TVS Supply Chain Solutions IPO is set to open for subscription on Thursday. The firm’s GMP rose 11% ahead of the issue opening. Should you subscribe?
TVS Supply Chain Solutions IPO: TVS Supply Chain Solutions’ Rs 880-crore IPO opens for subscription today, 10 August. The public offer comprises a fresh issue of shares worth Rs 600 crore and an offer-for-sale (OFS) component with promoters and shareholders offloading shares totalling Rs 280 crore. The supply chain management player has set the price band for the IPO at Rs 187-197 per equity share. TVS Supply Chain Solutions shares’ grey market premium gained 11.17% on Thursday, commanding a premium of Rs 22 over upper end of the IPO price, implying a listing price of Rs 219 per share.
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Ahead of the issue opening, TVS Supply Chain Solutions raised Rs 396 crore from various anchor investors on 9 August. The IPO will close for subscription on 14 August. The date of allotment of units is projected to be 18 August, following which, the issue is expected to list on the bourses on 23 August.
TVS Supply Chain Solutions (TVS SCS), est. 2004, a subsidiary of TVS Mobility Group, is a leading integrated supply chain solutions provider in India. With substantial revenue and growth in Fiscal 2023, TVS SCS operates across 25+ countries. Serving 8778 global and 902 domestic clients in FY23, the company caters to diverse sectors such as automotive, industry, consumer products, technology, rail, utilities, and healthcare.
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Should you apply for the TVS Supply Chain Solutions IPO?
Mehta Equities: Subscribe for listing gains
“On valuation parse at upper band of Rs 197 apiece the issue is asking for a Market Cap of Rs 8,746 crore with the EV/EBITDA value at around 12.6x multiples which seems reasonably discounted to industry average which are trading around 17-18x. Lower ask valuations has been offered to investors due to losses on books in the last two financial years. Some of the money raised will also be used to retire some debt which would bring in profits in the bottom-line of the business but profitability margins would remain lower single digits which is a cause of concern. Hence considering long term growth rationales with strong management leadership and high demand from global clients for supply chain outsourcing model, we recommend high risk investors to “SUBSCRIBE” to the issue, acknowledging the associated business risks. We also advise in case of optimistic market sentiments if investors get any listing gains over and above 25%, we recommend booking profits on the listing day.”
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“At the upper price band of Rs 197, TVS SCS is available at a P/E of 209x (FY23), which appears aggressively priced compared to peers. However, favourable factors include the fragmented Indian logistics market, growth potential for organized players, post-GST logistics focus, and outsourcing trends. TVS SCS’s asset-light approach, diverse global services, long-term contracts, and integrated capabilities position it well for growth. We assign a “Subscribe” rating for the issue on a short- to medium-term basis.”
