 "TVS Supply Chain Solutions, TVS SCS,")
The initial public offering (IPO) of TVS Supply Chain Solutions, part of TVS mobility group, will open for subscription on Thursday, August 10. The company has fixed issue's price band at Rs 187-197 per share. The public issue will close subscription on August 14, 2023.
An integrated supply chain logistics solution provider, the multi-national company's solutions span across entire value chain - from sourcing to consumption. Globally, it has provided supply chain solutions to 8,788 customers in fiscal year 2022-23 (FY23), while in India, it served 902 customers.
The company's customers span across numerous industries such as automotive, industrial, consumer, tech and tech infra, rail and utilities, and healthcare.
Issue-wise, it is a complete book building process, wherein the company will not receive any proceeds of the offer for sale (OFS). Around 75 per cent of the IPO is reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors (NIIs) and 10 per cent for retail.
Also Read: Shorter IPO timeline to become effective from December 1, says SEBI
Also Read: Shorter IPO timeline to become effective from December 1, says SEBI
The objective of the issue is repayment of outstanding borrowings and general corporate purposes.
According to ipowatch.in, shares of TVS Supply Chain Solutions enjoyed 15 per cent premium in grey markets, implying a likely listing price of Rs 227 apiece on the upper price band. Upon listing, it will join listed peers like TCI Express, Mahindra Logistics, Blue Dart, and Delhivery.
On the financial front, the company's revenue grew 10 per cent year-on-year (YoY) to Rs 102 crore in FY23 from Rs 925 crore in FY22. Profit-after-tax (PAT), meanwhile, recovered to Rs 0.4 crore in FY23 from losses of Rs 0.5 crore in FY22.
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That said, here's what brokerage houses recommend for TVS Supply Chain IPO:
Reliance Securities | Subscribe for long-term rewards
The brokerage firm believes that the company operates an asset-light business model through leases with its network partners and clients. As the company's margin trend improves on a YoY basis, analysts expect it to smoothen further as they focus on C3 framework - customer, capability, and country.
The issue is priced at 10.5 times based on its net asset value (NAV) of 18.89, as of 31 Mar 2023. Retirement of debt from IPO proceeds, they said, is likely to improve margins. Hence, analysts recommend a 'subscribe' to the issue for long-term rewards.
Swastika Investmart | Avoid
Since the company has a large exposure to the international market, analysts underline this as a key concern if there is a slowdown in global trade. The company also operates in a highly competitive industry, reporting losses in the past two years. Additionally, analysts underline that the IPO valuation at PE ratio of 189x is significantly above industry average of 43.03.
Overall, the brokerage firm said that the risks outweigh potential rewards for the IPO, suggesting investors to stay away.
Hensex Securities | Medium-to-high risky investors may apply
Despite reporting losses in FY21 (Rs 76.3 crore) and FY22 (Rs 45.8 crore), the company saw 88 per cent jump in net profit in FY23 at Rs 41.76 crore. The company's revenue from operations, meanwhile, saw steady growth, with 10.6 per cent compounded annual growth rate (CAGR) in FY23.
That said, analysts highlight the company's heavy dependance on top five customers for revenues and exposure to foreign currency rate fluctuations as key concerns.
Ashika Research | Unrated
The company's revenues are diversified in terms of customers, geographies and industries. The company serviced 8,788 customers globally in FY23 spread across 26 countries in Europe, UK, Asia-Pacific and North America. Moreover, the company operates at the forefront of a rapidly expanding logistics industry in India that is expected to grow to $385 billion by FY27 at a 13 per cent CAGR, said analysts.
In terms of valuations, the company demands enterprise value (EV)/Ebitda multiple of 13.2x based on FY23 post issue fully diluted Ebitda and market cap-to-sales of 0.84x.
