Can Horizon Parks IPO deliver long-term growth for high-risk investors?

ET Intelligence Group: Horizon Industrial Parks, a logistics infrastructure developer, plans to raise ₹2,600 crore through a fresh issue to repay debt and general corporate purposes. The promoter group's stake will fall to 75.4% after the IPO from 88.7%. The company develops and leases large warehouses and industrial facilities. Top four cities contribute about four-fifth to the total revenue. Nearly 43% of the revenue comes from top 10 customers. The company is yet to record profits. After the IPO, debt is expected to reduce significantly. Given the growth prospects for the sector and expected deleveraging, investors with a high-risk appetite may consider the issue from a long-term perspective.133284199BusinessIncorporated in 2009, Horizon Industrial Parks is the country's largest industrial and logistics infrastructure developer, owner and operator by total network, according to Jones Lang LaSalle Property Consultants (India). It also offers turnkey solutions, solar energy solutions, cold storage facilities, and on-site staff accommodation. It owns 45 logistics and industrial assets across 10 major Indian cities, totalling 58.6 million square feet. It offers three core asset categories such as fulfilment centres for warehousing and logistics operations, industrial facilities for manufacturing and industrial occupiers, and in-city centres catering to urban distribution and last-mile logistics needs.Read more | IPO rush: 5 companies to raise Rs 5,499 crore next week; Shiprocket, 4 others to listFinancialsRevenue from operations rose 73.8% annually to ₹691.4 crore and operating profit before interest, tax, depreciation and amortization (EBITDA) grew 100.3% annually to ₹607.8 crore between FY24 and FY26. EBITDA margin expanded to 79.2% in FY26 from 61.7% in FY24. In FY26, revenue grew 77.1% and EBITDA jumped 79.2% on a year-on-year basis. Cash flow from operations nearly doubled to ₹464.1 crore in FY26 from ₹119.3 crore in FY24. The company's net loss widened to ₹203.6 crore in FY26 from ₹162.2 crore in FY24. The profitability is expected to improve after repayment of debt. Finance cost as a percentage of revenue reduced to 78% in FY26 from 92.1% in FY24. Interest outgo relative to EBIT was 89% in FY26 compared with 139% in FY24.ValuationThe company does not have any direct peers listed in India. Price-to-earnings multiple will not help since the company is yet to record profits. The price-to-sales (P/S) multiple works out to 25. The enterprise value (EV)-to-Ebitda multiple moderated to 38.7 times in FY26 from 137.4 times in FY24 though net debt nearly doubled to ₹6,246.5 crore from ₹3,524.6 crore. The softening in the multiple implies that higher borrowings resulted in incremental operating profit during the period.