Mahindra Logistics may be an Expensive Bet
Bosch, BMW India, 3M India, and Mercedes-Benz India.
In the past five years, the company’s turnover increased at a compounded annual growth rate (CAGR) of about 15% to ₹ 2,666 crore in FY17. Its net profit expanded at a CAGR of about 25% in the same period to ₹ 60 crore in FY17. Profit excludes legal and professional fees.
On the valuation front, considering FY17 earnings, the IPO commands price-earnings(P/E)multipleof 64.8at the higher end of the price band. The average P/E of listed peers based on FY17 earnings works out to 48.1.
Thepremiumvaluationcanbeattributed to Mahindra Logistics’ superior return on equity (adjusted ex-surplus funds)of 33.8%incomparisonwiththe average of 16.5% for listed entities.