Crisil assigns A/stable rating to long-term bank facilities of Snowman Logistics

Mumbai (Maharashtra) [India], Apr 20 : Crisil has assigned A/stable rating to long-term bank facilities of Snowman Logistics, reflecting its established market position in the temperature-controlled logistics segment and benefits from continued parentage due to operational and strategic linkages with its parent Gateway Distriparks Ltd (GDL).
The rating also factors in Snowman's adequate financial risk profile with improving operating profitability and prudent funding mix for proposed capacity expansion plan, said Crisil.
But these strengths are partially offset by exposure to funding risks related to capex, susceptibility to competition and volatility in end-user segments.
Post settlement of agreement between Snowman and Adani Logistics Ltd in July last year, GDL is the single largest owner with 40.25 per cent stake in the company and substantial control on the board.
The rating continues to benefit from moderate operational and strategic linkages with GDL as both the companies offer complementary services in the logistics industry, thereby providing cross-selling opportunities to customers.
GDL is one of the largest private players in the container freight station, railways and inland container depot businesses in India. Snowman is well-established among the leading organised players, providing temperature-controlled services in India.
As on December 31, 2020, the company had warehousing capacity of 1.06 lakh pallets in 31 strategic locations across 15 cities. It also had 264 refeers providing last-mile, inter-city distribution services through a consignment agency model.
It caters to marquee customers in diversified end-user industries like seafood, pharma, dairy and quick service restaurant (QSR). The company is also setting up dedicated warehouse facilities for large e-commerce players, thereby providing steady revenue and profitability.
Snowman's revenue has grown at compound annual growth rate (CAGR) of 8 per cent over the three fiscals through 2020 to Rs 241 crore, driven by healthy capacity utilisation and increasing realisation in its warehousing business.
Revenue during the first nine months of this fiscal fell 3 per cent year-over-year to Rs 173 crore while operating profitability improved to 21.4 per cent from 16 per cent in the same period last year, mainly due to improved utilisation of its warehouses to 86 per cent from 79 per cent last year.
Crisil said healthy utilisation and increasing focus on margin-accretive end-user segments like pharmaceuticals and seafood are expected to sustain operating profitability at 22 per cent over the medium term. With improvement in operating performance, debt protection metrics are expected to improve over the medium term.
The company's stock closed 9.26 per cent higher today on BSE Ltd at Rs 50.15 per unit.