Mahindra Group’s logistics arm Mahindra Logistics might list on the Indian stock exchanges in FY2019. In an interview, logistics firm’s chief executive Pirojshaw Sarkari said if Mahindra Logistics IPO does not materialize, the company may also be put on block. the executive declined to offer more details about the size of the public offering.
“There are certain milestones which will be achieved in 2017-18 and in the next fiscal, we will either come out with an IPO or do a strategic alliance which may involve partnership with an overseas player”
– Pirojshaw Sarkari
Sarkari was referring to the target of achieving at least 50% revenues from non-Mahindra entities. Mahindra Logistics generated 55% of the INR2,600 crore (INR26 billion) revenues in FY2017 from companies within the group. The logistics firm also reported a pre-tax profit of INR100 crore in the latest FY. Even though the business from the Mahindra group is likely to grow in FY2018, Sarkari said stronger business growth outside the group will help it in achieving the revenue split target.
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The executive added that the company was being approached by bankers for a stake sale, although no decision has been made as of now regarding investment bank. Accordingly, paperwork will be filed once the revenue milestones are achieved.
Mahindra Logistics counts private equity (PE) investor Kedaara Capital among its investors. The PE firm acquired 23% in Mahindra Logistics in 2014 for an investment of INR200 crore. Mahindra Logistics IPO or divestment will help Kedaara Capital in exiting the three-year old investment.
Mahindra Logistics works with 300 trucking partners and operates on an asset light model. It has presence in freight forwarding, third-party logistics (3PL), road transportation, cold chains and e-commerce.
India’s red hot IPO market
As and when it gets regulatory approvals, Mahindra Logistics IPO will add to India’s strong IPO pipeline. Currently, there are 14 companies with SEBI approvals to bring their IPOs while another eight are being scrutinized. Last calendar year saw 27 listings through mainboard IPOs.