Mahindra Logistics falls below issue price after quiet debut

At 10:05 am; the was trading at Rs 422, a 2% lower against its issue price of Rs 429 per share, after listed at par on the NSE

Mahindra Logistics (MLL) was trading at Rs 422 at 10:05 am,  below its issue price of Rs 429 per share, after making quite debut on the bourses.

On the National Stock Exchange (NSE), the stock listed at par of Rs 429, while on the BSE, it opened less than 1% higher at Rs 432. It touched low of Rs 420 on the NSE and of Rs 421 on the BSE. A combined 4.64 million shares changed hands on the NSE and BSE.

The initial public offering (IPO) of MLL was oversubscribed over 7.9 times with the reserved portion for qualified institutional buyers (QIBs) was oversubscribed 15.60 times, non-institutional investors 2.04 times and retail investors 6.10 times, the exchange data shows.

MLL, a subsidiary of Mahindra & Mahindra, raised Rs 829 crore through the issue, at higher end of price band of Rs 425-429 per share. Out of which, Rs 247 crore had raised from anchor investors. Since the issue comprises of only offer-for-sale or OFS, the company will not receive any proceeds from it.

MLL is one of the India’s largest third party logistics (3PL) solutions providers in the logistics industry. The company follows an asset light business model in which most assets (vehicles and warehouses) are owned /provided by its business partners. The company operates in two business segments i.e. supply chain management (SCM) and corporate people transport solutions (PTS).

“MLL has exhibited CAGR (compound annual growth rate) of 15% and 25% in top-line and adjusted bottom-line respectively, which is better than its players i.e. VRL logistics and Transport Corporation of India. In terms of returns, company has shown a better return profile (ROE & ROIC of 17.3% and 40% v/s. peer group avg. – 13% & 14% respectively). Based on its growth story, diversification strategy, strong parent repute and post GST (Goods and Service Tax) attractiveness of the logistics sector, we assign Subscribe rating to the issue,” Angel Broking said in IPO note.