Pranik Logistics IPO Review: Apply or Not?

Pranik Logistics, a carrying and forwarding agent providing end-to-end logistics solutions, is set to launch its Initial Public Offering (IPO) from October 10, 2024, to October 14, 2024. The company operates across multiple sectors, including retail, telecommunications, manufacturing, and pharmaceuticals. As Pranik Logistics prepares for its debut on the NSE SME exchange, here’s a detailed review to help you decide whether to invest.

Pranik Logistics IPO Details

DetailsValues
IPO Open DatesOctober 10, 2024 – October 14, 2024
Price Band₹73 to ₹77 per share
Lot Size1,600 shares
Minimum Investment₹1,16,800
Total Issue Size₹22.47 crore
Fresh Issue2,918,400 shares
Listing atNSE SME
Listing DateOctober 17, 2024

About Pranik Logistics

Founded in 2015, Pranik Logistics is engaged in providing logistics services like transportation, warehousing, material handling, and freight forwarding. The company manages 30 warehouses and offers its services across 13 states in India. Its fleet of specialized trucks caters to various needs, including container trucks for parcels and platform trucks for heavy-duty items.

Some key clients include well-known names like Zepto, Zomato, VIP, Max, and Moglix. Pranik Logistics also holds a license from the Food Safety and Standards Authority of India (FSSAI), allowing it to handle food-related logistics.

Financial Performance

Pranik Logistics has shown significant growth in recent years. Here’s a snapshot of its financials:

MetricsFY 2022FY 2023FY 2024
Revenue (₹ Cr)33.4760.5366.84
Total Assets (₹ Cr)14.0423.5335.68
Profit (₹ Cr)0.310.934.06

Strengths of Pranik Logistics

  1. Wide Geographical Presence: Pranik Logistics operates in 13 states, offering pan-India logistics solutions.
  2. Established Clientele: The company serves reputed brands like Zepto, Zomato, and Moglix, which showcases its reliability and market credibility.
  3. Diverse Fleet of Trucks: The company owns a variety of trucks tailored to handle different logistics needs, from heavy-duty to parcel transport.
  4. Rising Financials: Pranik Logistics has seen substantial revenue growth, increasing from ₹33.47 crore in FY22 to ₹66.84 crore in FY24. The profit after tax (PAT) also surged from ₹0.31 crore in FY22 to ₹4.06 crore in FY24.

Risks

  1. Ongoing Legal Proceedings: Pranik Logistics and its promoters are involved in several legal disputes. Any unfavorable outcomes could negatively impact the company’s operations.
  2. Dependency on Client-Provided Technology: The company does not own proprietary technology and relies on client systems to manage operations. This dependency poses a risk if clients experience any technical disruptions.
  3. Revenue Concentration: A significant portion of the company’s revenue comes from a small group of customers. In FY24, the top 10 customers contributed 84.97% of total revenue, which increases the risk of revenue fluctuations if any of these customers scale back or cease their partnership.
  4. Geographical Revenue Dependence: The company’s revenue is heavily concentrated in a few states, with West Bengal, Jharkhand, Maharashtra, Bihar, and Orissa contributing a large portion. Any adverse changes in these states could impact the company’s financials.
  5. Debt Levels: As of June 30, 2024, the company had secured and unsecured loans of ₹18.81 crore and ₹0.80 crore, respectively. Inability to manage or service this debt could harm the company’s financial health.

Key Performance Indicators (As of June 30, 2024)

KPIValues
ROE8.70%
ROCE11.79%
Debt/Equity Ratio1.57
PAT Margin4.88%
P/BV3.63

Objects of the Issue

Pranik Logistics plans to use the IPO proceeds for the following:

  1. Investment in Technology – To upgrade and modernize its logistics operations.
  2. Capital Expenditure – For infrastructure development, such as expanding the warehouse network.
  3. Working Capital – To meet ongoing operational expenses.
  4. General Corporate Purposes – For business expansion and future investments.
  5. Issue Expenses – Covering the costs related to the IPO.

Pranik Logistics IPO Lot Size

Investors can apply for a minimum of 1,600 shares in multiples thereof. Below is the investment requirement based on the price band:

ApplicationLotsSharesAmount (₹)
Retail (Min)11,6001,23,200
Retail (Max)11,6001,23,200
HNI (Min)23,2002,46,400

Pranik Logistics IPO Promoter Holding

Pre-Issue HoldingPost-Issue Holding
99.99%73.49%

Pranik Logistics IPO Review: Apply or Not?

Investment Verdict: [May Apply]

According to Dilip Davda, Pranik Logistics presents a decent investment opportunity, though with some caveats. The company has demonstrated growth in recent years, but the sudden surge in revenue and profit leading up to the IPO raises questions about the sustainability of this growth, especially in a highly competitive and fragmented sector. While the issue appears fully priced, informed and cash-surplus investors may consider parking moderate funds for long-term gains.

Why You Should Apply:

  1. Steady Financial Growth: Pranik Logistics has shown consistent revenue and profit growth, suggesting strong business fundamentals.
  2. Reputed Clients: The company works with established brands like Zomato and VIP, giving it a strong foothold in the logistics sector.
  3. Wide Geographic Reach: With operations spanning 13 states, Pranik Logistics is well-positioned to capitalize on the growing demand for logistics services in India.

Why You Might Avoid:

  1. Revenue Dependency: The heavy reliance on a few key customers makes the company vulnerable to revenue fluctuations if any of these customers reduce their business.
  2. Debt Levels: The company’s current debt level may pose risks if they face challenges in servicing these loans.
  3. Valuation Concerns: The IPO appears fully priced based on FY25 earnings, which may not offer substantial room for upside in the short term.

Pranik Logistics IPO Registrar

  • Registrar: Maashitla Securities Private Limited
  • Phone: +91-11-45121795-96
  • Email: ipo@maashitla.com
  • Website: Maashitla IPO Status

In conclusion, Pranik Logistics IPO might be a suitable investment for those willing to take on some risk and have a long-term perspective. The company’s fundamentals are solid, but its reliance on a few customers and regional concentration are concerns to consider.

FAQs

  1. When is the Pranik Logistics IPO open for bidding?

    The IPO is open from October 10, 2024, to October 14, 2024.

  2. What is the price band for Pranik Logistics IPO?

    The price band is set at ₹73 to ₹77 per share.

  3. What is the minimum investment required for the Pranik Logistics IPO?

    The minimum investment is ₹1,16,800 for 1,600 shares.

  4. What is the total issue size of the Pranik Logistics IPO?

    The total issue size is ₹22.47 crore.

  5. On which stock exchange will Pranik Logistics list?

    Pranik Logistics will list on the NSE SME exchange.

  6. What are the key strengths of Pranik Logistics?

    Key strengths include wide geographical presence, reputed clientele like Zomato and Zepto, and consistent financial growth.

  7. What are the risks associated with Pranik Logistics IPO?

    Risks include legal proceedings, client technology dependency, and concentration of revenue from a few customers.

  8. How will Pranik Logistics use the IPO proceeds?

    The funds will be used for technology investment, capital expenditure, working capital, and general corporate purposes.

  9. What is the post-issue promoter holding of Pranik Logistics?

    The post-issue promoter holding will be 73.49%.

  10. Should I apply for Pranik Logistics IPO?

    It is a may apply IPO, suitable for long-term investors with a higher risk tolerance, as the issue appears fully priced.

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