TVS Supply Chain Solutions IPO: Rs 880 Crore Worth Public Offer Opens Today; Should You Subscribe?

Subscription in TVS Mobility Group-backed subsidiary, TVS Supply Chain Solutions' Rs 880 crore worth initial public offering (IPO) will open on Thursday. Ahead of the IPO, the company garnered Rs 396 crore through anchor investors on August 9th including marquee investors like SBI Life Insurance, Societe Generale, BNP Paribas Arbitrage, and Tata Mutual Fund among others. The proposed shares in the IPO will be listed on BSE and NSE.

The company is offering 2,51,22,289 equity shares in the IPO that will open on August 10. TVS Supply Chain plans to raise Rs 880 crore through the IPO --- comprising a fresh issue of Rs 600 crore and an offer for sale (OFS) of 14,213,198 equity shares aggregated to Rs 280 crore.

Under the OFS, the selling shareholders are --- Omega TC Holdings, Tata Capital Financial Services, Sargunaraj Ravichandran, Andrew Jones, Ramalingam Shankar, and Ethirajan Balaji.

Proceeds from the fresh issue will be used for repayment of all or a portion of certain outstanding borrowings availed by the company and its subsidiary TVS LI UK, and other general corporate purposes. However, TVS Supply Chains will not receive any proceeds from OFS as the funds will go to selling shareholders.

The price band is fixed at Rs 187 to Rs 197 per share. The equity shares have a face value of Re 1 each. The bid lot size is 76 Equity Shares and in multiples thereof.

Of the total IPO size, 75% of the offer is reserved for qualified institutional buyers (QIBs), while 15% of the portion is kept for non-institutional investors (NII) and the rest of 10% is allotted to retail individual investors (RII).

The IPO will close on August 14. However, bidding will not be available on August 12 and 13th due to the weekend holidays.

Companies like JM Financial, Axis Capital, J.P Morgan India, BNP Paribas, Nuvama Wealth Management, and Equirus Capital are acting as the book-running lead managers of the IPO. Link Intime India is the registrar of the issue.

Should you subscribe to TVS Supply Chain IPO?

In its IPO note, brokerage Geojit said, "At the upper price band of ₹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."

However, Geojit also pointed out the key risks of the IPO. These are:

- Around 73% of revenue is sourced from global operations and is exposed to foreign currency exchange rate fluctuations and local-law compliance.

- TVS SCS' asset-light model causes high operational expenses (71% of FY23 revenue), including freight, handling, and personnel. Rising costs may harm cash flows and margins.

After the listing, TVS Supply Chain peers would be TCI, Mahindra Logistics, Blue Dart Express, and Delhivery on exchanges.

TVS Supply Chain Solutions is a leading integrated supply chain solutions provider in India. With substantial revenue and growth in Fiscal 2023, TVS SCS operates across over 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.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns. in advises users to consult with certified experts before making any investment decision.