Pranik Logistics IPO: High Growth, But Are There Hidden Risks?

PLL offers end-to-end logistics solutions

Pranik Logistics IPO: High Growth:  Pranik Logistics Ltd. (PLL), founded in 2015, is quickly establishing itself as a significant player in India’s logistics industry, delivering complete end-to-end logistics services. The company has seen consistent growth, offering tailored solutions for sectors such as Retail, Pharmaceuticals, Telecom, and Manufacturing. With a wide array of logistics offerings—including transportation, warehousing, material handling, and freight forwarding—PLL strives to meet the diverse needs of customers across the country.

Pranik Logistics IPO: High Growth:  PLL boasts a fleet of 86 owned vehicles, with the option to lease additional ones as needed. These vehicles, organized by size and capacity, accommodate a range of transportation requirements, from parcel deliveries to the transport of heavy machinery. The company also operates 30 warehouses across 13 states in India, providing a solid logistics infrastructure for its clients.

PLL’s growth strategy is anchored in its adaptability to customer requirements, utilizing technology supplied by clients to enhance operational efficiency. With a workforce of over 625 employees, the company successfully manages supply chains across various industries, establishing itself as a dependable logistics partner.

Pranik Logistics IPO: High Growth: Pranik Logistics is set to go public through an initial public offering (IPO) of 2.91 million shares, with a pricing range of INR 73 to INR 77 per share, aiming for a total target of INR 22.47 crore. The IPO will be open for subscription from October 10, 2024, to October 14, 2024, and once allotted, the shares will be listed on the NSE SME Emerge platform.

The funds raised will be used for technology investments, capital expenditures on material handling equipment, and working capital needs. Following the IPO, the company’s market capitalization is anticipated to reach INR 84.78 crore, with 26.51% of the post-IPO capital being made available to the public.

Pranik Logistics IPO: High Growth: On the financial side, PLL has shown consistent growth, with revenue increasing from INR 33.61 crore in FY22 to INR 67.70 crore in FY24, while net profits grew from INR 0.32 crore to INR 4.07 crore during the same period. However, this significant rise in profitability right before the IPO raises concerns about its sustainability, particularly in a competitive and fragmented logistics sector.

Although the company’s growth prospects are promising, increasing employee and financing costs could pose challenges to future profit margins. The IPO is priced at a P/E ratio of 20.87 based on FY24 earnings, suggesting it is fully valued.

Pranik Logistics IPO: High Growth:  Pranik Logistics positions itself as a growing player in the logistics industry with a diverse range of services. Nonetheless, the abrupt increase in profitability ahead of the IPO could be worrisome. Investors with a long-term perspective and excess funds may find this fully priced IPO appealing but should remain cautious about the company’s capacity to maintain growth in a competitive landscape.

Pranik Logistics IPO: High Growth: Pranik Logistics IPO: The subscription period for Pranik Logistics’ initial public offering (IPO) commenced on October 10 and will remain open until October 14. Here are the key details, including subscription status, GMP, and important dates: As of October 11 at 4:10 PM, the Pranik Logistics IPO was subscribed 3.94 times, with a subscription of 7.39 times in the retail category, 0 times in the QIB category, and 1.19 times in the NII category.

The IPO will officially open on October 10, 2024, and close on October 14, 2024. The allocation of shares for the IPO is expected to be completed by Tuesday, October 15, 2024, with shares set to list on the NSE SME on Thursday, October 17. The price range for the IPO is ₹73 to ₹77 per share, with a minimum lot size of 1,600 shares required for applications. Retail investors must invest at least ₹123,200, while high-net-worth individuals (HNIs) need to invest a minimum of two lots (3,200 shares), totaling ₹246,400.

Pranik Logistics IPO: High Growth:  The ₹22.47 crore Pranik Logistics IPO is a book-built offering comprising a fresh issue of 2,918,000 shares. The proceeds from the offering will be used for technology investments, capital expenditures, working capital needs, general corporate purposes, and to cover issue expenses. According to data from Investorgain.com, the Pranik Logistics IPO currently has a nil GMP, indicating that shares are available in the grey market without any premium, priced at the upper band of the issue price at ₹77.

Pranik Logistics IPO Overview

Pranik Logistics IPO: High Growth: The Pranik Logistics Initial Public Offering (IPO) is a book-built issue valued at ₹22.47 crores, comprising entirely of a fresh issue of 2,918,400 shares.

The subscription period for the Pranik Logistics IPO is from October 10, 2024, to October 14, 2024, with the allotment expected to be confirmed on Tuesday, October 15, 2024.

Shares of Pranik Logistics will be listed on the National Stock Exchange (NSE) for Small and Medium-sized Enterprises (SME), with a tentative listing date set for Thursday, October 17, 2024.

The IPO price band ranges from ₹73 to ₹77 per share, and the minimum application lot size is 1,600 shares.

Retail investors need to invest at least ₹123,200, while high-net-worth individuals (HNIs) must invest a minimum of two lots (3,200 shares), totaling ₹246,400.

Narnolia Financial Services Ltd. serves as the book-running lead manager for the IPO, with Maashitla Securities Private Limited as the registrar, and Prabhat Financial Services acting as the market maker.

Key Details:

– IPO Subscription Period: October 10, 2024, to October 14, 2024
– Face Value: ₹10 per share
– Price Band: ₹73 to ₹77 per share
– Lot Size: 1,600 shares
– Total Issue Size: 2,918,400 shares (totaling ₹22.47 crores)
– Fresh Issue: 2,918,400 shares (totaling ₹22.47 crores)
– Issue Type: Book Built Issue IPO
– Listing At: NSE SME
– Pre-Issue Shareholding: 8,091,750 shares
– Post-Issue Shareholding: 11,010,150 shares
– Market Maker Portion: 161,600 shares (Prabhat Financial Services

Additional Information:

– Basis of Allotment: Tuesday, October 15, 2024
– Refunds Initiation: Wednesday, October 16, 2024
– Credit of Shares to Demat Accounts: Wednesday, October 16, 2024
– Listing Date: Thursday, October 17, 2024
– Cut-off Time for UPI Mandate Confirmation: 5 PM on October 14, 2024

Investor Categories and Shares Offered:

– QIB Shares Offered: Up to 50% of the net offer
– Retail Shares Offered: At least 35% of the net offer
– NII (HNI) Shares Offered: At least 15% of the net offer

Bid Date and Anchor Information:

– Bid Date: October 9, 2024
– Shares Offered: 820,800 shares
– Anchor Portion Size (in crores): 6.32
– Anchor Lock-in Period End Date for 50% Shares (30 Days): November 14, 2024
– Anchor Lock-in Period End Date for Remaining Shares (90 Days): January 13, 2025

Application Information:

– Investor Type | Lot/s | Shares | Amount
– Retail (Min) | 1 | 1,600 | ₹123,200
– Retail (Max) | 1 | 1,600 | ₹123,200
– HNI (Min) | 2 | 3,200 | ₹246,400

Grey Market Premium (GMP):

As of October 6, 2024, the GMP for the Pranik Logistics IPO remains unchanged, showing a GMP of ₹0 previously.

GMP Status on Recent Dates:
– GMP Date: Pranik IPO Price: ₹77, GMP: ₹0, Estimated Listing Price: ₹77

Pranik Logistics, established in 2015 and based in Kolkata, is a prominent logistics service provider in India, primarily operating in Eastern India. The company offers a comprehensive array of logistics services, including transportation, warehousing, material handling, and freight forwarding, catering to diverse sectors such as retail, consumer durables, telecommunications, manufacturing, and pharmaceuticals.

With a fleet of 86 commercial vehicles and 30 warehouses, Pranik Logistics aims to enhance cost-efficiency, reduce delivery times, and improve service quality. The company is recognized for its experienced management team, strong customer relationships, and asset-light business model.

Financial Highlights for the Past Three Years (as of June 30):

– Particulars | 30-06-2024 (₹ in lakhs) | 31-03-2024 (₹ in lakhs) | 31-03-2023 (₹ in lakhs) | 31-03-2022 (₹ in lakhs)
– Assets | 3,842.75 | 3,568.30 | 2,352.73 | 1,404.48
– Revenue | 2,248.89 | 6,770.08 | 6,090.62 | 3,360.96
– Profit After Tax | 108.9 | 406.56 | 93.23 | 31.54
– Net Worth | 1,252.09 | 1,143.19 | 736.63 | 363.96
– Reserves and Surplus | 442.91 | 603.74 | 197.18 | 103.95
– Total Borrowing | 1,961.83 | 1,783.95 | 1,382.09 | 577.87

Key Performance Indicators (as of June 30, 2024):

– ROE (Return on Equity): 8.70%
– ROCE (Return on Capital Employed): 11.79%
– Debt/Equity Ratio: 1.57
– RoNW (Return on Net Worth): 8.70%
– P/BV (Price to Book Value): 3.63
– PAT (Profit After Tax) Margin: 4.88%

Risks Associated with Pranik Logistics:

The Red Herring Prospectus (RHP) identifies several risks facing the company:

1. The company does not own the facilities it operates from.
2. There are ongoing legal disputes involving its promoters that could adversely affect business operations and financial health if not resolved.
3. The absence of in-house technology means the company relies on third-party services, which may disrupt operations if issues arise.
4. The company has experienced negative cash flows in its operations, investing, and financing activities, which could hinder growth if they continue.
5. As of June 30, 2024, there exists a contingent liability of ₹93 crores in the form of bank guarantees, which, if not properly managed, could lead to financial difficulties.

Company Strengths:

1. The management team possesses extensive experience and qualifications in the industry.
2. Pranik Logistics has established strong partnerships across various sectors, demonstrating its capability to meet diverse client needs.
3. Its asset-light business model allows for flexibility and cost-effectiveness in addressing market demands.
4. The company adheres to rigorous quality assurance standards to ensure excellence in its services and products.