Chartered Speed IPO Review

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Chartered Speed Limited Basic Details

Before we start analyzing the Chartered Speed IPO, here are a few quick data points for your reference:

 

Chartered Speed Limited Background

The company began its operations in the year 2010 and provides passenger mobility solutions for different modes of surface transport. The company, which started its operations with 15 buses, now has a fleet of more than 750 passenger vehicles and 430 bikes and is one of the leading players in the market.

Inter-city passenger mobility solutions are provided by the company using their bus operations that are mainly focused in the central and western parts of India. They are also expanding their operations in North East India.

They also provide city buses and Bus Rapid Transport System (BRTS) to State Transport Undertakings (STUs). The other segments catered by the company are school and staff buses, automated public cycle sharing systems and rental and self-drive cars.

The company also has an in-house facility for designing and building buses. Their transportation network is spread across 26 cities in the 4 states of Maharashtra, Gujarat, Rajasthan and Madhya Pradesh.

The business is coming up with an IPO in the next few days that will be launched across NSE & BSE. In this detailed review, we will talk about multiple aspects related to this IPO including company background, financial health, risks and strengths related to this business.

Hopefully, by the end of this review, you will be able to take a decision on whether go ahead with the Chartered Speed IPO or not.

Chartered Speed IPO Data Points

Chartered Speed IPO will open on (undisclosed) and close for subscription on (undisclosed).

The IPO size will be of (undisclosed) lakh Equity shares and the face value shares will be ₹10 each share. The price band has been set at ₹(undisclosed) – ₹(undisclosed) per equity share.

The offer price includes a premium of ₹(undisclosed) and is (undisclosed) times the face value of the equity shares. The IPO size is expected to be up to ₹273 crores.

The offer consists of a fresh issue of up to (undisclosed) lakh equity shares aggregating up to ₹225 crores and an offer for sale of up to (undisclosed) lakh equity shares, aggregating up to ₹48 crores by selling shareholders.

• Up to (undisclosed) equity shares, aggregating up to ₹24 crores are being offered by Mr Pankaj Kumar Gandhi and;
• the rest (undisclosed) lakh shares, aggregating up to ₹24 crores are being offered by Mrs Alka Pankaj Gandhi. 

The market lot size is of (undisclosed) equity shares and the shares will be listed on the National Stock Exchange and the Bombay Stock Exchange.

Pursuant to a resolution passed on September 10, 2018, the fresh issue has been authorised by the Board of Directors and pursuant to a special resolution of the shareholders at the Extraordinary General Meeting held on September 14, 2018, the offer has been approved by them.

The selling shareholders approved the sale of their shares through their consent letters dated September 14, 2018.

Chartered Speed Limited Financial Performance (Consolidated)

The company is in a good financial health which is reflected by its key numbers.

Total revenues and total assets of the company have been increasing consistently for the last 3 years. The company has been profitable in the last 3 years.

 

There was a slight dip in profit after tax from ₹14.15 crores in the financial year ended March 31, 2017, to ₹12.44 crores in the financial year ended March 31, 208.

As per the consolidated financial statements, the return on net worth of the company for the years ended March 31, 2018, March 31, 2017, and March 31, 2016, is 21.33%, 32.22% and 36.65% respectively. The net asset value (NAV) per equity share as of March 31, 2018, is ₹21.10.

Chartered Speed IPO Objectives

The Chartered Speed IPO consists of two parts:

The proceeds from the offer for sale of equity shares will be given to the selling shareholders. Any proceeds from the offer for sale will not be received by the company for its operations.

The main objectives of the fresh issue of equity shares are as follows:

• For buying passenger transportation vehicles
• For repayment or prepayment of some borrowings taken by the company
• For investing in one of their subsidiary companies, Chartered Bus Private Limited and for repayment or prepayment of some borrowings taken by it
• For buying Information Technology software and types of equipment
• For meeting expenses related to the general corporate operations

Other than the above-mentioned objectives, the company will also benefit in terms of enhanced corporate image, brand name and increased visibility through Chartered Speed IPO.

Chartered Speed IPO Events

For your reference, here are the specific dates that you must be aware of, in case you are looking to invest in this IPO:

 

Chartered Speed IPO Recommendation

Now, let us discuss some of the key strengths and risks related to the business of Chartered Speed Limited.

One of the major strengths of the company is its diverse passenger mobility solutions serving lakhs of passengers through intra as well as inter-city buses, car rental services and public smart bike sharing services.

The current contracts with different clients have considerable residual period left and they are also being awarded new routes and projects which show that the revenues of the company are going to be coming in good numbers in the coming years.

The large fleet in terms of number and the high density of their operations in the areas in which they serve and their brand recall are factors that help them in achieving good customer satisfaction by maintaining their high standards of services.

The company shares good relationships with its customers and suppliers and also has a good track record of performance over the past years.

The company focuses on backward integration which helps them to decrease their costs and increase the efficiencies of their buses. The fuel efficiency of their fleet of vehicles has been decreasing continuously from 46.08% in the fiscal year 2014 to 39.78% in the fiscal year 2018.

The company’s revenues from operations have grown at a CAGR of 18.89% over the last 5 financial years. Their EBITDA and PAT grew at CAGR of 23.03% and 35.91% during the same period.

Now, let us some to the risk factors related to the company.

The company is dependent on a significant amount of revenues coming through projects awarded by government agencies and other agencies which derive their funds from state governments. Therefore, any adverse changes in government policies for the company may affect their operations and revenues.

One of the largest operating expense of the company is of fuel. Any fluctuations in costs related to fuel may affect the profitability of the company (like its happening in the last few weeks).

The company is dependent on the states of Gujarat and Madhya Pradesh for a significant portion of their revenues. Any adverse development in these states may have a negative impact on the financial health of the company.

Some of the subsidiary companies of Chartered Speed Limited have incurred losses in the past few years. Any future losses may impact the reputation and brand name of the business.

The company, its Directors, etc. are involved in certain legal proceedings which are pending at different levels and any adverse ruling in them may pose a risk to the overall profitability of the company.

Increases in drivers’ compensation and an increase in the prices of new vehicles may adversely affect the operations of the company. The company also faces intense competition from state-owned road transport corporations and new entrants as well.

The company requires certain permits, licenses, etc. in order to operate smoothly. Any delay or failure in obtaining them may have a negative impact on the functioning of the company.

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After analysing various aspects of the company, it can be said that investors may choose to subscribe to the Chartered Speed IPO for a long-term basis. (Although you may opt for short-term returns as well, however, you need some risk appetite for that).

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Chartered Speed Limited Management Information

Currently, there are 6 Directors on the Board of Chartered Speed Limited.

Mohib Nomanbhai Khericha is the Chairman and Independent Director of the company. He is a Commerce Graduate from Gujarat University and is a fellow member of ICAI. He possesses an experience of more than 4 decades in the field of capital structuring, restructuring, financial management and loan syndication.

He is also a Managing Director of the company, Chartered Capital And Investment Limited, which is into investment banking.

Chartered Speed IPO Advisors Information

Equirus Capital Private Limited is acting as Book Running Lead Manager to the issue. Link Intime India Private Limited is acting as the Registrar for the Chartered Speed IPO. M/s. Crawford Bayley & Co. is acting as legal advisor for the offer.