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The upcoming listing of Western Carriers (India) Ltd. on the Dalal Street is anticipated to experience a subdued debut despite the impressive oversubscription of its Initial Public Offering (IPO). While the IPO garnered a remarkable 30.57 times subscription, with strong participation from both institutional and retail investors, the projected listing premium remains modest.
Akriti Mehrotra, an analyst at Stoxbox, forecasts a listing premium of approximately 6% above the upper band price. This relatively muted expectation can be attributed to a few key factors. Firstly, the company's revenue stream exhibits a significant dependence on its top 10 customers, contributing a substantial 71.97% of its overall revenue. This high customer concentration poses a potential risk, as any changes in the business relationships or demands of these major clients could significantly impact Western Carriers' financial performance.
Despite the potential risk associated with customer concentration, Western Carriers is actively working towards diversification and strengthening its relationships with its existing clientele. The company's asset-light model, coupled with its comprehensive multi-modal logistics solutions encompassing rail, road, sea, and air transport, positions it as a key player in India's burgeoning logistics sector. Furthermore, Western Carriers' integrated services, including warehousing, customs clearance, and cargo handling, cater to a diverse customer base of 1,647 entities.
In the run-up to the IPO, Western Carriers successfully secured ₹148 crore from anchor investors, including prominent names such as Societe Generale, Citigroup Global Markets Mauritius, Aditya Birla Sun Life Insurance Company, Kotak Mahindra Life Insurance Company, and Motilal Oswal Mutual Fund. This substantial anchor investor participation further underscores the confidence in the company's growth prospects and its ability to navigate the dynamic logistics landscape. Despite the anticipated muted listing premium, analysts recommend investors to maintain their holdings in Western Carriers for the medium to long term, given the company's strong market position and growth potential within the Indian logistics industry.
Source: Western Carriers shares likely to see muted debut on Dalal Street on Sept 24