Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on Mahindra Logistics IPO .
Ajcon Global: “At the upper end of the price band of Rs. 429, the IPO is valued at 66x on FY17 EPS and 50x on annualized Q1FY18 EPS which we believe is at a premium due to its asset light business model and high growth opportunity. With due consideration to factors like a)strong parentage, b) vast opportunities presented in third party logistics industry, c) total logistics market expected to cross Rs. 9.2 tn with 3PL market at Rs. 570-580 bn by FY 2020 (19-20% CAGR), d) asset light business model which others players in the logistics industry do not have, e) long standing relationship with marquee clients f) impressive financial performance with topline CAGR of 22 percent+ and strong ROCE of 16.4 percent, g) logistics sector being strong beneficiary post GST implementation, we recommend “SUBSCRIBE” to the issue”
Angel Broking: “At the upper end of the price band (`425-`429), the issue is priced at 66.2x and 50.8x of its reported and adj. FY2017 earnings. Due to its asset light model, there is no exact comparable peer; however, the thumb rule for any investment is growth and returns. MLL has exhibited CAGR of 15% and 25% in top-line and adj. bottom-line respectively, which is better than its players i.e. VRL logistics and Transport Corporation of India. In terms of returns, company has shown a better return profile (ROE & ROIC of 17% and 40% v/s. peer group avg. – 13% & 14% respectively). Based on its growth story, diversification strategy, strong parent repute and post GST attractiveness of the logistics sector, we assign Subscribe rating to the issue.
AUM Capital: “ The Indian logistics industry is expected to grow and Mahindra Logistics Ltd, an arm of automobile giant Mahindra and Mahindra Ltd will be benefitted from these rising opportunities. MLL’s focus on enhancements in technology, leveraging on the changing logistics industry dynamics particularly with the implementation of GST regime and exploration in new business opportunities in new industry verticals shows bright prospects in the future. ence, we recommend to SUBSCRIBE the issue for medium to long term perspective. “
Capital Market: ” Score 47/100, The diluted equity share capital of the company stands at Rs 71.14 crore of face value of Rs 10. EPS for FY 2017 works out at Rs 6.4. At the higher price band of Rs 429, The P/E on FY 2017 diluted EPS works out to 66.9. There is no comparable listed player.”
Choice Broking: “There is no listed companies in India having a business model and asset structure similar to MLL. However, other major logistics company can be considered as the proxy peer. At the higher price band of Rs. 429 per share, MLL’s share is valued at a P/E multiple of 66.9x (to its restated FY17 EPS of Rs. 6.4), which is at a premium to the peer average of 46.2x. Thus considering the above observations, we assign a “SUBSCRIBE” rating for the issue.”
GEPL Capital“ Mahindra Logistics stands to gain from operating leverage. At a P/E of 64xs of FY17 Earning. We believe that Mahindra Logistics has a unique business model and strong growth metrics which will make them lucrative. We assign a Subscribe rating to the IPO.“
KR Choksey: “In terms of valuation, on the upper price band of INR 429, the company has been valued at ~65x on FY17 earnings as against 71x for Blue Dart Express, 34.2x for Gati Ltd and 54x for TCI Express. We believe, valuations look expensive, however, the management expects MLL to receive a tax refund of approximately Rs 540 mn, which will result in positive cash flows in the coming period. These cash flows will be utilised in maintaining organic growth trajectory for the company, which could result in strong bottom line growth in the years to come. The company plans to support this growth by focusing on increasing business from Non-Mahindra Group clients, leveraging the changing industry with the implementation of GST.
Zerodha (Trading Account)
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