Brokerages upbeat on Western Carriers IPO; should you bid on opening day?

Western Carriers (India) IPO has also garnered mostly favourable reviews from several brokerage firms, including Canara Bank Securities, K R Choksey, BP Equities, and Swastika Investmart

Western Carriers IPO  opens today: The initial public offering (IPO) of Western Carriers (India), a leading multi-modal, rail-focused, 4PL asset-light logistics company, opens for public subscription today. 

Western Carriers has announced that it has already raised Rs 147.86 crore from anchor investors in a bidding process that concluded on Thursday, September 12, 2024, ahead of the issue opening for subscription.

Western Carriers IPO has also garnered mostly favourable reviews from several brokerage firms, including Canara Bank Securities, K R Choksey, BP Equities, Swastika Investmart, Ventura Securities, and Anand Rathi Research Team.  Before we delve into the brokerages' recommendations, let's take a look at the key details of Western Carriers' public issue.

Western Carriers IPO details

At the upper end, the company seeks to raise  Rs 492.88 crore from the public issue by offering a fresh issue of 23,255,813 shares and an offer for sale of 5,400,000 shares with a face value of  Rs 5 apiece. Not more than 50 per cent of the offer is reserved for the QIB category, not less than 35 per cent for retail investors, and not less than 15 per cent for the NII (HNI) category.

The public issue of Western Carriers is available at a price band of  Rs 163-172, with a lot size of 87 shares. Investors can bid for a minimum of 87 shares and in multiples thereof.

Link Intime India Private Ltd is the registrar for the Western Carriers IPO, while JM Financial and Kotak Mahindra Capital Company are the book-running lead managers of the public issue.

Western Carriers IPO objective

Western Carriers (India) proposes to utilise the net proceeds from the fresh issue for the prepayment or scheduled repayment of a portion of certain outstanding borrowings. The company will use the remaining funds for capital expenditure on commercial vehicles, 40-foot specialised containers, 20-foot normal shipping containers, and reach stackers, as well as for general corporate purposes.

Western Carriers IPO allotment, listing Date

The three-day subscription window for the Western Carriers IPO closes on Wednesday, September 18, 2024. Following the closure, shares are scheduled to be allotted on Thursday, September 19, 2024, and will be credited into demat accounts on Friday, September 20, 2024.

After the finalisation of allotment, Western Carriers IPO shares are expected to debut on the bourses on Monday, September 23, 2024. The shares will be listed on the BSE, and NSE.

Western Carriers IPO Review

Should You Subscribe to the Western Carriers IPO?

Canara Bank Securities – Subscribe for listing gains

Analysts at Canara Bank Securities are bullish on the Western Carriers IPO and have recommended investors subscribe for listing gains. The brokerage highlighted that the company posted impressive RoE and RoCE figures of 20.17 per cent and 29.23 per cent in FY24, far exceeding its peers, which averaged 15 per cent and 14 per cent, respectively. The company’s RoCE is among the highest in the specialty logistics industry.

According to Canara Bank Securities, the issue is attractively valued with a P/E ratio of 16.85x and a P/B ratio of 3.4x, compared to industry averages of 40x and 6x, respectively. "Therefore, we recommend subscribing to this issue for listing gains," the brokerage concluded.

Anand Rathi Research Team – Subscribe

Anand Rathi Research Team is also positive about the public offering of Western Carriers and has assigned a subscribe rating to the IPO. According to the brokerage, at the upper price band, the company is valued at a P/E of 21.8x, with a market cap of Rs 1,753.60 crore post-issue and a return on net worth of 22.4 per cent. "On the valuation front, we believe the company is fairly priced. Thus, we recommend a Subscribe rating to the IPO," said Anand Rathi Research.

BP Wealth - Subscribe for medium to long term

BP Wealth, in its research report, has recommended investors to subscribe to the Western Carriers IPO with a medium to long-term investment perspective. According to the brokerage report, its commitment to leveraging technological advancements and expanding project logistics capabilities position it well to capitalise on the projected growth in the rail-road multi-modal sector, forecast to reach Rs 4,66,700 crore by FY29. 

The brokerage highlighted that the current issue is priced at a P/E of 16.8x on the upper band based on FY24 earnings and is relatively lower than its peers.

'Given its strong financials, strategic initiatives, and positioning to capitalise on the expanding rail-road multi-modal sector, we recommend a 'Subscribe' rating for the issue with a medium to long-term investment perspective,' said the brokerage in its report.

K R Choksey - Subscribe

Analysts at K R Choksey remain upbeat on the public offering of Western Carriers and recommended a 'Subscribe' rating. According to the brokerage report, the company's strengths lie in its extensive pan-India network, strong client relationships, and alignment with key government initiatives like PM Gati Shakti.

Analysts believe that, currently valued at an adjusted PE ratio of 22x, which is below the industry average, Western Carriers (India) presents a favourable valuation. Considering its strong growth prospects and strategic positioning, K R Choksey recommended a 'Subscribe' rating for the IPO.

Swastika Investmart - May Subscribe

Swastika Investmart, in its report, has said that a 'may apply' rating is recommended for long-term investors with a high-risk tolerance. Given the company's financial challenges and limited market interest, the brokerage noted that the company faces a long payment cycle and is exposed to several operational risks. However, it also highlighted that the company has exhibited slow but consistent financial growth with a positive trajectory. According to Swastika Investmart, the IPO's valuation is considered reasonable.

About Western Carriers (India)

Western Carriers (India) is the largest private, multi-modal, rail-focused, 4PL asset-light logistics company in India in terms of container volumes handled by private players in FY2023. The company provides end-to-end, customised, multi-modal logistics solutions across the supply chain, integrating road, railway, water, and air logistics, along with a suite of value-added services.