Oneclick Logi NSE SME IPO review (Avoid)
• CLIL is an integrated logistics services provider with third-party contracts.
• It posted an average performance as a partnership firm.
• Post turning public limited company, it has financial data for just 108 days for FY23.
• Based on annualized FY23 earnings, its IPO is exorbitantly priced.
• Simply stay away from this pricey “high-risk/no-return” bet
ABOUT COMPANY:
Oneclick Logistics India Ltd. (CLIL) is an integrated logistics services and solutions provider. Its services can be broadly categorized as i) non-vessel operating common carrier (“NVOCC”); ii) ocean and air freight forwarding (“Freight Forwarding”); iii) bulk cargo handling (“Bulk Cargo”); iv) custom clearance, for which it has an arrangement with third parties who have valid Custom House Agent’s License and v) allied logistics and transportation services.
As an integrated end-to-end logistic services provider, the company offers its customers a single-window solution thereby negating the need to approach multiple service providers at different levels in the chain of logistics services. CLIL’s services include container handling, clearing and forwarding, customs clearance, brake bulk handling, and brokerage, recovery of all types of claims including customs and insurance, warehousing, distribution and supply chain management, port and terminal operations, and container freight station operations.
The company operates an asset-light business model and outsources infrastructure requirements to third parties. Further, its integrated service model provides the company with greater business opportunities from customers involving a wide range of services, contributing to revenue and profitability. It also benefits from long-standing relationships with customers. The company offers services in India and its primary focus is to offer these services to importers for importing goods from countries namely China, Europe, Singapore, and Malaysia where it has a presence through agency partners. Business arrangements with agency partners enable it to provide services in jurisdictions where it does not operate directly. CLIL’s agency partnerships also help in acquiring new business opportunities in India through agency partners who do not have direct operations in India.
As of August 31, 2023, it had 20 employees on its payroll and as of the date of this offer document, the company has provided its services to 627 diversified customers.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden IPO of 1000800 equity shares of Rs. 10 each at a fixed price of Rs. 99 per share to mobilize Rs. 9.91 cr. The issue opens for subscription on September 27, 2023, and will close on October 03, 2023. The minimum application to be made is for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 27.77 % of the post-IPO paid-up capital of the company. CLIL is spending Rs. 1.50 cr. for this IPO process, and from the net proceeds, it will utilize Rs. 7.21 cr. for working capital, and Rs. 1.20 cr. for general corporate purposes. Higher spending for the IPO process indicates the fully structured mode of the IPO.
Fedex Securities Pvt. Ltd. is the sole lead manager and Bigshare Services Pvt. Ltd. is the registrar of the issue. SS Corporate Securities Ltd. is the market maker for the company.
Having issued initial equity shares at par, the company issued further equity shares at a price of Rs. 580 per share in April 2023. It has also issued bonus shares in the ratio of 465 for 10 in the same month. The average cost of acquisition of shares by the promoters is Rs. 9.98, and Rs. 10.00 per share.
Post-IPO, CLIL’s current paid-up equity capital of Rs. 2.60 cr. will stand enhanced to Rs. 3.60 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 35.68 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, as the company was formed on December 14, 2022, for its first fractional fiscal year ended on March 31, 2023 (i.e. for 108 days working), it has posted a total revenue of Rs.4.16 cr. and earned a net profit of Rs. 0.19 cr. This performance is on an equity capital base of Rs. 0.01 cr. It is really surprising how this IPO got approved with just 108 days of working data post turning public limited company.
For the fractional period of just 108 days of FY23, it has posted an EPS of Rs. 4.08 and a RoNW of 95.09%. The issue is priced at a P/BV of 23.13 based on its NAV of Rs. 4.28 as of March 31, 2023, and at a P/BV of 3.01 based on its post-IPO NAV of Rs. 32.85 per share.
If we annualize FY23 earnings and attribute it to the post-IPO paid-up capital of the company, then the asking price is at a P/E of 54.40. Thus the issue is exorbitantly priced.
As a partnership firm, for the last three fiscals, it has reported a total revenue/net profit of Rs. 11.67 cr. / Rs. 0.33 cr. (FY20), Rs. 13.33 cr. / Rs. 1.02 cr. (FY21), and Rs. 35.21 cr. / Rs. 1.30 cr. (FY22). For the period ended on February 10, 2023, – FY23, it earned a net profit of Rs. 0.99 cr. on total revenue of Rs. 29.42 cr.
DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer documents, the company has shown Amiable Logistics, Cargosol Logistics, and Timescan Logistics as their listed peers. They are trading at a P/E of 13.57, 14.64, and 17.57 (as of September xx, 2023). However, they are not comparable on an apple-to-apple basis.
MERCHANT BANKER’S TRACK RECORD:
This is the 19th mandate from Fedex Securities in the last four fiscals (including the ongoing one). Out of the last 10 listings, 2 opened at discount, 1 at par, and the rest with premiums ranging from 0.21% to 108.93% on the date of listing.
Conclusion / Investment Strategy
The company is providing integrated logistics services with third-party contracts. It has posted an average performance as a partnership firm. For FY23 as a public limited entity, it has a working of just 108 days. Based on annualized FY23 earnings, the issue is exorbitantly priced. A tiny post-IPO equity base indicates a longer duration for migration to the mainboard. Simply stay away from this pricey “High-risk/No-return” offer.
Review Author
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.
(SEBI registered Research Analyst-Mumbai).
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
Email: dilip_davda@rediffmail.com
Courtesy: https://www.chittorgarh.com/
