SS 1 Select Snowman Logistics lists brilliantly and remains locked at Rs 78.75 ~Advice to Book Profit

Had recommended Snowman Logistics as below in the SCRIP SCAN Module on our website

SS 1 Select ~ IPO of Snowman Logistics Rs 44-Rs 47 :Must Subscribe ~ 26-Aug-2014

It was heavily oversubscribed 59.75 times and allotment has been poor….However those who leveraged,which is the key reason for this high level of oversubscription, and applied as High Net Worth Applications too have come out making a good net profit after interest cost

It listed  brilliantly on Friday,September 12,2014 even better than expected and remained locked at Rs 78.75 on BSE

We have now advised Allottees to start offloading and book profit rather than buy more or Hold

Extracts from our advisory post as linked above

“We have designated this IPO as a SS 1 Select signalling a ‘Must Subscribe’ for immediate Strong Gains on Listing as well as in the Medium to Longer Term 

The Planned Expansion should enable a topline of @ Rs 200 crs in the next two years and if operating margins of 24% sustain the bottom line should cross Rs 50 crs…in fact with loan pay off from IPO Proceeds there should be marginal interest charge if any and the bottomline will get pumped even better…assuming a bottomline of Rs 60 crs in the next two to three years post expansion the EPS will be over Rs 3 and this at a PE of 20 and 30 gives an indicative Price of Rs 60 & Rs 90 respectively

FY 14 saw Topline Sales of Rs 153+ crs and a Bottomline of Rs 22.48 crs giving an EPS of Rs 1.35 on Post IPO Issue Equity of @ Rs 166 crs and thus pricing the IPO at high PE of 32+ at the lower end price band of Rs 44….yet this premium pricing is justified by the growth potential going forward…non linear to some extent

……. should be heavily oversubscribed and therefore allotment may be poor…Price on listing in September is expected to be Rs 65+…The IPO Pricing Band is at very high PE Multiples of 32 + itself and this races away to @ 50 if Listing does take place at Rs 65+….High Growth Potential does justify this Premium Pricing to some extent

This IPO is a Fresh Issue of Shares and not an Offer For Sale in part as none of the current Major Shareholders are selling in the IPO…that’s a a strong measure of confidence reposed by them in the Company’s prospects  

The Company has raised Rs 44.4 crs through three Anchor Investors,IDFC,ICICI Prudential and Faering Capital who have been allotted an aggregate of 9.45 million shares at Rs 47 per share

Interesting to note that the lead Managers are HDFC Bank and one of the Anchor Investors,Faering Capital has been promoted by Aditya Parekh,the son of Financial Doyen Deepak Parekh…Faering Capital and HDFC Bank incidentally are also significant private equity investors in Ratnakar Bank that is also planning an IPO this Financial Year  “

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