Western Carriers IPO: A Comprehensive Overview
The initial public offering (IPO) of Western Carriers opened for subscription on Friday and will remain available until September 18. This marks a significant milestone for the company as it seeks to raise capital through the public market.
IPO Structure
The IPO comprises a fresh equity sale of ₹400 crore, alongside an offer for sale (OFS) of up to 54 lakh shares by promoter-selling shareholder Rajendra Sethia. This dual structure aims to bolster the company’s financial standing while providing an exit option for existing shareholders.
Price Band and Lot Size
Western Carriers has set a price band of ₹163-172 per share. Investors can bid for a minimum of 87 shares in one lot, making it accessible for a range of investors looking to participate in the offering.
Grey Market Premium (GMP)
As the IPO opened, the company’s shares had no Grey Market Premium (GMP) in the unlisted market. This lack of GMP may indicate cautious sentiment among investors ahead of the issue, reflecting the company’s financial challenges and market positioning.
Analyst Insights
Analysts have advised that only high-risk investors consider subscribing to the issue. The company faces a long payment cycle and is exposed to various operational risks. Swastika Investmart has suggested a "may apply" rating for long-term investors with a high-risk tolerance, given the financial challenges and limited market interest.
Use of Proceeds
The proceeds from the fresh issue will be allocated towards repaying borrowings and funding capital expenditures for purchasing commercial vehicles, containers, and reach stackers. The remainder will be directed towards general corporate purposes, which could enhance operational efficiency and financial stability.
Company Overview
Western Carriers boasts a pan-India presence with over 50 branch offices and four zonal offices across 23 states. The company operates 16 warehouses in 12 states and manages over 55 major public rake handling points throughout India. This extensive network enables Western Carriers to provide both first-mile and last-mile connectivity to its customers, including those in remote areas.
As of March 31, 2024, the company had a diverse customer base of 1,647 clients across various industries, including metals, FMCG, pharmaceuticals, chemicals, and oil & gas. Notable clients include industry giants such as Tata Steel, Hindalco Industries, Hindustan Unilever (HUL), and DHL.
Financial Performance
For the fiscal year 2024, Western Carriers reported a consolidated revenue from operations of ₹1,686 crore, reflecting a 4% increase from the previous year. The profit after tax (PAT) rose by 12% to ₹80.3 crore, indicating a positive trend in the company’s financial health.
Conclusion
The Western Carriers IPO presents an intriguing opportunity for investors, particularly those with a high-risk appetite. While the company’s extensive operational network and diverse client base are promising, potential investors should weigh the financial challenges and market conditions carefully. With JM Financial and Kotak Mahindra Capital Company serving as the book-running lead managers, the equity shares are set to be listed on both the BSE and NSE, marking a new chapter for Western Carriers in the public domain.