Issue Date:?06th Dec ? 08th Dec 2017
Price Band(Rs):?660-664 |??Lot Size (No. of Share):?22
Company Background
Incorporated in 2006, Future Supply Chain Solutions Ltd is one of the largest third-party logistics service provider in India. Their services includes automated and IT-enabled warehousing, distribution and other logistics solutions. They serves customers in various sectors which includes retail, fashion and apparel, automotive and engineering, food and beverage, fast-moving consumer goods, e-commerce, healthcare, electronics and technology, home and furniture and ATMs.
Issue Details
| Issue Opens | 06-Dec-17 |
| Issue Closes | 08-Dec-17 |
| Issue Size(Rs in Crore) | 649.70 |
| Face value(per equity share) | 10 |
| Price Band(Rs.) | 660-664 |
| Lot Size(No of Share) | 22 |
| No of Shares on Offer(Crore) | 0.97 |
| QIB(%) | 50% |
| Non-Institutional(%) | 15% |
| Retail(%) | 35% |
| Commencement of Trading | 18-Dec-17 |
Strengths
- One of the largest service providers with extensive network of facilities in a fast growing third party logistics market.
- Diverse customer base across many sectors.
- At the forefront in introducing new standards of technology and automation in the logistics industry in India.
Concerns
- Profitability margins in the future would depend on its ability to cater to customers outside the group.
- Unable to manage expansion through strategic acquisition.
- Changing regulations in India could lead to new compliance requirements that are uncertain.
- Dependence on third-party vendors could have an adverse effect on business financial condition.
Our View
The price band of INR 660-664 per share and FY17 EPS of Rs.11.69, P/E ratio works out to 56x to 70x. Its only listed peers Mahindra Logistics Ltd is trading at P/E ratio of 68x. This is quite high for a logistics player as we made it amply clear in our analysis of Mahindra Logistics IPO. Hence, if we compare this way, Future Supply chain is overpriced.
Future Supply has asset-light business model, domain expertise and opportunities in the sector, the company?s growth prospects are bright. FSC happens to be the first mover in automated technology system support in consumption related segments; it will attract more fancy post listing going forward. Investors may consider investment for medium to long term.