Today, after the IPO of Western Career India Limited, which we will discuss in detail, several promising IPOs have emerged this week. As we approach the close of this IPO, noticeable interest and a clear trend is forming around it. This week, we’ll also examine when withdrawals from previously successful IPOs will start. But first, let’s dive into the basic details and comprehensive analysis of today’s IPO.
Company Overview:
The company was incorporated in 2011 and is primarily a logistics firm operating on a multi-logistics model. It offers value-added services across road, rail, air, and water transportation.
Key IPO Dates:
- Opening Date: 13th September
- Closing Date: 18th September
- Allotment Finalization: 19th and 20th September
- Tentative Listing Date: 23rd September
Retail and High Net-worth Individual (HNI) Categories:
- Retail Lot Size: 87 shares per lot.
- Price Range: ₹163 to ₹172 per share.
- Minimum Lot Size: One lot of 87 shares.
- Quotas:
- 50% for Institutional Buyers (Ku IB)
- 35% for Retail Investors
- 15% for HNI Category
Financial Health:
The company’s total assets have doubled in the past two years, growing from ₹1400 crore to ₹1700 crore. Profit after tax has also risen from ₹60 crore to ₹80 crore, though the growth rate has slowed, with a profit growth of only 13% in 2023 compared to earlier.
Key Financial Ratios include:
- Debt-to-Equity Ratio: 0.67
- Return on Equity: 20.17%
- Return on Capital Employed: 22.4%
Valuation and Peer Comparison:
The company’s P/E ratio comes to approximately 22, which is reasonable compared to its competitors like Container Corporation (P/E of 47) and TCI Express (P/E of 32). This indicates that the valuation is not too high, positioning the IPO as decent.
IPO Objectives:
- Prepayment of Borrowings: The company aims to use part of the funds to pay off some of its debts.
- Capital Expenditure Funding: The remaining funds will be allocated toward capital expenditures, helping the company expand its operations.
Risks to Consider:
- Customer Concentration: 80% of the company’s business comes from its top 20 customers, which poses a risk if any major client withdraws.
- Dependence on India’s Logistics Sector: Since the business relies heavily on Indian infrastructure, any disruption here could negatively impact the company.
- Trade Receivable Cycle: The company’s receivables cycle is often delayed, which can strain its cash flow.
Market Sentiment:
As of now, the gray market premium is fluctuating around ₹10-12, but this may change as the IPO progresses. It’s important to monitor the anchor investor list and overall subscription levels, especially in the HNI category.
Conclusion:
While the Western Career India Limited IPO presents an interesting opportunity, I would suggest a careful approach. The financials are decent, the growth potential is moderate, and risks need to be carefully weighed. It seems like an ok IPO—nothing spectacular, but certainly one to keep an eye on. I’ll personally decide to apply after observing how it performs early next week.
If you’re looking to increase your chances of allotment, consider applying through multiple Demat accounts under different names (family members, etc.). Links for Demat account opening with additional benefits are in the description.