Aqua Logistics is entering the capital market on 25th January 10, with a public issue of Rs. 150 crores, in the band of Rs. 220 to Rs. 230 per share.
The company is full scope third party logistic service provider delivering end to end solutions in the logistic and supply chain domain, which include Multimodal Transportation, Contract Logistics, Regulatory Compliance, Warehousing, Valued added Services and Project Logistics.
The company has been rapidly expanding its operations with an annual growth of over 100%, in its topline and bottomline, over the last 5 years. For FY 09, the total income of the company was placed at Rs. 214 crores with PAT at Rs. 9.84 crores, resulting in an EPS of Rs. 7.62. For 6 months ending 30-9-09, the total income was at Rs. 154 crores with PAT at Rs 8.36 crores, resulting in an annualized EPS of Rs. 12.30.
The proposed fund of Rs. 150 crores is earmarked for purchase of specialized equipments (Rs. 30.50 crores) Acquisitions ( Rs. 35 crores) expansion of office (Rs. 17.10 crores) and for working capital requirements. The comforting feature of the company is that, inspite of over 100% increase in its performance, the debt of the company are quite low at Rs. 33 crores as at 30-9-09, on net worth of Rs. 75.42 crores. The company also has Enam Share and H T Media as its shareholders, though Enam has subscribed to it, in Jan. 08, at Rs. 100 per share. H T Media subscribed to just 1 lakh share in August 08, at Rs. 500 per share. Error of judgement? No, they have been subsequently compensated by further issue of 1.33 lakh shares, on 4-8-09, free of cost, thus bringing down the cost, to about Rs. 215 per share.
This industry has been growing rapidly in the last 4-5 years, while there are very limited listed peers available, like Gati, TCI, Gateway Distripark, Allcargo Global and Arshiya International. Based on FY 10 performance, share at Rs. 230 is being issued at a PE of 18 times, at the upper band of Rs. 230 per share, with expected market capitalization of Rs. 500 crores, on expected post issue equity of Rs. 20.50 crores.
It is certain that fresh infusion of the funds would improve the financial performance of the company. But still, PE of 18 times via primary market route, looks quite stretched. Allcargo Global, a leading and established player, with expected revenue of Rs. 500 crores for FY 10, is likely to have a PAT of Rs. 125 crores, resulting in an EPS of close to Rs. 10. Share of this company is ruling at Rs. 200, resulting in a PE of about 20 times.
So, this company is yet to prove itself and considering a gap required between secondary and primary market price, of about 15%, share does not deserve a valuation of over Rs. 200 per share. Hence, one may consider skipping it and go for listed peers like Gati, Allcargo or TCI.