Popular Vehicles & Services Limited, a renowned name in the Indian automobile dealership sector, is coming up with an IPO. This IPO would open for subscription on March 12 and closes on March 14, 2024. This article provides Popular Vehicles & Services IPO details, objects of the issue, financials, positive aspects, risk factors, conclusion and review from our side.
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Popular Vehicles & Services IPO Details
| IPO Opening Date | 12-Mar-24 |
| IPO Closing Date | 14-Mar-24 |
| IPO Listing Date | 19-Mar-24 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 2 per equity share |
| IPO Price band | Rs 280 to Rs 295 per equity share |
| Lot Size | 50 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | Rs. 601.55 Crores |
| Fresh issue | Rs. 250 Crores |
| OFS | Rs. 351.55 Crores |
| Employee Discount | Rs.28 Per Share |
About Popular Vehicles & Services Limited
Popular Vehicles & Services Limited, incorporated in 1983, stands as a prominent player in the Indian automobile dealership sector. Its core operations revolve around providing comprehensive services throughout the entire lifecycle of vehicle ownership, spanning from the sale of new and pre-owned vehicles to servicing, spare parts distribution, and financial product sales.
The company’s operations are segmented into three key areas:
Passenger Vehicles: Including luxury vehicles from renowned brands like Maruti Suzuki, Honda, and Jaguar Land Rover.
Commercial Vehicles: Catering to the demand for commercial vehicles from manufacturers such as Tata Motors and Daimler India Commercial Vehicles.
Electric Vehicles: Encompassing both two-wheeler and three-wheeler electric vehicles, with dealership agreements with Piaggio and Ather Energy.
Popular Vehicles & Services boast an extensive network comprising 59 showrooms, 126 sales outlets, 31 pre-owned vehicle showrooms, 134 authorized service centers, 40 retail outlets, and 24 warehouses spread across 14 districts in Kerala, eight districts in Karnataka, 12 districts in Tamil Nadu, and seven districts in Maharashtra.
Popular Vehicles & Services IPO Objects of the issue
The objects of the IPO contain OFS and fresh issue.
1) Under OFS, the issue proceeds would go to selling shareholders and the company would not get anything.
2) For fresh issue, the net proceeds from the IPO will be utilized primarily for:
- Repayment and/or pre-payment of certain borrowings availed by the company and its subsidiaries.
- General corporate purposes.
Popular Vehicles & Services Limited Financials
Popular Vehicles & Services Limited have demonstrated impressive financial performance.
| Financial Year ending / Period ending (Amt in Crores) | ||||
| Period Ended | 31-Mar-21 | 31-Mar-22 | 31-Mar-23 | 30-Sep-23 |
|---|---|---|---|---|
| Assets | 1,118.94 | 1,263.29 | 1,503.78 | 1,941.78 |
| Revenue | 2,919.25 | 3,484.20 | 4,892.63 | 2,848.21 |
| Profit After Tax | 32.46 | 33.67 | 64.07 | 40.04 |
| Net Worth | 246.00 | 279.89 | 343.04 | 384.21 |
| Reserves and Surplus | 233.46 | 267.34 | 330.50 | 371.67 |
| Total Borrowing | 353.04 | 371.91 | 505.01 | 764.61 |
Revenue Growth: Revenue increased by 40.42% between March 31, 2022, and March 31, 2023.
Profit After Tax (PAT): PAT rose by 90.31% during the same period.
Popular Vehicles & Services IPO – Reasons to Invest
- Diversified Business Model: Popular Vehicles & Services offers a comprehensive suite of services throughout the vehicle ownership lifecycle, including sales, servicing, spare parts distribution, and financial products sales.
- Strong Market Presence: With a network spanning across multiple states and over 400 touch points, the company enjoys a robust presence in the automobile dealership sector.
- Revenue Diversity: Revenue streams from passenger vehicles, commercial vehicles, and electric two-wheeler and three-wheeler vehicles provide diversification and resilience against market fluctuations.
- Healthy Financial Performance: The company has exhibited consistent revenue growth and profit margins, indicating operational efficiency and financial stability.
Popular Vehicles & Services IPO – Risk Factors
- Economic Sensitivity: The automotive industry is sensitive to economic conditions, and any downturn could adversely affect the company’s financial performance.
- Dependency on OEMs: Popular Vehicles & Services heavily rely on its OEMs, particularly Maruti Suzuki and Tata Motors, which could expose it to risks associated with their policies and market fluctuations.
- Geographical Concentration: The majority of the company’s operations are concentrated in specific states, making it vulnerable to regional risks such as natural calamities and regulatory changes.
- Negative Cash Flows: Historical negative cash flows and the possibility of future cash flow challenges could strain the company’s financial position and growth prospects.
Popular Vehicles & Services IPO Price Valuation
The IPO price band is Rs 280 to 295 per share
- If we consider last 3 years weighted EPS of Rs 7.76, the P/E ratio works out to be 38x
- If we consider the last year FY23 EPS of Rs 10.22, the P/E ratio works out to be 29x
- If we annualise 6 months ended Sep-23 EPS, the P/E ratio works out to be 23x
- There is only one listed peer Landmark Cars Limited trading at P/E 35x. While it is not appropriate to compare with only one peer, we can assume IPO Price band at P/E of 29x to 38x is fully priced.
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Popular Vehicles & Services IPO – Conclusion and Review
Popular Vehicles & Services Limited, with its strong market presence, diversified revenue streams, and sound financial performance, presents an excellent investment opportunity in the Indian automobile dealership space.
However, investors should be mindful of risks including economic sensitivity, depending on OEMs like Maruti Suzuki and Tata Motors, geographic concentration in specific states, and potential cash flow challenges.
High risk investors can invest in such IPOs for a medium to long term.
Source: Popular Vehicles IPO RHP filed on SEBI website.
Disclaimer: This article is for educational purpose only. Investing in IPOs is riskier, and your capital could be at risk. Please consult your financial advisor before investing in such IPOs.
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