ColdEX IPO

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ColdEX IPO

7

Company Background

7.5/10

Price Band

7.0/10

Financial Health

6.0/10

Industry Situation

6.5/10

IPO Proceeds Usage

8.0/10

Pros

  • Spread Out Logistics Service
  • Asset Light Warehousing Model
  • Strong Relationship with Major Customers

Cons

  • Strong Competition
  • Average Financials
  • Labor Intensive Industry

ColdEX Basic Details

Before we delve into the details of ColdEx IPO, let’s have a quick look at some of the stats you should be aware of:

 

ColdEX Background

ColdEX Limited, which began its operations at Gwalior in the state of Madhya Pradesh in the year 1999, is the largest player in integrated food supply chain and distribution. The company’s 2 business segments are integrated distribution and fulfilment services.

The company caters to many different industry sectors like FMCG, confectionary including chocolates and baked goods, dairy, ice cream and frozen dessert, frozen food etc.

ColdEX Limited has 5 temperature controlled warehouses in Navi Mumbai, Bengaluru, Hyderabad. The company has been awarded several awards and recognition over the last few years including Partner of the Year Award from Burger King in the year 2018, Best Service Level Certificate Award from Cadbury in the year 2012.

ColdEX IPO Data Points

ColdEX IPO will open on (undisclosed) and close for subscription on (undisclosed). The IPO size will be of 26,66,408 Equity shares and the face value of each share will be ₹10.

The offer consists of a fresh issue of up to 10,10,000 equity shares aggregating up to ₹(undisclosed) and an offer for sale (OFS) of up to 16,56,408 equity shares by selling shareholder, Sabr India Investment Pvt Limited. (undisclosed) equity shares will be reserved for subscription by employees.

(undisclosed) equity shares will be reserved for market makers and (undisclosed) shares will be issued to investors.

The price band has been set at ₹(undisclosed) – ₹(undisclosed) per equity share. The offer price includes a premium of ₹(undisclosed) and is (undisclosed) times the face value of the equity shares.

The IPO size is expected to be up to ₹(undisclosed) crores. (undisclosed) lakh equity shares, aggregating up to ₹(undisclosed) lakhs will be issued to the public.

Out of these (undisclosed) lakh shares, (undisclosed) lakh equity shares, aggregating up to ₹(undisclosed) lakhs will be allocated to retail investors for up to ₹(undisclosed) lakh. The market lot size is of (undisclosed) equity shares and the shares will be listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Pursuant to a resolution passed on August 21, 2018, the fresh issue has been authorised by the Board of Directors and pursuant to a special resolution of the shareholders at the Extraordinary General Meeting held on August 21, 2018, it has been approved by them. The selling shareholder authorised its participation in the sale of its shares after a resolution passed by its Board of Directors on October 22, 2018.

ColdEX Financial Performance

The revenues of the company have been growing since the last 3 financial years. They have grown from ₹159.34 crores (proforma) in the financial year ended March 31, 2016, to ₹264.24 crores in the financial year ended March 31, 2018.

ColdEX reported losses of ₹9.21 crores and ₹16.21 crores in the fiscal years ended March 31, 2016, and March 31, 2017, respectively. However, the company earned a profit of ₹3.14 crores in the financial year ended March 31, 2018.

Here are the details:

As per the restated consolidated financial statements, the return on net worth of the company for the years ended March 31, 2018, March 31, 2017, and March 31, 2016, and period ended June 30, 2018 is 5.14%, (27.56)%, (12.62)% and 2.1% respectively.

The net asset value per equity share as of June 30, 2018, and March 31, 2018, is Rs. 69.85 and Rs. 68.46 respectively.

ColdEX IPO Objectives

The ColdEX IPO consists of two parts:

The proceeds from the offer for sale of equity shares will be given to the selling shareholder. Any proceeds from the offer for sale will not be received by the company for its operations.

The main objectives of the fresh issue of equity shares are as follows:

  • For investing in IT infrastructure
  • For funding of the working capital requirements of the subsidiary of the company, Coldex Logistics Private Limited
  • For making acquisitions and other strategic initiatives
  • For meeting expenses related to the general corporate operations.

Other than the above-mentioned objectives, the company will also benefit in terms of enhanced corporate image, brand name and increased visibility through ColdEX IPO.

ColdEX IPO Events

In case you are actively looking to invest in the ColdEx IPO, then you must be aware of some of the important dates related to different events around this IPO.

Here is the requisite information for your reference:

Filing of Draft Red Herring Prospectus (DRHP) November 27, 2018
Anchor List TBA
IPO Open Date TBA
IPO Close Date TBA
Finalization of Basis of Allotment TBA
Credit to Demat Accounts TBA
Listing at BSE and NSE TBA

 

ColdEX IPO Recommendation

Before deciding whether to invest in the ColdEX IPO or not, let us first discuss various key strengths and major risk factors for the business of the company.

One of the biggest strengths of the company is its logistics services that are integrated temperature controlled and spread across throughout India. Their temperature controlled warehouses have been strategically located in places near to areas which have good potential for sourcing and consumption of temperature sensitive products.

The company’s warehousing business is mainly operated on the basis of “asset-light” warehousing model due to which the company is able to provide a range of flexible, scalable, solutions and services in order to meet specific demands of their clients.

Another major strength of the company is its good and long-standing relationships with its major customers. Also, the company enjoys an edge over its competitors because of its domain expertise and technology. The company’s strategies for further growth in the country are quite promising.

Now, let us discuss some of the risks related to the business of the company.

The company, one of its subsidiaries, promoters, Directors, etc. are involved in certain legal proceedings pending at various stages and any adverse ruling in them may pose a risk to the overall profitability of the company.

The company may not be able to buy new warehouses for expansion at strategic locations at competitive rates which may affect the expansion plans along with other factors as well.

The operations of ColdEX are exposed to many legal, regulatory and statutory risks. Another major risk factor for the business is that the revenues are mainly dependent on a few customers. If they fail to retain one or more of their clients, it could have a negative impact on the profitability of the business.

Increased competition in the industry is another risk for the business.

From the financial point of view, the company has made losses in the last few financial years. Any disruption in technology may also adversely affect the profitability of the business because of its huge dependence on technology.

Also, since the industry in which the company operates is labour intensive, it is also subject to the risk of strikes, work stoppages and other labour related problems. The warehousing facilities of the company are on lease or license arrangements.

After the completion of the tenure, any failure in renewing leases or entering into arrangements may significantly disrupt operations of the company and will have adverse effects on the earnings of the company.

The company requires certain approvals, permits, licenses etc. in order to operate smoothly. Any delay or failure in obtaining them may have a negative impact on the functioning of the company.

After analysing various aspects of ColdEX Limited, it can be said that investors should remain cautious, go through the Draft Red Herring Prospectus for further important details of the company and may choose to subscribe to the IPO for long-term gains.

In case you are looking to apply for this IPO or just want to invest in the share market, let us assist you in taking the next steps further:

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ColdEX Management Information

Currently, there are 5 Directors on the Board of ColdEX Limited. Mr Gaurav Jain is the Managing Director of the company. He completed his degree of Bachelors in Electronics from the University of Poona and holds an MBA degree in Infrastructure Management from the Indian Institute of Information Technology and Management, Gwalior.

He has been the Director of the Board of ColdEX since March 1999.

ColdEX IPO Advisors Information

Pantomath Capital Advisors Private Limited is acting as Book Running Lead Manager to the issue. Link Intime India Private Limited is acting as the Registrar for the ColdEX IPO.

AZB & Partners is acting as the legal counsel to the selling shareholder, Sabr India Investment Pvt Limited and Messrs. Kanga and Company is acting as the legal counsel to ColdEX Limited.

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ColdEX IPO
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