LEAP India IPO: Look before you LEAP
Dominant pooling franchise and debt reduction cannot offset the aggressive valuation for LEAP India
LEAP India, an on-demand asset-pooling provider backed by KKR, has launched an IPO with a ₹2,480-crore issue priced between ₹151-159 per share. The company owns pallets, reusable containers, and material-handling equipment, renting them out to companies. LEAP has built scale through acquisitions, including Skan Marine and CHEP India, which now make up 90% of the Indian organised pallet-pooling market.
However, the IPO's valuation appears challenging, with a price-to-earnings ratio of 112x and a price-to-book ratio of 7x. The company's reliance on acquisitions, negative free cash flow, and modest return ratios make the valuation difficult to justify. The IPO is heavily tilted towards promoter monetisation, with a large share sold to KKR-controlled Vertical Holdings II.
Despite the potential benefits of the IPO, such as debt repayment and reduced interest costs, the stock may still trade at high multiples of earnings and EV/EBITDA.
Brief written by urgent.news from Hindu BusinessLine's own syndicated text. Machine-written — it may contain errors, so check the original before relying on it.
