Established in 2012, Tara Chand Logistic Solutions Limited is engaged in providing reliable and affordable logistic and supply chain services including Transportation and Warehousing, Equipment Rental and Steel Processing and Distribution. So company works on following three verticals with revenue breakup as follow. 1. Logistics (46.02%) 2. Equipment Rental (35.42%) 3. Steel Processing (18.56%) Company serves a broad range of industries, including steel, urban and rural infrastructure, oil and gas, renewable energy etc. As of December 31, 2017 its transportation fleet included 42 owned trailers and its equipment rental fleet included 292 owned cranes ranging from 10 MT-800 MT lifting capacity. Company owns automated steel processing machineries like shear line, twin master, robo master, compressor, decoiling machines etc. totaling to 32, which currently operates at around 70% capacity utilisation. In its warehousing division, it handled 1.5 million MT of steel in nine months upto December 31, 2017. Company's major clientele includes Reliance industries ltd., Larsen &Toubro Ltd. (seven Independent Companies), Steel Authority of India Ltd., Rashtriya Ispat Nigam Ltd., Oil and Natural Gas Corporation Ltd., Tata Projects Ltd., Hindustan Construction Company Ltd., Vedanta Ltd., J Kumar Infra Projects Ltd., NCC Ltd., Welspun Corp, ITD Cementation India Ltd., Bharat Heavy Electricals Ltd., Gayatri Projects Ltd, Megha Engineering & Infrastructures Ltd. As of December 31, 2017 company had 1167 employees. Company's Order Book as of January 30, 2018 was Rs. 154. 24 Crores. On financial performance front, TCLSL has posted turnover/net profits of Rs. 22.59 cr. / Rs. 0.56 cr. (FY13), Rs. 23.98 cr. / Rs. 0.66 cr. (FY14), Rs. 39.25 cr. / Rs. 0.69 cr. (FY15), Rs. 46.22 cr. / Rs. 1.19 cr. (FY16) and Rs. 52.65 cr. / Rs. 2.63 cr. (FY17). For upto Q3 of FY18, it has earned net profit of Rs. 3.66 cr. on a turnover of Rs. 54.18 cr. Thus first nine months top and bottom line has crossed previous entire year’s performance. Its net profit margins have increased from 2.77% in FY14 to 7.05% in FY18 (first nine months). For FY13 to FY17 its revenue and net profits has seen CAGR of 23.17% and 47.21%. For last three fiscals it has reported an average EPS of Rs. 1.96 and an average RoNW of 12.95%. Issue is priced at a P/BV of 1.83 on the basis of its post issue NAV of Rs. 30.11. If we annualise latest earnings and attribute it to fully diluted equity post issue then asking price is at a P/E of around 15 against industry composite of 34 plus. As per offer documents, it has shown Lancer Container and Tiger Logistics as its listed peers and they are trading at a P/E of 57 and 20 respectively. So issue looks reasonably priced. On merchant banker's front, this is the 35th IPO in last three years. Last 10 listing opened at a premium ranging from 2.66% to 20% on the day of listing. As per financials, company has shown very good growth, RoNW is 12.95% for last three fiscals and issue looks reasonably priced as per latest earnings. Company has strong order book and it may get benefits from the mega spending of GoI on infrastructure projects. So, we give SUBSCRIBE rating to this SME IPO.
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