GConnect Logitech and Supply Chain Limited is engaged in the business of providing surface logistics services viz. goods transport services. The Company offers its services to other logistic companies, including surface logistic companies and to direct customers. The range of services offered by the Company includes bulk load, Full Truck Load (FTL) service and dedicated load. Under bulk load, the Company offers bulk transportation service to large sized Companies through their transport contractors, Full Truck Load (FTL) service to retailers and traders, wherein the Company provides point to point services to the customers in which the goods are loaded from the premises of the customer and are delivered to the delivery point as specified by them (i.e. factory/warehouse). The Company also provide dedicated load service, which includes multiple pick-ups and drops. The Company mainly serves transport contractors and industrial customers, who have requirement to transport bulk quantities of their goods from one place to another within India. The Company carry its logistics business with the primary focus being the state of Gujarat. The Company primarily serves transport contractors and also direct customer, thus serving a varied end customers from a broad range of industries such as metals, fabrics, Fast Moving Consumer Goods (FMCG), auto components, chemicals and pharmaceuticals. They do not enter into any contract with the customers. The Company operates under an asset light model, thus engaging with third parties for providing the Company with the assets necessary for its operations such as vehicles (customized and containerized). As the business strategy of the Company, the Company shall own vehicles in the future but the Company believes that the approach of maintaining an asset light model will help the Company to meet the diverse and ever-changing needs of its customers effectively. As on October 30, 2023 the Company has arrangement with truck owners having over 20 vehicles of different sizes and carrying capacity, as per the requirement of customers. For the six months period ended September 30, 2023 and for the Fiscal 2023 the total revenue as per Restated Financial Statements of the Company were Rs. 212.57 lakhs and Rs. 101.03 lakhs, respectively. Further, the EBITDA for the six months period ended September 30, 2023 and for the Fiscal 2023 as per Restated Financial Statements of the Company were Rs. 33.45 lakhs and Rs. 14.50 lakhs, respectively. The PAT for the six months period ended September 30, 2023 and for the Fiscal 2023 as per Restated Financial Statements of the Company were Rs. 22.83 lakhs and Rs. 10.86 lakhs, respectively. As per financial performance, GConnect Logitech and Supply Chain Limited has posted total income / net profits of Rs 3.02 Cr / Rs 0.06 Cr (FY20), Rs 2.92 Cr / Rs 0.06 Cr (FY21), Rs 2.96 Cr / Rs 0.07 Cr (FY22), Rs 4.38 Cr / Rs 0.24 Cr (FY23) and Rs 2.13 Cr / Rs 0.23 Cr (upto Q2 FY24). So as per previous financials data, company has shown very good growth, but sudden rise in net-profit just before IPO raises doubts. Company has posted an average EPS of Rs 26.64 and average RoNW of 11.61% for last three fiscals. Issue is priced at a P/BV of 1.55 as per NAV of 25.77 as on Post issue. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 222.06, 61.74 and 32.63 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Fedex Securities Private Limited is associated with this SME IPO and handled 26 SME IPOs and 1 Main board IPO in last 3 year. From last 10 SME IPOs, one opened below issue price and remaining opened above issue price or at par on the day of listing and from last 1 Main board IPO, that is opened above issue price on the day of listing. As of now from last 10 SME IPOs, six are trading below issue price and remaining are trading above or at par issue price and from last 1 Main board IPO, that is trading above issue price. ( As on 21.03.24 ) As per financials, GConnect Logitech and Supply Chain Limited has shown good results, RoNW is 14.01% and P/E is respectively 222.06, 61.74 and 32.63 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced, but sudden rise in net-profit just before IPO is very surprising. Company is in business of providing surface logistics services, which is highly competitive and fragmented segment. Performance of BRLM is good. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
✍️ Post a Comment