Western Carriers India Ltd IPO opens for subscription on 13 September 2024. The issue will remain open until Wednesday, September 18, 2024. As one of India’s largest private, multimodal, rail-focused, 4PL asset-light logistics companies, Western Carriers is looking to raise ₹492.88 crore through this public offering.
Western Carriers India Ltd IPO Price
Western Carriers aims to raise ₹492.88 crore through the IPO, which comprises a fresh issue of up to 2.33 crore shares (worth ₹400 crore) and an offer for sale of 0.54 crore shares (amounting to ₹92.88 crore). The price band for the IPO has been set between ₹163 and ₹172 per share, with a lot size of 87 shares for retail investors. At the upper end of the price band, the cost for one lot is ₹14,964. Retail investors can apply for a maximum of 13 lots.
The net offer is allocated as follows: 50% of the shares are reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 35% for retail investors. The IPO’s book-running lead managers are JM Financial Limited and Kotak Mahindra Capital Company Limited, with Link Intime India Private Ltd serving as the registrar.
The proceeds from the fresh issue will be used to prepay or repay a portion of the company’s outstanding borrowings and fund capital expenditure requirements. This includes the purchase of commercial vehicles, specialized 40-foot containers, standard 20-foot shipping containers, and reach stackers. The company’s goal is to strengthen its operational capabilities and enhance its service offerings in the logistics market.
About Western Carriers Limited
Founded in 1972, Western Carriers is a leading player in India’s logistics sector, providing multimodal, rail-focused, 4PL asset-light logistics solutions. The company integrates road, rail, sea, river, and air transport modes to deliver end-to-end customized logistics services across India for both domestic and EXIM (Export-Import) cargo. With a scalable, asset-light business model, Western Carriers focuses on delivering 3PL and 4PL solutions to its diverse clientele, which includes major players in the metals, FMCG, pharmaceuticals, chemicals, oil and gas, and utilities sectors.
Western Carriers boasts a diverse customer base of over 1,647 clients as of March 31, 2024, spanning various industries such as metals, FMCG, pharmaceuticals, chemicals, oil and gas, and utilities. In FY24, revenue from metals customers constituted 53.26% of total revenue, followed by FMCG at 19.46%, pharmaceuticals and chemicals at 7.04%, and oil and gas at 4.76%. The company’s top 10 customers accounted for 72% of its revenue in FY24, reflecting a significant dependence on key clients.
Competition
Operating in a highly fragmented logistics market, Western Carriers distinguishes itself with its scalable, asset-light business model. The Indian logistics industry, however, is dominated by numerous small local players and unorganized competitors, who may attract customers through aggressive pricing or matching Western Carriers’ terms. Larger players with economies of scale also pose significant competition.
Financials and Fundamentals
Western Carriers has shown a consistent growth trajectory over recent years. The company’s revenue from operations increased from ₹14,708.75 million in FY 2022 to ₹16,857.69 million in FY 2024, reflecting a compound annual growth rate (CAGR) of 4.65%. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) rose from ₹1,088.87 million in FY 2022 to ₹1,518.24 million in FY 2024, marking a CAGR of 11.72%. Additionally, net profit grew from ₹611.29 million in FY 2022 to ₹803.47 million in FY 2024, with a CAGR of 9.54%. The company’s EBITDA margin also improved from 7.40% in FY 2022 to 9.01% in FY 2024.
Should you Subscribe to Western Carriers India Ltd IPO?
Western Carriers operates with a focus on scalability and flexibility. Its asset-light model allows the company to optimize operational efficiency and adapt to changing market conditions. The company’s container volumes have shown a positive trend, increasing from 193,137 TEUs in FY 2023 to 212,500 TEUs in FY 2024. Western Carriers plans to continue expanding its volume of containers handled by exploring new growth opportunities and capitalizing on favorable government initiatives, such as the National Logistics Policy, the National Rail Plan (2024), and Dedicated Freight Corridors (DFCs).
What are the risks?
- Customer Concentration Risk: A significant portion of the company’s revenue comes from a small number of key customers, particularly in the metals and FMCG sectors. A decline in business from these sectors could adversely affect financial performance.
- Industry Risks: The company is exposed to risks inherent to the logistics industry, such as infrastructure disruptions, fluctuations in freight and container traffic, and changes in regulatory policies.
- Rising Finance Costs: Western Carriers’ finance costs increased by 46.72% in FY 2024, primarily due to higher interest expenses on short-term borrowings. This could impact profitability if not effectively managed.
The allotment for the Western Carriers India Ltd IPO is expected to be finalized on Thursday, September 19, 2024, with shares scheduled to be listed on the NSE and BSE on September 23, 2024.
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