NCL at the upper price band is likely to trade at P/E and EV/EBITDA of 23.2x and 6.2x respectively its FY2015 earnings. As compared with the large players like Container Corporation of India and Gateway Distriparks, the return ratios are lower as these players enjoy premium positioning due to economies of scale. We believe the company’s expansion plans which are likely to be materialised during FY2017 will significantly increase its capacity and lead to higher earnings. Further, the logistics sector has been in the limelight on account of proposed dedicated freight corridors, Goods and Services Tax (GST) policy and huge investments in the sector. Consequently, considering the company’s line of business and growth strategy we have a positive view on the company.
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