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Friday, August 22, 2014

Snowman Logistics Ltd IPO: Avoid

Received few queries about Snowman Logistics IPO. These are my two pence worth:

- Good part is the IPO funds are getting used in the company.
- Though the company is good, the issue seems to be expensive to me.
- At higher price band 788cr mkt cap + 88 cr debt for a company with 23Cr PAT and 155Cr revenue of 2013
- Also retail portion is just about 20Crore so we may have difficulty in allotments.

I do not find a strong conviction to invest in this IPO. However, you never know. In a bull market anything is possible. The stock may still touch new highs after listing. Take your decision based on self conviction.

Some reference docs:

Launch Date
26th of August
Issue Period
Opening date: 26th August; Closing date: 28th August 2014
Exchange
Listing on both NSE and BSE
Issuer
Snowman Logistics (“Snowman”)
Offer Type
Initial Public Offering / Reg S
Offer Size
Total
42 Million Equity Shares
Net offer
25.23% of Post issue paid-up equity share capital
Offer Price
[ 44 - 47 ] Min Retail 300 shares
Issue Split (No. of shares)
QIB Portion: Atleast 75% of the issue  (31,500,000)
Non-Institutional portion: Upto 15% of the issue (6,300,000)
Retail Portion: Upto 10% of the issue  (4,200,000)
Use of proceeds
· Capital expenditure for setting up new temperature controlled and ambient warehouses
· Long term working capital and
· General corporate purposes
Current Shareholding


Pre-Offer
Post-Offer

Gateway Distriparks
54.04%
40.41%

Norwest Venture Partners
13.78%
10.30%

Mitsubishi Corp
12.57%
9.40%

IFC
12.40%
9.27%

Others
7.21%
5.39%

Public
-
25.23%
Syndicate Member
HDFC Securities Limited


Cheers,
Niteen S Dharmawat
Blog: http://dharmawat.blogspot.com/
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IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the discussion thread above/anywhere in communication. It is safe to assume that I, my family, friends have vested interest in the stock idea discussed here. Please do your homework and take the help of a qualified advisor before you take any financial decision.

4 comments:

Sunil Sangamnerkar said...

For the last 4 years, there is consitent revenue and profit growth.

Also the IPO grading by CRISIL is 4/5.

Hardly any competition (the next largest co is 1/10th the size)

Keeping the mind the "Made in India" focus and the war against inflation the govt has embarked, this industry has a role to play.

Sangam

Niteen S Dharmawat said...

Sangam, thank you for your comment. I am doubting neither the prospects for the company nor the India growth story and contribution this company can make. However, as Warren Buffett rightly said "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price". I am questioning price that we are paying for this company.

Niteen S Dharmawat said...

The reserved portion of retail investors subscribed 3.82 times followed by qualified institutional buyers with 0.03 times and non-institutional investors with 0.13 times

There were so many buy reports on this but still the issue did not find support from QIP and non Insititutional Investors. This is a very sad part of the Indian equity market. They say something and do something else.

Don't disheartened if you have applied. Market is in full bull run and it is expected to continue. The investors may still have listing gains. As I mentioned earlier the company is good but the issue was expensive.

http://www.moneycontrol.com/news/ipo-issues-open/snowman-logistics-ipo-fully-subscribedretail-support_1165244.html

Cheers,
Niteen S Dharmawat
Blog: http://dharmawat.blogspot.com/
Twitter: @niteen_india
Facebook: https://www.facebook.com/dharmawat
slideshare: www.slideshare.net/ndharmawat/
Linkedin: in.linkedin.com/in/dharmawat/

Niteen S Dharmawat said...

As expected Snowman IPO received overwhelming response, subscribing 60 times on the last day of issue. It will be difficult to get allotments now. The retail portion was subscribed 41 times, the HNI and qualified institutional buyers segments were subscribed by 222 and 17 times, respectively. The company had allotted 94.50 lakh equity shares to anchor investors such as Faering Capital India Evolving Fund (34.92 lakh), ICICI Prudential (29.78 lakh), IDFC Sterling (26.59 lakh) and IDFC Infrastructure Fund (3.19 lakh) at Rs 47 a share.