Wise Travel (WTi) NSE SME IPO review (Apply)

Wise Travel (WTi) NSE SME IPO review (Apply)

• WTIL is a corporate transport service provider and also has convenient airport counters.
• The company operates on a B2B model and gaining more preference.
• It has also started its operations in Dubai.
• The company has posted growth in its top and bottom lines for the reported periods that hints towards likely future prospects.
• Investors may park funds for the medium to long term rewards.

ABOUT COMPANY:
Wise Travel India Ltd. (WTIL) the company stated its operations as transportation service provider with an objective to redefine urban mobility and metamorphose the fabric of daily commutes. The company is offering services under car rentals, employee transportation, end-to-end employee transport, flexible/fixed/monthly rental plans, convenient airport counters, fleet management. Mobility services, cutting edge mobility tech solutions, sustainable mobility, project mobility, and strategic consulting and advisory on mobility, etc. The company does its business on B2B module and gaining grounds with more and more corporates joining the bandwagon.

The company has Pan-India presence and has its own brand counters at 12 airports that includes Delhi, Bengaluru, Guwahati, Varanasi, Gwalior, Bhopal, Amritsar, Madhurapudi, Visakkhapatnam, Jaipur, Maduri and Jabalpur. Further, on September 13, 2023, the Company has established a One-Person Company LLC in the Emirate of Dubai, namely, WTI RENT A CAR L.L.C with the objective of providing car rental services.

As of September 30, 2023, it had a fleet of 6997 cabs, and as of October 31, 2023, it had 784 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 6441000 equity shares of Rs. 10 each (worth Rs. 94.68 cr. at the upper cap) It has announced a price band of Rs. 140 – Rs. 147 per share. The issue opens for subscription on February 12, 2024, and will close on February 14, 2024. The minimum application to be made is for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 27.05% of the post-IPO paid-up capital of the company. The company is spending Rs. 13.68 cr. for this IPO and from the net proceeds it will utilize Rs. 73.00 cr. for working capital, and Rs. 8.00 cr. for general corporate purposes.

The company has reserved 438000 equity shares for the market maker, 49000 shares for the eligible employees and from the rest, it has allocated not more than 2976000 shares for QIBs, not less than 894000 shares for HNIs and not less than 2084000 shares for Retail investors.

The issue is solely lead managed by Share India Capital Services Pvt. Ltd., and Beetal Financial & Computer Services Pvt. Ltd. is the registrar of the issue. Share India group’s Share India Securities Ltd. is the market maker for the company.

Having issued initial equity capital at par, the company issued further equity shares in the price range of Rs. 40 – Rs. 86 between March 2010 and March 2023. It has also issued bonus shares in the ratio of 9 for 2 in September 2023. The average cost of acquisition of shares by the promoters is Rs. 2.69, Rs. 2.73, and Rs. 4.30 per share

Post-IPO, company’s current paid-up equity capital of Rs. 17.37 cr. (17370837 shares) will stand enhanced to Rs. 23.81 cr. (23811837 shares). Based on the upper IPO price band, the company is looking for a market cap of Rs. 350.03 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total revenue/net profit of Rs. 44.07 cr. / Rs. 1.78 cr. (FY21), Rs. 89.71 cr. / Rs. 3.75 cr. (FY22), and Rs. 249.98 cr. / Rs. 10.27 cr. (FY23). For H1 of FY24 ended on September 30, 2023, it earns a net profit of Rs. 11.36 cr. on a total revenue of Rs. 190.18 cr. Thus its top and bottom lines posted growth for the reported periods. This also indicates the prospects for the company going forward.

For the last three fiscals, it has reported an average EPS of Rs. 3.90, and an average RONW of 18.26%. The issue is priced at a P/BV of 4.92 based on its NAV of Rs. 29.89 as of September 30, 2023. The IPO price band ad is missing the post-IPO NAV data for this IPO.

If we attribute annualized FY24 earnings to its post-IPO fully diluted paid-p capital, then the asking price is at a P/E of 15.39. Thus the issue appears fully priced.

For the reported periods, the company has posted PAT margins of 4.20% (FY21), 4.24% (FY22), 4.11% (FY23), 5.99% (H1-FY24), and RoCE margins of 8.96%, 17.57% 22.90%, 21.46% respectively for the referred periods.

DIVIDEND POLICY:
The company has not declared any dividends in the last five years. It will adopt a prudent dividend policy based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Shree OSFM and Mahindra Logistics as their listed peers. They are trading at a P/E of 43.2 and NA (as of February 09, 2024). However, they are not comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
This is the 10th mandate from Share India Capital in the current fiscals, out of the last 9 listings, 5 opened at par and the rest with premiums ranging from 50.82% to 120% on the date of listing.

Conclusion / Investment Strategy
The company is a corporate transport and employees’ logistics provider operating on a B2B model. It has also opened its office in Dubai to offer services over there. The company marked growth in its top and bottom lines for the reported periods. Based on FY24 annualized earnings, the issue appears fully priced. Considering future prospects based on its financial parameters, investors may lap it p for medium to long term rewards.

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