Western Carriers IPO - Issue Details, Financials, Growth Strategies, Risks, Valuation And More: Anand Rathi

Anand Rathi Report

Western Carriers India Ltd. will launch its initial public offering on Sept. 13 and will conclude on Sept. 18. The Kolkata-based multi-modal, rail-focused, 4PL asset-light logistics company has set the price band in the range of Rs 163-172 per share. The minimum order lot for bidding is 66.

The Rs 492.9 crore IPO consists of a fresh issue of Rs 400 crore and an offer for sale of shares worth Rs 92.9 crore.

Objects of fresh Issue

• Prepayment or scheduled re-payment of a portion of certain outstanding borrowings availed by the company.

• Funding of capital expenditure requirements towards purchase of commercial vehicles; 40 feet specialized containers and 20 feet normal shipping containers; and reach stackers.

• General corporate purposes

Strengths

• Comprehensive and integrated multi-modal, end-to-end logistics solutions

• Strategically positioned to capitalise on a fast-growing logistics market in India

• Experience in delivering customised, end-to-end services and executing complex and customised projects

• Strong customer relationships with a diverse customer base

Key Strategies:

• To Pursue inorganic growth on an opportunistic basis

• Continue to invest in infrastructure capabilities

• Acquire new customers and expand into new sectors and new geographies

• Strong relationships with the existing customers

Key Risks

• The company relies on a few key customers, especially in metals and FMCG. Any decline in revenue from these customers could severely impact its business and financial health.

• The business needs substantial working capital. Delays in customer payments or tighter payment terms from suppliers could strain cash flows.

• It relies heavily on technology. Any system disruptions or security breaches could lead to financial losses and damage its reputation.

• Western Carriers has unsecured loans that can be recalled at any time. If recalled, the company might not have enough funds to repay, affecting financial stability.

• The company’s logistics operations depend on external infrastructure like roads and ports. Any disruptions could harm its business operations.

Valuation

Western Carriers is a Multi-modal, rail-focused, 4PL asset-light logistics company. The company offers fully customizable, multimodal logistics solutions encompassing road, rail, water, and air transportation and a tailored range of value-added services.

Over the years, the company plans to enhance its service delivery by robust growth and operational efficiency.

At the upper price band company is valuing at P/E of 21.8x with a market cap of Rs 1754 crore post issue of equity shares and return on net worth of 22.4%.

On the valuation front, we believe that the company is fairly priced. Thus, we recommend a “Subscribe” rating to the IPO

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