Western Carriers (India) IPO analysis

Western Carriers (India) IPO will open for subscription on September 13, 2024 and close on September 18, 2024. We break down the logistic company's strengths, weaknesses, and growth prospects to help investors make an informed decision. In a nutshell Quality: Its three-year average ROE and ROCE were 25 and 31 per cent, respectively, during FY22-FY24. Growth: Its revenue and net profit grew 7 and 15 per cent per annum, respectively, during FY22-24. Valuation: Post the IPO, the stock will be valued at a P/E and a P/B ratio of 21.8 and 2.2 times, respectively. Overview: The growth in e-commerce and government support for transportation infrastructure (including railways and roads) will help the company scale up its business. However, low entry barriers and the commoditised nature of the industry (no product differentiation) are some concerns. About Western Carriers (India) Western Carriers (India) is a railway-focused B2B logistics company that offers rail transport, road transport, warehousing and stock management for bulk goods. It has 1,600 customers, including marquee names like HUL and Tata Steel. The top five of them contributed 57 per cent to the company's FY24 revenue. Strengths of Western Carriers (India) Strong customer loyalty : Western Carriers (India) has decades-long relationships with seven of its top 10 customers. Weaknesses of Western Carriers (India) High revenue concentration: Its top five clients contributed 57 per cent to its total revenue in FY24. Dependence on cyclical industries: Nearly 53 per cent of the company's revenue comes from transporting metals. Such high dependence on the cyclical sector is highly risky. Low-entry barriers: The logistics market is filled with many unorganised players due to low-entry barriers. For instance, with more than 1,000 players, there is fierce competition in the road logistics segment. The same is true in case of railway logistics as well. Western Carriers (India) IPO details Total IPO size (Rs cr) 493 Offer for sale (Rs cr) 93 Fresh issue (Rs cr) 400 Price band (Rs) 163-172 Subscription dates September 13-18, 2024 Purpose of issue Funding capex, repayment of borrowings and offer for sale Post-IPO M-cap (Rs cr) 1,754 Net worth (Rs cr) 798 Promoter holding (%) 71.9 Price/earnings ratio (P/E) 21.8 Price/book ratio (P/B) 2.2 Financial History Key financials 2Y growth (% pa) FY24 FY23 FY22 Revenue (Rs cr) 7.1 1,686 1,633 1,471 EBIT (Rs cr)