Mahindra Logistics IPO: Read this if you are planning to subscribe

Mahindra Logistics raised a little over Rs 247 crore from anchor investors, and initial share sale of Mahindra Logistics would be open for public subscriptions from October 31 to November 2.

Mahindra Logistics has allotted 5.8 mln shares to 15 anchor investors at 429 rupees apiece, the company said in a press release. The offer will open today and close on Nov 2. The price band for the IPO is set at 425-429 rupees per share.

Goldman Sachs, Pictet, Copthall Mauritius Investment Ltd, HDFC Trustee Company Ltd, Reliance Capital Trustee Company Ltd and Wellington Alberta Teachers Retirement Fund Board are among the anchor investors. Mahindra Logistics’ IPO comprises sale of 1,93,32,346 shares, including offloading of 96,66,173 shares — amounting to 13.74 per cent stake — by parent firm Mahindra and Mahindra. Normandy Holdings and Kedaara Capital would sell 92,71,180 and 3,94,993 shares, respectively. Normandy Holdings is a 100 per cent subsidiary of Kedaara Capital. Kotak Mahindra Capital Company and Axis Capital will manage the company’s IPO.

The Brokerages are saying that this IPO will benefit the investors. The Mahindra Logistics over the years has grown, which is a good sign to invest in this IPO.

According to a report in NDTV, in FY17, Mahindra Logistics posted net sales of Rs 2667 crore growing at a CAGR of around 15 per cent from FY13.  Angel Broking in a note said, “The company hired global consultant McKinsey in 2015 to scale up its business, especially that of the non-Mahindra segment and results are clearly visible with the 17.5% top-line CAGR between FY2015-17.”

Aum Capital told NDTV that the Indian logistics industry is expected to grow and will benefit from these rising opportunities. Mahindra Logistics’ 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, it added.

The GST effect:

The GST is a game changer in the logistic sector. The GST is already Indian market, and people still recovering from losses, GST is also set to hit logistic sector as well. Angel Broking told NDTV, “As the sector is largely fragmented, the share of the unorganized players is very high in this sector. Implementation of GST will result in most business decisions being focused on supply chain efficiency and not on state-wise tax benefits. Many businesses have already started considering a complete redesign of their supply chain network. This will be a boon to the logistics sector and to the large organized players in the sector.”

The down side:

As the Mahindra Logistics significantly depends on clients in automotive industry, a loss or decrease in business by this clients in automotive industry could highly affect the business. This company depends on limited number of clients which exposes high risk of client concentration.

(Inputs from Agencies)

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