AQUA LOGISTICS

 

Company's Plans to Split Shares & Issue Fresh Shares Will Attract More Action on the Counter

 

AQUA LOGISTICS, a recently listed midcap player in the logistics sector, is witnessing higher investor interest following the current boom in demand from key user industries including auto, construction and pharma.

   The stock touched a 52-week high of Rs 545 intra-day on Thursday before it ended the day at Rs 541.3. Since its listing on February 23, the stock has more than doubled compared to an 8.7% rise in the broader Sensex.

   During the same period, the stock of its larger peer Transport Corporation of India gained 32% while Allcargo Global Logistics scrip declined 6.2 %.

   Apart from the strong growth in the domestic economy, investor sentiment has also been boosted by Aqua Logistics' recent expansion into the booming East Asian market. As part of this strategy, Aqua Logistics had recently completed the acquisition of a 60% stake in three Hong Kong-based companies for $7.1 million (nearly 32.5 crore). The company via its recent IPO had raised Rs 150 crore and funding this acquisition should not be a problem.

   However, Aqua Logistics' operating margin declined 40 basis points 10.1% in FY10, despite the year-on-year 51% jump in its income from operations. Pressure on its operating margin was due to higher operating expenses. Nevertheless, the company's net profit increased 84% to Rs 20.5 crore in FY10.

   Aqua's stock may continue to see some more action in the coming days given its plans to split shares. The company's board is considering the sub-division of its share, from the current face value of Rs 10. It is likely to declare the exact split ratio next week. Though the move will not change its paid-up capital, the number of traded shares will increase, adding to the stock's liquidity.

   In addition, the company plans to seek shareholders' approval for a fresh issue of shares of a size not exceeding $70 million (nearly Rs 320 crore). Aqua's stock currently trades at 37.7 times its trailing 12-month earnings. This makes it one of the most expensive stocks in the sector.