the initial public offering (IPO) of Western Carriers (India) Ltd. has garnered significant attention from investors, achieving a subscription rate of 13.89 times by the end of its fourth day. This IPO has attracted robust interest, particularly from retail and non-institutional investors, showcasing a promising outlook for the logistics company.
Main Points
Western Carriers IPO Subscription Details and Investor Interest
The IPO opened for subscription on September 13 and is set to close on September 19, 2024. As of September 18, bids have been received for approximately 28.96 million shares, against an offer of 2.08 million shares. The breakdown of subscriptions reveals strong engagement across various investor categories:
- Non-Institutional Investors (NIIs): Subscribed 20.93 times
- Retail Individual Investors (RIIs): Subscribed 18.61 times
- Qualified Institutional Buyers (QIBs): Subscribed only 0.14 times
This diverse interest indicates a solid backing from smaller investors while highlighting a more cautious approach from institutional players.
Western Carriers IPO Financial Overview and Use of Proceeds
Western Carriers aims to raise approximately Rs 492.9 crore through this IPO, which consists of a fresh issue of Rs 400 crore and an offer for sale worth Rs 92.9 crore. The price band for the shares is set between Rs 163 and Rs 172, with a minimum bid requirement of 87 shares.The proceeds from the fresh issue are earmarked for several key purposes:
- Debt Repayment: About Rs 163.5 crore will be allocated to prepay outstanding borrowings.
- Capital Expenditure: Approximately Rs 151.71 crore will be used to fund the purchase of commercial vehicles and shipping containers.
This strategic allocation reflects the company’s focus on strengthening its operational capacity and financial stability.
Western Carriers IPO Grey Market Premium Insights
As of September 18, the grey market premium (GMP) for Western Carriers shares stood at Rs 50, indicating a potential listing gain of about 29% over the upper issue price. This premium suggests that investors are optimistic about the stock’s performance post-listing, which is anticipated on September 23, 2024.
Company Profile and Market Position
Western Carriers is recognized as India’s largest private, multi-modal, rail-focused logistics company. Established in 1972, it has evolved into a leading provider of customized logistics solutions that integrate road, rail, water, and air transportation.
Key Services Offered:
- Multi-modal Logistics Solutions: Tailored services that encompass various transportation modes.
- Value-added Services: Including warehousing, stock management, and project logistics.
- Strong Customer Base: The company serves major clients across sectors such as metals, FMCG, pharmaceuticals, and chemicals.
In FY2024, Western Carriers reported a consolidated net profit of Rs 80.35 crore, with total sales reaching approximately Rs 1,685.77 crore, reflecting its robust operational framework.
Analyst Recommendations and Market Sentiment
Market analysts have mixed sentiments regarding the IPO. While some recommend subscribing due to the company’s strong market position and growth potential in rail logistics, others caution about operational risks associated with long payment cycles and financial challenges.
Anand Rathi has given a “subscribe” recommendation based on the company’s attractive pricing compared to peers in the industry. They noted that at the upper price band, Western Carriers is priced at an EV/Sales multiple of about 1x, significantly lower than the peer average of 2.4x, making it an appealing investment option for long-term investors with higher risk tolerance.
