Deccan Transcon Leasing Limited, a company providing end-to-end logistics and shipping solutions, had a solid debut on the NSE SME on September 24, 2024, with its share price opening at ₹115.50, a 7% premium over its upper price band of ₹108. The company's IPO, launched between September 13 and September 19, 2024, garnered significant investor interest, being oversubscribed 102 times.

IPO Details

The Book Built Issue for Deccan Transcon raised ₹65.05 crores, comprising a Fresh Issue of 55.24 lakh shares worth ₹59.65 crores and an Offer for Sale of 5 lakh shares totaling ₹5.4 crores. The company offered shares at a price band of ₹102 to ₹108 per share, with the minimum investment lot set at 1,200 shares. Retail investors needed to invest a minimum of ₹129,600, while HNIs required a minimum of ₹259,200 for 2 lots.

Financial Performance

Deccan Transcon Leasing has shown steady financial growth in recent years:

Revenue: Increased from ₹15,319.40 lakh in FY22 to ₹18,061.76 lakh in FY23, maintaining solid performance in FY24.

EBITDA: Grew from ₹881.44 lakh in FY22 to ₹1,901.65 lakh in FY24, demonstrating strong operational efficiency.

PAT: Increased from ₹519.10 lakh in FY22 to ₹1,181.89 lakh in FY24, reflecting profitability growth.

These consistent financial metrics underscore the company’s solid performance in the freight and logistics sector, providing logistics solutions to clients across various industries.

Valuation Metrics

For the Deccan Transcon IPO, the company is issuing shares with a pre-issue EPS of ₹6.87 and a post-issue EPS of ₹5.20. The pre-issue P/E ratio stands at 15.72x, while the post-issue P/E ratio is 20.76x. These figures compare favorably with the industry P/E ratio of 23.33x.

The company's ROCE for FY24 is 41.43%, and ROE is 45.03%, indicating that the company is well-positioned for future growth.

Subscription and Anchor Investors

The IPO saw significant demand across categories, with an oversubscription of 102 times. The company also raised ₹15.12 crore from Anchor Investors at a price of ₹108 per share, with 1,400,400 equity shares allocated to this group.

Grey Market Premium (GMP)

The Grey Market Premium (GMP) for Deccan Transcon Leasing hovered between ₹50 and ₹55 before listing. This suggested a potential 45%-50% listing gain, driven by strong demand during the subscription period and the company’s positive financial outlook.

Investment Outlook

With the company’s consistent financial growth, solid demand for its IPO, and fair valuation metrics, the Deccan Transcon Leasing IPO presents a strong opportunity for listing gains and long-term investments. The company's leadership in logistics and tank container leasing places it in a favorable position to capitalize on market trends.

Conclusion

Deccan Transcon Leasing’s IPO debut at a 7% premium and its oversubscription by 102 times reflect the strong investor sentiment surrounding this growing logistics player. Given its solid financials and positive market positioning, this IPO is recommended for those looking to invest in the logistics sector.

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