Shree Vasu Logistics Limited

Started in 2007, Shree Vasu Logistics Limited, is a Raipur - Chattisgarh based company, engaged in providing various logistic services such as acting as Carrying and Forwarding Agent, Warehousing and Inventory Management and Distribution Management through Secondary Transportation. Company has positioned itself as a third party Logistics Services Provider (LSP). It operates the business mainly through carrying and forwarding agent model in the domestic market. SVLL has mainly three spectrum of services:1. Carrying and Forwarding Agent Model: This model allows company for scalability of services, synchronised logistics in divers market.2. Warehousing and Inventory Management: Company offers warehousing solutions to various businesses across industry verticals.  3. Distribution Management through Secondary Transportation: Company provides secondary transportation in which they receive the goods from their clients then they provide warehousing service and transport to desired location.  Company serves to various domestic customers from sectors like FMCG, Consumer durables, Automobile, Industrial Equipments and Electrical, Agri Products, Lifestyle Products, etc. As on 31.01.18, company has 366 employees on its payroll. As per financial performance, SVLL has posted total revenue/net profits of Rs. 16.43 cr. / Rs. 0.40 cr. (FY13), Rs. 18.06 cr. / Rs. 0.53 cr. (FY14), Rs. 21.78 cr. / Rs. 0.66 cr. (FY15), Rs. 23.02 cr. / Rs. 0.76 cr. (FY16) and Rs. 27.69 cr. / Rs. 0.79 cr. (FY17). For upto Q3 of the FY18 it has earned net profit of Rs. 1.89 cr. on a turnover of Rs. 22.79 cr. So company has shown good performance, but sudden jump in net profit for FY18 is big surprise. For last three fiscals it has posted an average EPS of Rs. 1.35 and an average RoNW of 14.47%. The issue is priced at a P/BV of 2.03 on the basis of post issue NAV of Rs. 22.18. If we annualise latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 14 and industry average as per RHP is around 14. So, issue looks fully priced as per latest earnings.  On BRLM's front, for Pantomath Capital Advisors Private Limited, this is the 65th IPO since last three fiscals and out of recent 10 listings, 1 listed at par and remaining with 1% to 40% premium on the day of listing. As of now from last 10 IPOs, 6 are trading above issue price and remaining below issue price or at par. So track record of BRLM is good. As per financials, company's performance is good, RoNW is 14.47% and issue is fully priced as per latest earnings. Sudden jump in FY18 bottom-line is very surprising and generates doubts. With growth of country, this industry will get most benefits and companies of this sector may get good growth rates.  So we give NEUTRAL rating to this SME IPO as per current market situation.

• 1 Mr Atul Garg
• 2 Mr Bhushan Garg