- Date Aug 25th, 2015
- IPO Period: 24-26 Aug 2015
- Industry – Logistics
- Mid Cap share – 2210 cr market capitalization
- Advice: Avoid
Navkar Corporation is logistics firm that provides container handling and storage services. It is established in the JNPT port region and has expansion plans locally and in Vapi Gujarat. The Income, EBITDA and Profits have grown at 7.2%, 10.2% and 15.9% CAGR over last 3 years. While current operations and margins are excellent, we are concerned about slow JNPT port traffic growth. Gujarat operations are also at least 2 years away from profitability. Free Cash flows are negative, and logistics businesses require large and early investments. Based on this, we advise investors to avoid the NKC IPO.
- IPO Share Price range: Rs. 147-155 and Period: 24-26 Aug 2015
- Number of Shares: 3.9-4.1 cr. shares of face value 10, which are 28.3% of equity post issue.
- Retail quota is 35%, qualified institutions get 50% and 15% is for HNI. See Fig 1a for pattern.
- The IPO will raise Rs. 600 cr. to be used for:
- Capacity enhancement of the Somathane CFS at a cost of 114 crores.
- Development of the non-notified areas of their CFSs at a cost of 54 cr.
- Establishment of a logistics park at Valsad (near Vapi) at a cost of 314 cr.
- Encashing of stake by a promoter group company Siddhartha Corp of 90 cr.
- The P/E of NKC is 28.7 – 30.2 times at lower /upper price band, based on the FY15 financials.
- Post IPO, the market cap of the firm will be 2210 cr. (upper).
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