The Ashapura Logistics IPO kicked off yesterday. The buzz around the IPO was quite evident even before the opening bell. And it looks like investors weren’t disappointed. The IPO, which opened for subscription yesterday, was oversubscribed by a solid 3.73 times on the first day.
This strong opening raises questions about what’s driving this investor enthusiasm and whether the momentum will continue. Let’s examine the numbers and company details to find out.
| Offer Price | ₹136 – ₹144 per share |
| Face Value | ₹10 per share |
| Opening Date | 30 Jul 2024 |
| Closing Date | 1 Aug 2024 |
| Total Issue Size (in Shares) | 3,657,000 |
| Total Issue Size (in ₹) | ₹52.66 Cr |
| Issue Type | Book Built Issue IPO |
| Lot Size | 1000 |
| Listing at | NSE, SME |
The Ashapura Logistics IPO opened for subscription on July 30th, 2024, and will close on August 1st, 2024. The company is looking to raise ₹52.66 crore through the issuance of 36.57 lakh shares. The price band for the IPO is set at ₹136 to ₹144 per share.
This translates to a minimum investment of ₹144,000 for retail investors, who must apply for a minimum lot of 1,000 shares. The share allotment is expected to be finalized by August 2nd, with a tentative listing date of August 6th, 2024, on the NSE SME platform.
Subscription Status:
Ashapura Logistics’ IPO garnered a positive response on the first day, receiving an overall subscription of 3.73 times. The breakdown reveals strong interest from retail investors, with their category oversubscribed 5.78 times. Institutional Investor (QIB) participation was moderate at 1.5 times, while Non-Institutional Investors (NII) subscribed to the issue 1.92 times.
Objectives of the IPO:
The primary objective of the IPO is to raise capital for Ashapura Logistics’ expansion plans. The company intends to utilize the proceeds for:
- Fleet Expansion: They plan to purchase additional trucks and equipment to strengthen their transportation capabilities.
- Warehouse Development: Funds will be directed towards building new warehouses at their Mundra facility in Gujarat.
- Working Capital: The IPO will also help Ashapura Logistics meet its increased working capital needs to support ongoing operations.
- General Corporate Purposes: A portion of the proceeds will be used for general corporate purposes.
Grey Market Premium (GMP):
The Grey Market Premium (GMP) for Ashapura Logistics’ IPO is currently hovering around ₹95 per share. This indicates that investors in the grey market are willing to pay a premium to own Ashapura Logistics shares pre-listing. While not a guarantee, a positive GMP can be a potential indicator of a strong listing price. As per estimates, this translates to an expected listing price of around ₹239 per share, which is 65.97% higher than the upper band of the IPO price.
Company Overview:
Founded in April 2002, Ashapura Logistics boasts over 20 years of experience in the Indian logistics industry. They offer a comprehensive suite of services encompassing cargo handling, freight forwarding, transportation, warehousing, distribution, and coastal movement across India.
Ashapura Logistics leverages technology to enhance its services and customer experience. They have developed their own software, IMPEX, to manage cargo handling and transportation operations and are continuously innovating for the transportation segment. Their technology stack focuses on various aspects like demand generation, tracking, fleet operations,
The company has a strong presence with three subsidiaries: Jai Ambe Transmovers Private Limited, Ashapura Warehousing Private Limited, and Amanzi International Private Limited. Their freight forwarding team operates from Ahmedabad, with branches in major seaports like Hazira, Mundra, Pipavav, Kandla, JNPT, and other inland container depots, ensuring efficient service delivery to existing clients.
As of March 31, 2024, Ashapura Logistics boasts a fleet of 250 commercial trucks, a mix of owned vehicles (181) by a subsidiary, and the company itself (69). Additionally, they manage 7 warehouses with a total storage capacity of around 284,000 square feet as of July 2024. Their workforce comprises over 219 employees, with a significant focus on operations and transportation (over 111 personnel).
Financials
Ashapura Logistics’ financials for FY24 (ending March 2024) reflect growth in profitability and net worth:
- Assets: ₹12,644.88 lakh (up from ₹10,461.66 lakh in FY23)
- Revenue: ₹19,934.57 lakh (slight decline compared to FY23 and FY22)
- Profit After Tax (PAT): ₹1,235.44 lakh (up from FY23 and FY22)
- Net Worth: ₹6,532.31 lakh (up from FY23 and FY22)
- Reserves & Surplus: ₹5,542.40 lakh (up from FY23 and FY22)
- Total Borrowings: ₹12.90 lakh (relatively low, with a slight increase from FY23 and FY22)
The slight decline in revenue might be a concern, but the consistent growth in profitability and net worth indicates a healthy financial trajectory. Additionally, the company maintains a low debt profile.
SWOT Analysis of Ashapura Logistics Limited
| STRENGTHS | WEAKNESSES |
|---|---|
| Over 20 years of experience in the logistics industry. Strong client base across various industries. Diversified service portfolio. Technological capabilities to enhance efficiency. Prudent financial management with low debt. | Slight decline in revenue compared to previous years. Relatively small fleet size compared to larger logistics players. Dependence on key personnel and management expertise. |
| OPPORTUNITIES | THREATS |
| Growing Indian logistics market. Increasing demand for e-commerce logistics solutions. Expansion plans for warehouses and fleet. Potential for further technological integration. | Intense competition in the logistics sector. Fluctuations in fuel prices and transportation costs. Economic slowdown impacting customer demand. Regulatory changes in the logistics industry. |
Conclusion
The strong subscription for the Ashapura Logistics IPO on its first day is undoubtedly a positive sign for the company. However, investors should conduct thorough due diligence before making an investment decision.
Factors such as the company’s financials, business model, and industry outlook should be carefully evaluated. While indicative of initial interest, the grey market premium and investor sentiment are not guarantees of future performance.
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.
