Rising significance of logistics as a strategic function coupled with lower 3PL penetration, rising consumerism in India, regulatory changes like GST implementation, government focus on ‘Ease of Doing Business’ etc. go in favour of larger organised players like FSC. On the flipside, expensive valuations along with significance dependence of group entities and stretched working capital go against FSC. OFS worth Rs6.5bn representing 24.43% of share capital (Rs1.3bn from Promoters & Rs5.2bn from PE investor Griffin Partners) values the company at 57x FY17 & 40x FY18E PER, respectively. We like the space; however, the valuations are stretched and one should subscribe only with a longer term investment horizon.
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