Started in 2006, Future Supply Chain Solutions Limited is one of India's largest organized third-party logistics service operators. FSCSL offers automated and IT-enabled warehousing, distribution and other logistics solutions to a wide range of customers. Their service offerings, warehousing infrastructure, pan-India distribution network, 'hub-and-spoke' transportation model and automated technology systems support their competitive market position. Their customers operate in various sectors across India, including retail, fashion and apparel, automotive and engineering, food and beverage, fast-moving consumer goods ('FMCG'), e-commerce, healthcare, electronics and technology, home and furniture and ATMs. FSCSL offers its customers services in three key areas:1. Contract Logistics: warehousing, distribution and other value-added services;2. Express Logistics: point-to-point, less-than truck-load, time-definite transportation services; and3. Temperature-Controlled Logistics: cold-chain warehousing, transportation solutions and distribution of perishable products. As of July 31, 2017, they run their contract logistics operations through 42 distribution centers across India, covering approximately 3.80 million square feet of warehouse space and also operate 2 distribution centers of their customers, covering approximately 0.37 million square feet of warehouse space. Their distribution centre at the Multi-modal International Hub Airport at Nagpur ('MIHAN') is one of the largest and most highly automated distribution centers in India. They also utilize a 'hub-and-spoke' distribution model comprising 14 hubs and 105 branches across India (including franchisees and 13 of which are co-located on the same premises as their hubs), covering 11,228 pin codes across 29 states and 5 union territories as of July 31, 2017. Further, during July 2017, they operated approximately 590 containerized vehicles, including 256 GPS-enabled vehicles of which 144 are refrigerated (reefer) trucks that are owned by them. They also operate 9,529 pallets as a part of their temperature - controlled logistics services. Company has adopted technology and processes throughout its offerings, including (i) a warehouse management system to track, process and manage inventory, (ii) a sortation system to allow picking of orders with accuracy, (iii) integration with customers' systems for automated inventory replenishment, (iv) GPS-enabled trucks that provide real-time visibility of shipments and (v) a mobile portal to allow its customers real-time visibility into their supply chain. FSCSL is promoted by Future Enterprises Limited, which is promoted by Kishore Biyani. While comapny's business was originally established to provide supply chain and logistics solutions for its Promoter and certain of their Group Companies, they have diversified their customer base across various sectors. Their customers except their Promoter and Group Companies accounted for 37.5%, 50.5% and 53.5% of their revenue from operations for Fiscals 2017, 2016 and 2015, respectively. On performance front, FSCSL has posted turnover/net profits of Rs. 354.07 cr. / Rs. - (4.18) cr. (FY13), Rs. 333.20 cr. / Rs. 4.23 cr. (FY14), Rs. 410.72 cr. / Rs. 24.71 cr. (FY15), Rs. 528.47 cr. / Rs. 29.43 cr. (FY16) and Rs. 576.99 cr. / Rs. 45.75 cr. (FY17). For upto Q2 of the current fiscal, it has reported net profit of Rs. 33.33 cr. on a turnover of Rs. 365.2 cr. Thus company has posted healthy growth over last couple of years on consistent basis. FSCSL has posted an average EPS of Rs. 9.13 and average RoNW of 13.7% for last three fiscals. Issue is priced at a P/BV of 8. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 40. Recently listed MLL, which is peer of the company, is trading at P/E of 67.7 (as on 24.11.17). So issue looks reasonably priced. As per financials, company's growth is good, RoNW is 13.7% for last three fiscals and issue is priced at P/E of around 40. Government has given infra status to logistics company, logistics sector is growing at good pace and expected to continue same growth for next couple of years. FSCSL, being a group company of Future Group, has good brand value and expected to show same growth for next couple of years. So we give SUBSCRIBE rating to this IPO.
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