Shares of Popular Vehicles and Services Ltd (PVSL) made a muted debut at Dalal Street on Tuesday and the company failed to find buying interest from the investors on its maiden trading session. The stock was shunned by the investor after a soft listing at the bourses.
Shares of Popular Vehicles were listed at a discount of 1.97 per cent at Rs 289.20 on NSE, against an issue price of Rs 295 apiece. The auto-dealership kicked-off its maiden trading session at Rs 292 on BSE, a discount of 1.02 per cent over its issue price. However, the stock dropped another 10 per cent to Rs 262.90, extending the overall fall to 12 per cent over the issue price.
Analysts tracking the issue are mostly positive on the issue in the longer run and suggest investors to hold it. However, the believe the investors should have a strict stop-loss in place.
Popular Vehicles & Services is a well-established automobile dealer with a presence across four states and longstanding relationships with leading OEMs, PV&S boasts a fully integrated business model and a proven track record of capitalizing on growth opportunities but listed at discount, said Shivani Nyati, Head of Wealth at Swastika Investmart.
“The Indian auto market is highly competitive, and unresolved customer complaints can negatively impact the brand’s reputation. Allottees who applied for the public offering for listing premium are advised to maintain their stop loss at Rs 250 and wait for further upside, whereas those who have a medium- to long-term perspective can also hold the stock,” she said.
The Kerala-based Popular Vehicles & Services sold its shares in the price band of Rs 280-295 apiece. Investors could bid for a minimum of 50 shares and its multiples thereafter. It raised a total of Rs 601.66 crore via IPO, which included a sale of fresh equity shares worth Rs 250, while an offer-for-sale (OFS) of up to 1,19,17,075 equity shares.
The IPO was overall subscribed only 1.23 times, receiving a dull response and just sailing through in the last few hours of bidding. The quota for qualified institutional bidders (QIBs) was booked 1.97 times. The portion reserved for retail investors and employees saw bidding for 1.05 times and 7.59 times, respectively. The quota for non-institutional investors was subscribed just 66 per cent.
Popular Vehicles has over 70 years of experience in the automobile industry with diversified automobile dealerships and a fully integrated business model. Apart from benefiting from the inherent synergies arising from its business verticals, the company’s diversified income streams contribute to higher profitability margins, said Parth Shah, Research Analyst at StoxBox.
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“Numerous demand drivers such as growth in new PV sales, rise in average vehicle prices, rising financial penetration, and digital technology, we remain positive on the automotive dealership business in India. Therefore, even after a discounted opening to the issue, we suggest that the market participants who have been allotted the shares hold them for a medium to long-term,” he said.
Popular Vehicles and Services, Incorporated in 1983, is engaged in the business of automobile dealerships in India. Popular Vehicles provides complete services throughout the life cycle of vehicle ownership, including sales of new and preowned vehicles, servicing, spare parts distribution, driving schools, and third-party financial and insurance product sales.
Nuvama Wealth Management, Centrum Capital and ICICI Securities are the book running lead managers of the Popular Vehicles & Services IPO, while Link Intime India is the registrar for the issue.
