobilize Rs. 12.40 crore. Issue consists of 204000 equity shares as a fresh issue and 750000 equity shares by offer for sale. Issue opens for subscription on 29.09.17 and will close on 05.10.17. Minimum application is to be made for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Aryaman Financial Services Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 27.30% of the post issue paid up capital of the company. Its entire equity is issued at par. It has also given bonus in the ratio of 5 for 2 in September 2016. Post issue, its current paid up equity capital of Rs. 3.29 crore will stand enhanced to Rs. 3.49 crore.

On performance front, STL has posted revenue/net profits of Rs.81.41 cr. / Rs. 0.23 cr. (FY14), Rs.93.16 cr. / Rs. 0.47 cr. (FY15), Rs. 88.46 cr. / Rs. 1.04 cr. (FY16) and Rs. 87.75 cr. / Rs. 1.58 cr. (FY17). Thus while its top line has shown declining trends for past two fiscals, its bottom line has shown rising trends. It has posted an average EPS of Rs. 3.69 and average RoNW of 8.68% for last three fiscals. Issue is priced at a P/BV of 2.92. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 28.7 against industry average of around 26. Thus issue is fully priced.

On merchant banker’s front, this is the 17th mandate from its stable in past three fiscals. Out of last 10 listings, 2 opened at a discount to offer price, rest opened with 0.01% to 20% premium to issue price.

Conclusion: Since issue is fully priced, considering prospects of the logistics sector, investment for long term may be considered.