Snowman Logistics had a firecracker of a listing on Friday, shooting 68 per cent higher. Snowman — the cold-chain business of Gateway Distriparks — seems set to gain over the long term. Growing demand for processed foods, frozen vegetables and dining out should spur the sector. The issue price was ₹47 and the stock closed at ₹78.75.

The issue saw more interest from retail investors, whose portion was oversubscribed 41 times than institutional investors, who oversubscribed 16 times. Of the shareholding now, domestic and foreign institutions account for 19 per cent of the holding, with retail investors holding a good 40.7 per cent.

Snowman is among the few national players in a very fragmented market. It is also steadily expanding its warehouse network; 65 per cent of its issue proceeds of ₹197 crore will fund expansion.

Snowman’s revenue and net profit expanded at a fast clip of 50 and 54 per cent annually over the past three years. Being debt-free, interest costs are not a drag.

But the stock’s euphoric debut is still quite bewildering. The issue itself was not cheap. Next, assuming that earnings grow in line with the rate last fiscal, the stock is at an expensive 48 times earnings for 2014-15. It is also a small-cap stock with a market capitalisation of ₹1,310 crore. Gateway Distriparks (20.5 times) and Concor (27.6 times) trade at lower valuations, while their scale of operations is far larger.

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