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Know Your IPO: Tiger Logistics (India)

By Priyanka Kumari | 8/8/2013 5:59 PM Thursday

Delhi-based Tiger Logistics (India) (TLIL) is the first company in the logistics sector to file a DRHP for listing on the BSE SME platform. The company has planned to offer 11.40 lakh equity shares, aggregating to Rs 7.52 crore. In this issue, equity shares will cost the public Rs 66 per share. The issue also includes a reservation of 58000 equity shares for market makers out of the total offered size. Sarthi Capital Advisors is the lead manager for this issue. The issue will open on 27 Aug this year and will close on 29 Aug 2013.  

TLIL provides logistics services for its clients and started its logistics services in the year 2000. It is engaged in third party logistics operations. It has a registered office in Delhi and branches in Mumbai, Pune, Mundra, Ludhiana and Kolkata. TLIL offers its services in many sectors including automobiles, aviation, consumer durables, agri & perishable products and chemicals.

The company is raising funds to the tune of Rs 7.52 crore to meet its working capital requirement. It has a total capital requirement of Rs 1154 crore. It intends to employ Rs 6.4 crore from the issue proceeds, and will invest Rs 5.24 crore from internal sources to fulfil the overall requirement.

On the financial front, TLIL's revenue came in at Rs 123 crore in FY13 by showing a growth of 17% on a YoY basis. Due to the increase in operating expenses, the total expenditure for the company increased by 17% to Rs 117 crore. Its EBITDA stood at Rs 5.8 crore. The bottomline stood at Rs 3.4 crore for FY13, over that of Rs 2.81 crore in FY12. Moreover, the company saw a CAGR of 11.5% in its revenues over the five-year period. Its net profits for the same period recorded a CAGR of 20%.

The company has quoted a price of Rs 66 per share, and with this, its share price will trade at a FY13 PE of 8.22x. Other listed players in this sector including Gati, Allcargo Logistics, Transport Corporation of India and Gateway Distriparks are presently trading at a TTM PE of 21.6x, 5.2x 6.7x and 8.7x respectively. In comparison with its peers, TLIL has quoted a higher price for the issue.

The logistics sector primarily depends on four factors – good infrastructure, reforms in governmental policy, increase in trading, and last but not the least, consumption growth. Logistics cost in India is higher as compared to that in developed countries due to poor infrastructure, which results in inadequate service quality. Brand name also plays a critical role in this space, and this company enjoys no brand recognition. Considering all these factors, we advise investors to stay away from the issue.

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