Snowman Logistics shares soar 70% on Street debut

Stock is trading at Rs 80 compared to IPO price of Rs 47

Snowman Logistics, the country's largest cold storage warehousing chain, saw its shares soar 70 per cent at stock market debut on Friday.

Promoted by Gateway Distriparks, it raised nearly Rs 200 crore from the Initial Public Offer (IPO), which was subscribed around 60 times. The scrip closed at Rs 79.80, up 70 per cent compared to its issue price of Rs 47 a share.

There weren’t many sellers of Snowman shares and the stock got locked at the five per cent upper limit to its discovered price of Rs 76. After recent rule changes, new listings with an issue size of less than Rs 250 crore have to trade in a band of five per cent to the price discovered during the pre-open call auction.
 

GOOD TIDINGS

• Shares end at Rs 80 versus IPO price of Rs 47
• Snowman’s Rs 197-crore IPO saw bids of more than Rs 10,000 crore
• Company in the process of expanding cold storage warehouses
• Cold storage warehousing industry growing at a rapid pace
• Snowman IPO positively impacts shares of other logistic firms

Investment bankers said there was huge demand for the company’s shares in the secondary market, as very few IPO applicants got an allotment. The retail investor category, with 260,000 applications, was subscribed 41 times, the rich investor category was subscribed 220 times and the institutional investor segment was subscribed 17 times. One of every 18 retail applicants got an allotment of only 300 shares in the IPO.

Analysts said investors were attracted to Snowman’s business model and long-term growth prospects. It is in the process of expanding its temperature-controlled and ambient warehouses.

The cold storage warehousing and transportation industry is expected to expand from Rs 15,000 crore at present to Rs 65,000 crore by 2017. The company’s business model is likely to benefit from the fast-growing processed food industry. Snowman’s revenues and profits have grown at a compounded annual growth of 45 per cent and 53 per cent, respectively, between 2009-10 and 2013-14.

Market experts said the stellar listing of Snowman will help boost investor sentiment towards coming IPOs. Snowman's IPO also positively impacted other listed logistics companies, such as Gati, Container Corp and Balmer Lawrie and Co, whose share prices have seen a good run in recent weeks.

Sharda Cropchem, which just concluded a Rs 350-crore offering, is also expected to list at a huge premium, going by the prices quoted in the grey market.

Entertainment firm Shemaroo and apparel retailer Monte Carlo are next in line to launch their public offerings. Also, the government is about to begin its mega disinvestment drive with Steel Authority of India, followed by Oil and Natural Gas Corporation and Coal India.