@rk1771 wrote:
About the Company:
Lancer Container Lines Limited is Liner (Non-Vessel Operating Common Carrier or NVOCC) & Agency House in India. Lancer offers a wide range of container size and types ranging from 20 feet and 40 feet sizes and from Dry Van to Special Equipment. It has current inventory of more than 8900 containers to suit all types of customer needs. Lancer also provides end-to-end ocean freight services. It also provides air freight services. The company has also diversified in container trading and transportation of odd dimensional cargo, liquid cargo in flexi-bags, empty container handling and storage, container modification and refurbishment etc. The company operates in a highly competitive and commoditized business environment. The company got listed on SME platform, and shifted to main bourses in 2018.
Financials:
Despite being a part of highly competitive business environment; financial performance of the company has been highly encouraging. The Company has a debt of around 30 crores, with debt equity ratio of 1.28. Interest coverage ratio is at comfortable level of 5.69.The company is cash flow positive. Cash flow from operating activities has been more than 20 crores [as compared to PAT of 8 Crores].
Asset turnover ratio of the company is around 8. At this asset turnover, a company can generate decent return on equity even with a profit margin of 3-4 percent [ROE= Asset turnover * npm]
Management:
I don’t know much about management, but found some pointers in Annual report about quality of management. They are,
(i) They pay Rs. 1000/- per board meeting to independent directors.
(ii) Salaries taken by them looks reasonable. Ratio of Directors remuneration to median remuneration is surprisingly decent figure of 12.99
(iii) Found reporting to be useful, without camouflage and clear.
Looks like that management is believable.
Valuation:
The company is valued around market cap of 65 crores; almost 1/3rd of sales. Price earning of 8; for a company growing at a fast pace with 30% RoE is reasonable.
Opportunities:
(i) The industry is growing at the rate of 11%, whereas the company has grown at a much faster pace.
(ii) Third party transportation/logistics is increasing at a high rate.
(iii) Government initiative on logistics sector.
(iv) Strict financial discipline of the company, necessary to operate in an industry working on thin margins.
Risk:
(i) Thin margins.
(ii) Extremely competitive environment.
(iii) Any slackness in financial discipline is fatal.
Other Information:
Promoters are holding almost 75% of the shares. HNI shareholding is increasing in the company.
[Disclosure- Invested]
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