FLOMIC

GLOBAL
RESEARCH
REPORT

VANSH KHANUJA
10-09-2022
 DISCLAIMER

I have bullish investments in Flomic Global ltd.

(hereinafter referred to as ‘The Company’ and/or
‘Flomic’). This report is based upon my reading of the
company’s annual report and other public
documents. I have endeavored to distinguish clearly
between facts and opinions and tried my best to
include all necessary information. If, however, I have
made any errors, or if any readers have additional
facts that I have not considered, I would welcome
hearing from you. As to opinions expressed here,
others may disagree with some or all of them. I urge
anyone interested in the company to read its public
filings and to consult whatever other sources they
deem appropriate in order to form their own
opinions on the topics covered in this report.

This report is not intended as investment

advice to anyone.

http://thesecurityanalyst.weebly.com
 TABLE OF CONTENTS
1) Business Analysis
2) Financial Statements Analysis
3) Valuation
4) Conclusion

1) BUSINESS ANALYSIS
Flomic global Logistics ltd. is a logistics company
with a market capitalization of INR 100 Cr. and
INR 376 Cr in revenues. The company is listed
on the Bombay Stock Exchange and is currently
trading at Rs. 139.60 (as on Sep 10, 2022). The
company was incorporated on April 30, 1981.

The company has very low borrowings but due

to the asset heavy nature of the logistics
business, a lot of cash is needed to satisfy the
lease obligations. Also, logistics is a low margin
business. The company needs to maintain a
http://thesecurityanalyst.weebly.com
a steady growth of revenues to consistently stay
profitable.

The company offers a wide range of services

spanning air, land and water movements and
also owns warehouses (14) across India for
warehousing services.

Flomic is nowhere near the top

logistics companies in India. The 27.5%
company has a lot of room to
grow. With growing e-commerce Promoter's
and rise in trade agreements, the holdiing
industry is growing at a rate of
400
6.5% CAGR globally. The Indian
logistics sector is growing at
300
10.5% CAGR since 2017 and is
estimated that this market would 200

grow to USD 380 billion in 2025

from USD 250 billion in 2021. The 100

company can easily grow at rates

higher than this, given the small 0
2021-2025
size
http://thesecurityanalyst.weebly.com
 2) FINANCIAL STATEMENTS
Revenues Profits
40,000 1,000

750
30,000

500

20,000

250

10,000
0

0 -250
2020 2021 2022 2020 2021 2022

Revenues for FY-2022 were 376 Cr and profits

were 9.6 Cr. Revenues for FY-2021 were 166 Cr
and profits were 2.4 Cr. Profits were negative
before that due to covid in FY2020. The
company had started rapid expansion plans (to
become the leading warehouse player in the
country) post-covid.
http://thesecurityanalyst.weebly.com
Coming to the balance sheet of the company, I
see a couple of red flags here. The total assets
equals (2021) 98 Cr out of which 43 Cr are
receivables. This is surely a cause of concern
because it directly questions the company's
revenue recognition policy. If revenues are not
properly matched, then surely trade receivables
would jump. Also, the company's revenues have
increased at a really rapid pace.
For 2022, this figure is even more extreme, 73
Cr in receivables out of 139 Cr in assets.

The company also has high fixed obligations

with 17Cr in borrowings and 42 Cr in lease
liabilities. A few bad quarters and the company
will be in deep trouble.

Coming to Free Cash flows - the company

generated 5.35 Cr in FY-2022 and 8.64 Cr in FY-
2021 (The discrepancy is due to higher trade
receivables). But this data is without factoring in

http://thesecurityanalyst.weebly.com
the payment for lease obligations. Considering
the fixed nature of payments and the amounts
involved, I will deduct lease payments to
calculate free cash flows. The adjusted figures
are: FY2022 - (8.5) Cr, FY2021 - (0.39) Cr.

The company has taken short term loans in the

previous couple of years. Obviously this is a
working capital loan to finance the daily
expenses. This company is very risky and I
would not advice anyone to invest amounts
they cannot afford to lose.

4) VALUATION
I will use the FCF's [without adjustments] to
value this company. The risk is high but that can
be managed with portfolio management.

DCF calculation for this company is in the next

page -

http://thesecurityanalyst.weebly.com
 Year FCF FCF (PV)
0 5

1 6 5.2
2 7 5.5
3 8 5.7
4 9 6.0
5 10 6.2
6 12 6.5
7 13 6.8
8 15 7.1
9 18 7.5
10 20 7.8
Terminal Year 23 9.0

DCF Calculation for Flomic Global

Terminal Value - 297 Cr

Present value = 114 Cr.
IBV = 179 Cr (Terminal Value + Sum of FCFs)

http://thesecurityanalyst.weebly.com
 5) CONCLUSION
Flomic Global can grow at higher rates in the
future and will qualify as an investment as long
as exposure is limited. Do note that the
company has a weak balance sheet and can
probably deteriorate more in the future. It's
important to regularly check the quarterlies to
stay updated. Also, the company does not
qualify as a long-term investment, you should
sell as soon as the market capitalization crosses
the 150-175Cr mark. Only invest in this
company when you've understood all the risks
associated with it and you are prepared for the
volatility such stocks offers.

vansh_khanuja03
@KhanujaVansh
Vansh Khanuja
vanshkhanuja78@gmail.com

http://thesecurityanalyst.weebly.com