The initial public offering (IPO) of Western Carriers India continued to attract a muted response from the investors during the second of the bidding process. Though it managed to sail through, The issue, which had kicked off on Friday, September 13, was subscribed nearly 79 per cent on day one.
The Western Carriers India is selling its shares in the price band of Rs 163-172 apiece. Investors can apply for a minimum of 87 shares and its multiples thereafter. It is looking to raise Rs 492.88 crore via IPO, which includes a fresh share sale of Rs 400 crore, and an offer-for-sale (OFS) of up to 54 lakh equity shares.
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According to the data, the investors made bids for 7,36,68,381 equity shares, or 3.53 times, compared to the 2,08,68,467 equity shares offered for the subscription by 2.25 pm on Monday, September 16. The three-day bidding for the issue will conclude on Wednesday, September 18.
The allocation for retail investors was subscribed 5.62 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 3.28 times. However, the quota set aside for qualified institutional bidders (QIBs) quota was subscribed merely one per cent as of the same time.
Incorporated in 2011, Western Carriers India is a multimodal, rail-focused, 4PL asset-light logistics company. The company offers fully customizable, multi-modal logistics solutions encompassing road, rail, water, and air transportation and a tailored range of value-added services to sectors such as metals, FMCG, pharmaceuticals, chemicals, engineering, oil and gas and retail.
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The grey market premium of Western Carriers India has remained stable amid the rising volatility in the broader markets. Last heard, the company was commanding a premium of Rs 57-60 per share in the unofficial market, suggesting a listing pop of over 33-35 per cent for the investors.
Brokerages are mostly positive on the issue suggesting investors to subscribe to it for a long term citing its rising market share, better return ratios, asset light model, rising demand for logistics products and attractive pricing. However, limited market interest and slow financial growth are major concerns for this IPO.
The company is strategically positioned to leverage the rapidly growing logistics market in India through an asset-light business model providing customized end-to-end 3PL and 4PL logistics solutions, offering a range of value-added services such as inventory planning, warehouse management, cargo handling, and customs clearance to meet client needs, said Arihant Capital.
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“Investing in technological capabilities will enhance a company’s ability to effectively manage operations and maintain strong operational and fiscal controls. At the upper price band, the issue is priced at a P/E of 21.82 times based on the FY24 EPS of Rs 7.88,” it added with a subscribe for listing gains.
For the year ended on March 31, 2024, Western Carriers India reported a net profit of Rs 80.35 crore with a revenue of Rs 1,691.41 crore. The company reported a net profit of Rs 71.57 crore with a revenue of Rs 1,637.84 crore for the fiscal year 2022-23.
Ahead of its IPO, Western Carriers India raised a total of Rs 147.86 crore from 15 anchor investors by allocating them 85.96 lakh equity shares. The company has reserved 50 per cent of the offer for qualified institutional bidders, while non-institutional investors will have 15 per cent shares reserved for them. Retail investors have an allocation of 35 per cent in the issue.
Western Carriers is the largest private, multi-modal, rail-focused, 4PL asset-light logistics company in India in terms of container volumes handled/operated by private players. It has demonstrated a successful track record of growth in revenue, Ebitda, and profit for the year. Western Carriers’ RoE and RoCE remained broadly consistent in FY24 compared with FY22, said SMIFS.
“We recommend to subscribe to the issue as a good long term investment as the company is the largest multimodal rail focused 4pl logistics service provider going on a capex drive nearly doubling the container capacity and a major associate of CONCOR coupled with comfortable valuations,” it said.
JM Financial and Kotak Mahindra Capital Company are the book running lead managers of the Western Carriers India IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with Monday, September 23 as the tentative date of listing.
