We are Summarizing the
Review and Recommendations of various Research Houses / Brokerages on the
Snowman Logistics Ltd IPO.QIB portion : 75% of issue; Non-institutional portion : 15% of issue; Retail portion : 10% of issue
Price band : Rs44-47 per share
ICICI Direct Analysts Bharat Chhoda and Soumojeet Kr Banerjee have the following views,
At the IPO price band of | 44-47, SLL is trading at 33-35xs FY14 diluted EPS of | 1.35. However, given the current embryonic industry size and possibility of a shift from the unorganised to organised segment, we believe, earnings CAGR of 21% over FY14-17E make valuations attractive for SLL. Consequently, we recommend SUBSCRIBE to the IPO.
K R Choskey analysts Ankush Mahajan and Nirvi Ashar have the following recommendation,
Snowman logistics is leader in the organized market of controlled temperature storage business (capacity of 85,000 pallets) and the industry (size Rs 150 bn) will be growing at 15%-17% CAGR for next five year. We expect Rs 74 crore of EBITDA in FY16E (Rs 40 crore in FY14) based on current capacity expansion; therefore it trades at 12.1x EV/ EBITDA for FY16E at upper price band of Rs 47. Considering leadership, unique business model and growing industry we recommend “Subscribe” to SNOWMAN LOGISTICS IPO.
Ajcon Global Analyst Akash Jain recommends SUBSCRIBE for Listing Gains.
Sharekhan Anlaysts recommend the following,
At the upper price band of Rs47, the company is priced at enterprise value/earnings before interest, tax, depreciation and amortisation of 24.0x FY2014 earnings. However, the company’s aggressive expansion plan for increasing its pellet capacity from 61,543 pellets in FY2014 to 85,000 pellets in FY2015 and further to 100,000 pellets by FY2016 is likely to boost the operating performance of the company over the next two years. Further, the company’s presence in a niche segment with a strong management pedigree improves its growth prospects. We recommend subscribe.
SBI Cap Securities has the Following ViewWe are positive on the companys growth potential going forward on account of a) healthy growth expected in TCL industry, b) gaining market share through penetration in Tier II & Tier III cities and c) improving revenues from Value added services. At upper band, the company is trading at a P/E and P/BV of 20.6x and 1.6x based on our F16e preliminary estimates (EPS of Rs2.4 and BV of Rs29.1). We believe the valuations can hold on to a slight premium as it is justified given SLLs first mover advantage and unmatched infrastructure thats already in place. Also, we expect the growth to unfold once the capex cycle for the company is over. We recommend a SUBSCRIBE rating with a long term perspective considering the EPS growth opportunity awaiting the company.
Aditya Birla Money has the following ViewsAt the higher price band of `47, the stock is valued at ~35x its FY14 EPS of `1.8 and 23.6x its FY14 EV/EBITDA. We prefer to value SLL on EV/EBITDA rather than P/E basis since SIL is currently in the capex mode and earnings will take time to stabilize. Our back of the envelope calculations estimate the stock to be trading at ~20x its FY16 (E)EPS of `2.3 and 12.9x its FY16 (E) EV/EBITDA. Given the a) profitability b) return ratios and c) capex requirement of this business we believe SLL is fairly valued at 12.9x EV/EBITDA; however given the small size of IPO and lack of paper in the industry in which SLL operates there is a high probability of listing gains. Hence, we recommend “Subscribe” on SLL IPO for short and medium term investors.
IndiaInfoline has the Following Recommendation,Company plans to raise money for setting up 8 warehouses across 6 locations at a total cost of Rs1.2bn. At the upper end of Rs44-47 price range, our FY16E EBITDA forecast of ~Rs802mn translates in to EV/EBITDA of 9.7x which is inline with FY16E 6x-11x range for global peers like Mitsubishi Logistics, Swift Transportation, Sumitomo Warehouse etc. SLL is the only player in the organized segment in India, thus should command a scarcity premium in terms of valuation. SLL offers a robust business model with one of the highest temperature controlled warehousing capacity, largest fleet size, national presence and market dominant position. Recommend investors to subscribe at the upper end of IPO range
Why are we Personally AVOIDING the IPO of SnowMan Logistics ?Allotment to Retail is just 10% of the Issue Size and hence chances POOR of Allotment together with HIGH VALUATION makes us skip the IPO.
