Shares of Snowman Logistics continued their northward journey and surged to a 52-week high of Rs 52 on the BSE on Thursday on Thursday on BSE amid favorable demand prospects. In the last eight trading days, the stock of the logistic company has declined 77 percent from the level of Rs 35.60 on November 9, 2020.
At 02:30 pm, Snowman Logistics was trading up 7 per cent at Rs 61.50, down 1.3 per cent on the S&P BSE Sensex. By the time this report was written, trading volume over the counter had doubled, along with a combined 8.04 million shares on the NSE and BSE.
According to India Ratings and Research (Ind-Ra), demand for single-point end-to-end cold chain services by large multinationals is increasing. This has led to the emergence of organized private players such as Snowman Logistics. In addition, the demand for temperature controlled services by the food industry is increasing due to increasing urbanization and changing consumer consumption patterns.
In addition, some of its regular customers such as McCain Foods (India) Private Limited, Ferrero India Private Limited. Ltd, and Hindustan Unilever Ltd have to maintain high standards with independent audits and inspections, leading to greater reliance on organized players, it said in a report.
Further, to meet the growing demand for e-commerce logistics in the food and pharmaceutical sector, the company has created a separate vertical in FY15. Ind-Ra expects the company to demand a growing presence of quick-service restaurants and new avenues such as pharma and healthcare sectors following the outbreak of Quid-19.
The rating agency has confirmed Snowman Logistics’ long-term issuer ratings in ‘Ind A’, while resolving the ratings watch developed (RWE) with a stable outlook.
In the April-June quarter (Q1FY21), the company’s occupancy level was at a high of 89 percent, resulting in strong revenue growth and strong margins in the warehousing segment in the April-September period (H1FY21). However, the lack of drivers in the first few months of FY21 affected revenue and margins in Q1FY21 which are back in Q2FY21.
EB1DA (earnings before interest, tax, depreciation, and amortization) margins remained strong at 28 percent in H1FY21 versus 26 percent in H1FY20. With the company’s focus on capacity expansion (adding 12,000 pallets in the next year); Establishment of dedicated facilities for e-commerce players such as Amazon where the revenue model exceeds the cost and also reimburses the capex; Increasing the focus on margin-extractive segments such as pharmaceuticals, the agency expects Snowman Logistics’ business profile to improve and the financial profile to remain strong in the medium term. Click here to read the full report