Sunday, December 3, 2017

IPO ANALYSIS : FUTURE SUPPLY CHAIN SOLUTIONS LIMITED - OVER PRICED - AVOID

Image result for future supply chain

ISSUE DETAILS :




Issue opens / closes on

06-12 / 08-12-2017
Issue Size
9,784,570 Equity shares
Face Value
Rs 10
Price
Rs 660-664


BUSINESS
Third party logistics service providers
Promoters
Future Enterprises Limited
LISTINGS
Bse, Nse
BRLMs
IDFC Bank Limited, IIFL Holdings Limited and YES Securities.
REGISTRAR
Link Intime
Global Co-ordinators & BRLMs
Edelweiss Financial Services Limited , CLSA India Private Limited and Nomura Financial Advisory & Securities (India) Private Limited


BUSINESS :



FSCS is an  third-party logistics service provider. The company offers automated and IT-enabled warehousing, distribution and other logistics solutions to a wide range of customers. The service offerings includes, warehousing infrastructure, pan-India distribution, “hub-and-spoke” transportation model and automated technology systems support. Their customers operate in various sectors across India, including retail, fashion and apparel, automotive and engineering, food and beverage, FMCG, ecommerce, healthcare, electronics and technology, home and furniture segment.


OBJECTS OF THE IPO :


The entire IPO is an OFS. The objects of the Offer are to achieve the benefit of listing the  Equity Shares on the Stock Exchanges and facilitate for the sale of Equity Shares by the Selling Shareholders.

FINANCIALS : (Rs in crores)
   

31-03-2017
31-03-2016
31-03-2015
Revenues
577
528
410
Equity
39.13
39.13
39.13
Other Equity
253.67
208.10
178.63
PAT
45.56
29.42
24.65
EPS (Rs)
11.24
7.34
6.30

PAT for the first half of FY18 is  Rs 33.33 cr

RISK FACTORS :


  1. Promoter’s entities are prime customers of the company.
  2. Delay in debt realisations will affect cash flow.
  3. Dependence on third-party vendors could have an adverse effect on business.
  4. If the other capital is also taken into account, EPS earned by the company in the last 3 years is in paises.
  5. DTDC Courier and Cargo Limited has instituted civil suit against the Rakesh Biyani and others for recovery of ₹ 2.35 million along with future interest. This matter is currently pending.          
STRENGTHS:
  • Comprehensive solution for supply chain requirements.
  • Diverse customer base across many sectors.
  • Longstanding relationship with Future Entities.
  • Experienced management team with logistics and retail sector-specific   knowledge.

VALUATION AND RECOMMENDATIONS :

The company will have an equity of Rs 40 cr, post IPO. The enterprise is likely to report an EPS around Rs 14 for FY18. The offer is made at 47 PE based on FY18 earnings. Actually the company’s total capital including other equity is at Rs 294 cr. To show better EPS the capital is split as equity capital and other equity. This is innovative accounting and misleading as for as earnings per share is concerned. Future group has not created value for the investors in the past. Since the IPO is overpriced, avoid the same.



No comments:

Post a Comment