Investors have consistently been showing huge buying interest in Snowman Logistics from its listing day. The stock shot up 101 percent in a week to touch a record high of Rs 94.65 (compared to issue price of Rs 47) on hopes of strong growth going ahead.
The largest cold chain solutions provider had reported a 40-50 percent growth (on compounded annual growth rate basis) in revenue and profit in last four years. In the year ended March 2014, total income from operations and reported profit after tax in FY14 grew by 35 percent to Rs 153.41 crore and 18 percent to Rs 22.48 crore while operating profit margin expanded to 24.7 percent from 22.4 percent year-on-year.
Therefore, investors may be hopeful of such growth in FY15 also.
Ravi Kannan, Director and CEO of Snowman Logistics (in an interview to CNBC-TV18 on September 12) said the company expected to maintain growth rate of last few years with clear visibility on expansion plans. "The cold chain solutions provider will add another 35 percent to its capacity in FY15. We are looking to expand to tier II and tier III cities," he added.
He is confident of stable growth going forward. "We may take the number of depots to 37 from the current 25 by fiscal-end," he said.
The company, which operates 23 temperature-controlled warehouses across 14 locations in India (including Kolkata, Mumbai, Delhi, Chennai and Bengaluru), proposed to set up another such 6 and 2 ambient warehouses at 6 cities at the cost of around Rs 140 crore.
It has a pan-India presence with warehousing capacity of 58,543 pallets and 3,000 ambient pallets, which is expected to increase to 85,000 pellets in current financial year (FY15) and further to 1 lakh pellets by FY16, said the company in its prospectus filed with SEBI before the issue launch.
At the time of issue opening, brokerages said company's big expansion plan (of raising capacity to 1 lakh pallets by next financial year) and strong industry growth going ahead was expected to boost the operating performance of the company over the next two years.
"India's temperature-controlled logistics industry is estimated at Rs 12,000-15,000 crore and is expected to grow at 15-20 percent year-on-year for the next three to five years. The current market share of the organised players in the industry is estimated at 6-7 percent in the temperature-controlled warehousing segment and at 15-20 percent in the temperature controlled transportation segment. Hence, the potential for growth in the organised services is immense," Sharekhan had said in IPO report.
It had added that SLL is set to reap the benefits of this growth as it is the largest player with a capacity of 63,000 pellets (way ahead of the competition with the second largest player having a capacity of around 5,000 pellets).
Snowman had raised Rs 197 crore through public issue, which will be used for setting up new temperature controlled and ambient warehouses, and long term working capital.
Ravi Kannan said the money raised from the IPO will be partially used to pay back a bridge loan.
Even the company is backed by strong shareholders. Promoter and largest shareholder Gateway Distriparks (GDL) holds 40.4 percent stake in the company (reduced from 54.04 percent). Other major shareholders include Mitsubishi Corporation, Mitsubishi Logistics Corporation, International Finance Corporation and Norwest Venture Partners VII-A Mauritius.
At 13:38 hours IST, the stock was quoting at Rs 94.65, up Rs 4.50, or 4.99 percent on the BSE. There were pending buy orders of 523,699 shares, with no sellers available.
Posted by Sunil Shankar Matkar
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