Started in 1994, Avana Logistek Limited is a Mumbai based leading integrated logistics solutions provider, offering customised and end-to-end solutions to domestic and international markets. According to the CRISIL Report, Avana is a leading logistics solutions company with operations across India and various international markets. They are the leading providers of regional liner services between India and the Middle East and the largest domestic coastal logistics solutions provider with a market share of approximately 52%, according to the CRISIL Report. Company has structured the primary business into two business divisions comprising domestic and international logistics solutions. The domestic solutions primarily comprises of coastal container service and road and rail transportation. The international solutions comprises international liner services consisting of refrigerated and dry cargo movements between Indian subcontinent, Middle East, South-East Asia and Far-East along with freight forwarding and liner agency services. During Fiscal 2018, they have provided services to over 8,000 customers in the domestic business division and over 15,000 customers in the international business division. Some of the key customers include Ramco Cements Limited, NITCO Limited, Grasim Industries Limited, JSW Steel Coated Products Limited, Star Bentonite Exports, Century Plyboards (I) Limited, KAG India Private Limited, EICL Limited, Arvind Ceramics Private Limited, Petrochem Middle East, Tilda International DMCC, Saint-Gobain India Private Limited, Pushpak Logistics Solutions LLP, Al Danube, JK White Cement Works (Unit of J.K. Cement Limited), Ultra Tech Cement Limited (Unit Birla White), Landmark Group and Qatar Chemical and Petrochemical Marketing and Distribution Company (Muntajat) Q.P.J.S.C. Company's logistics business serves a broad range of industries, including construction material, agricultural products, hazardous and non-hazardous chemicals, food products and beverages, machinery and equipment, minerals, electronics, pharmaceutical, petrochemical products, automobiles and fertilisers. As of March 31, 2018, they have a fleet of 42,068 TEUs which includes various types of 20Ft and 40Ft containers including dry, high cube dry, open-top, flat rack, foldable, ISO tank and refrigerated containers, on ownership and lease basis. The domestic and international logistics division handled 121,350 and 139,427 TEUs respectively during Fiscal 2018, 90,713 and 103,365 TEUs respectively during Fiscal 2017 and 63,318 and 98,425 TEUs during Fiscal 2016. Avana has an asset light business model and they have long standing relationships with a large number of international and domestic leasing companies business partners such as Seaco Global Limited, Tristar Container Services (Asia) Private Limited, CAI International, Inc and Subsidiaries, VS&B Domestic Container Solutions Private Limited, who provide them operating assets, including deployment of containers. Avana Logistek has also recently started providing (i) warehousing & distribution services and (ii) cold chain (temperature controlled warehousing and transportation) services. Company has presence in India and international markets with 22 offices and established network in 20 countries. They have a widespread transportation network across 19 states and five union territories in India and serve over 1,500 pin codes as at March31, 2018 and have 13 branches across India. As at March 31, 2018, Avana had 258 employees. As per financial performance, ICFL has posted total income/net profits of Rs. 396.91 cr. / Rs. 112.13 cr. (FY14), Rs. 528.06 cr. / Rs. 149.04 cr. (FY15), Rs. 644.05 cr. / Rs. 191.64 cr. (FY16) and Rs. 719.92 cr. / Rs. 210.80 cr. (FY17). For upto Q3 of FY18, it has reported net profit of Rs. 164.08 cr. on total revenue of Rs. 585.95 cr. So company has posted consistent growth over last couple of years. ICFL has posted an average EPS of Rs. 25.53 and average RoNW of 11.62% for last three fiscals. Issue is priced at a P/BV of 2.17 as per NAV of 263.96 on 31.12.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 24. As per RHP, industry average P/E ratio is 28.66 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's growth is consistent and very good, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 24 as per latest earnings. Company is an NBFC with principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Last two business segments (Vehicle Finance & Housing Finance) are started in recent past and it may give further boost to company's growth, but increasing bond yields and FD rates may put pressure on margins. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.
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