TVS Supply Chain Solutions, a part of the TVS Mobility Group, is expected to have a lackluster debut on the stock market on August 23. The company’s public offering received lower-than-expected interest due to various factors. The competitive nature of the industry, aggressive pricing of the IPO, and previous years’ losses are some reasons impacting the anticipated performance.
During the August 10-14 subscription period, the public issue of the Chennai-based company saw a subscription rate of 2.78 times. This amounted to bids for 6.99 crore equity shares against the IPO size of 2.51 crore shares. Retail investors led the way, oversubscribing by 7.61 times, followed by high net-worth individuals and qualified institutional buyers who subscribed 2.35 times and 1.35 times respectively.
The final issue price settled at Rs 197 per share, resulting in a market capitalization of Rs 8,746 crore at the issue price.
Analysts predict a modest debut for the TVS Supply Chain Solutions IPO. Dhruv Mudaraddi, a research analyst at StoxBox, anticipates a listing below the issuance price due to higher valuation compared to peers, average financial performance, and increased competition in the industry.
Prashanth Tapse, a senior VP research analyst at Mehta Equities, attributes the subdued demand for the IPO to factors such as aggressive pricing in a lackluster market, coupled with losses over the past two years, causing concern for potential investors.
In terms of valuation, TVS Supply Chain Solutions stands at a PE (price-to-earnings) of 209.43x for FY23, significantly higher than its peers like TCI Express, Mahindra Logistics, and Bluedart Express.
The company has displayed a revenue growth CAGR of 21.5 percent from FY21 to FY23, reaching Rs 10,235 crore in FY23. Profits turned positive at Rs 41.8 crore in FY23 after reporting losses in FY21 and FY22. The company operates in over 25 countries, serving both global and domestic clients across diverse sectors.
Although being a significant supply chain management company, TVS Supply Chain Solutions’ challenging industry dynamics, previous losses, and high IPO valuation may impact its stock market debut, according to analysts.