TVS Supply Chain Solutions is coming up with an IPO that would open for subscription on August 10, 2023. TVS Supply Chain Solutions provide supply chain management services. The company had a strong financial performance in the last 3-4 years. It turned from loss to profit making. But is the TVS Supply Chain IPO Price over-priced? Should you invest in a TVS Supply Chain IPO or avoid?
TVS Supply Chain IPO Details
| IPO Opening Date | 10-Aug-23 |
| IPO Closing Date | 14-Aug-23 |
| IPO Listing Date | 23-Aug-23 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 1 per equity share |
| IPO Price band | Rs 187 to Rs 197 per equity share |
| Lot Size | 76 Shares |
| Min Order Quantity | 76 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | Rs. 880 Crores |
| Fresh issue | Rs. 600 Crores |
| OFS | Rs. 280 Crores |
TVS Supply Chain Solutions IPO Reservation
| QIB shares offered | Not less than 75% of the offer |
| NII/HNI shares offered | Not more than 15% of the offer |
| Retail shares offered | Not more than 10% of the offer |
What is TVS Supply Chain IPO Market Lot?
| Application | Lot Size | No. of Shares | Amount |
|---|---|---|---|
| Retail (Min) | 1 | 76 | 14,972 |
| Retail (Max) | 13 | 988 | 1,94,636 |
| S-HNI (Min) | 14 | 1064 | 2,09,608 |
| S-HNI (Max) | 66 | 5016 | 9,88,152 |
| B-HNI (Min) | 67 | 5092 | 10,03,124 |
About TVS Supply Chain Solutions Ltd
TVS Supply Chain Solutions Limited provides supply chain management services for international organizations, government departments, and large and medium-sized businesses.
TVS Supply chain has two main services:
#1 – Integrated supply chain solutions (ISCS): They handle everything related to the supply chain, like buying and transporting products, operating logistics centers, delivering finished goods, and providing advice on how to improve the supply chain.
#2 – Network Solutions (NS): They manage the movement of goods across the world using various modes of transport like ships, planes, and trucks. They also provide warehousing and other important services.
The company has many customers globally and in India, including some well-known companies in industries like Automotive, Defense, Engineering, FMCG (Fast-Moving Consumer Goods), Rail, Utilities, E-commerce, and Healthcare.
TVS Supply Chain Solutions Ltd Financials
Here are the financials of the company.
| Financial Year ending / Period ending (Amt in Crores) | ||||
| Particulars | FY20 | FY21 | FY22 | FY23 |
|---|---|---|---|---|
| Total Assets | 5,462.9 | 4,990.1 | 5,789.7 | 6,210.9 |
| Total Revenue | 6,792.8 | 6,999.7 | 9,299.9 | 10,311.0 |
| Profit After Tax | -248.0 | -76.3 | -45.8 | 41.8 |
| Profit % | -3.65% | -1.09% | -0.49% | 0.41% |
| Net Worth | 510.8 | 490.7 | 714.0 | 723.6 |
| Reserves and Surplus | 493.4 | 473.9 | 713.8 | 774.2 |
| Total Borrowing | 2,160.1 | 1,547.9 | 1,763.8 | 1,989.6 |
Objects of the Issue
The IPO size is Rs 880 Crores which has Offer for Sale and Fresh issue:
#1 – Offer for Sale for Rs 280 Crores – Under OFS, these are sold by selling shareholders and proceeds would go to selling shareholders and company would not get anything.
#2 – Fresh issue of Rs 600 Crores – It would be used for the following:
- Prepayment or repayment of all or a portion of certain outstanding borrowings availed by the company and subsidiaries, TVS LI UK and TVS SCS Singapore
- General corporate purposes.
How is the valuation of this IPO?
TVS Supply Chain IPO Price Band is Rs 187 to 197 per share
- If we consider last year FY23 EPS of Rs 1.02, P/E ratio works out to be 193x
- Last 3 years weighted EPS is negative, hence we cannot compute P/E based on this.
- The listed peers like Blue Dart Express is trading at P/E 46x (Highest) and TCI Express is trading at P/E of 40x (Lowest) and industry average P/E is 43x. Hence, the IPO Price band at P/E of 193x is over-priced.
What are TVS Supply Chain IPO Expected Returns?
While the Grey market premium is around 10%, due to excess valuation, it might list at discounted price post listing.
TVS Supply Chain IPO Dates, Allotment & Listing Dates
| IPO Opens on | 10-Aug-23 |
| IPO Closes on | 14-Aug-23 |
| Basis of Allotment | 18-Aug-23 |
| Initiation of Refunds | 21-Aug-23 |
| Credit of Shares to Demat | 22-Aug-23 |
| Listing Date | 23-Aug-23 |
| Cut-off time for UPI mandate confirmation | 14-Aug-23 |
TVS Supply Chain Solutions Competitive Strengths
- Critical scale in a fast-growing and fragmented third-party logistics market in India
- Leader in end-to-end solutions enabled by domain expertise, global network and knowledge base
- Robust in-house technology differentiation
- Long and Consistent Track-Record of Successful Integration of Acquisitions to Support Capabilities and Customer Acquisition
- Long-term customer relationship in diversified and attractive industries through encirclement
- Resilient business model with multiple drivers of profitable growth
- Strong parentage with management team with cross industry experience
TVS Supply Chain IPO – Positive Factors to invest
- Strong Financial Performance: TVS Supply Chain Solutions has shown steady growth in total assets and total revenue over the years. In FY23, it recorded a total income of Rs 10,311.0 million, and its Profit After Tax improved to Rs 41.8 million.
- Market Leadership: TVS SCS is a leader in the fast-growing third-party logistics market in India, giving it a competitive advantage due to its critical scale.
- End-to-End Solutions: The company’s ability to offer comprehensive end-to-end supply chain solutions, supported by its domain expertise and global network, makes it an attractive option for customers seeking integrated services.
- Robust In-House Technology: TVS SCS’s strong in-house technology platform enhances its operational efficiency and service quality.
- Successful Integration of Acquisitions: The company’s track record of successfully integrating acquisitions indicates its capability to expand and enhance its offerings.
- Diversified Customer Base: TVS SCS serves a wide range of industries, reducing dependency on any single sector and spreading business risks.
- Resilient Business Model: The company’s resilient business model with multiple drivers of profitable growth allows it to adapt to market fluctuations.
- Long-term Customer Relationships: The company’s long-term relationships with customers demonstrate customer satisfaction and loyalty, which is crucial for sustained growth.
TVS Supply Chain IPO – Risk or Negative Factors
- Historical Losses: TVS SCS incurred losses in Fiscals 2021 and 2022, and any future losses could adversely impact its financial health and cash flow.
- Foreign Currency Exposure: As a significant portion of revenue and borrowings are in foreign currencies, fluctuations in exchange rates may affect the company’s financial performance.
- Previous Equity Issuance: The fact that TVS SCS issued equity shares at a lower price in the past might raise questions about the perceived value of the company among potential investors.
- Global Operations Complexity: Operating in multiple countries exposes TVS SCS to compliance risks, with potential legal consequences for non-compliance.
- Key Customer Dependency: If the company’s relationships with key customers are affected or terminated, it could negatively impact its financials and operations.
TVS Supply Chain IPO Review – Should you Invest or Avoid?
TVS Supply Chain Solutions Limited IPO has both positive and negative factors.
- On the positive side, the company holds a dominant position in India’s growing logistics market, offering comprehensive supply chain solutions with robust technology and strong financial performance.
- However, there are risks, such as historical losses, foreign currency exposure, and key customer dependencies. The IPO is priced 4.5x times higher compared to industry average. The IPO proceeds have OFS where the company would not get benefitted. Even the fresh issue would be used for part or full repayment of loans.
I would personally avoid such high priced IPOs for now.
What is TVS Supply Chain Solutions IPO GMP today?
As per the market sources, Grey market premium now is at Rs 18 - 20 per share.
Is TVS Supply Chain Solutions Share Price is over-priced?
IPO Price is currently at P/E of 196x. The industry average is at 43x and industry peers are trading between 40x to 46x. Hence, the issue is over-priced.
What does TVS Supply Chain IPO Review indicate?
The overall IPO review and analysis indicate that while the company has strong financials and its IPO issue price is over-priced.
What does TVS Supply Chain Solutions Limited Financials indicate?
TVS Supply Chain Solutions' financials have shown a positive turnaround, with reduced losses and improved profit percentages in recent years (FY22: -0.49%, FY23: 0.41%). The company's total assets, total revenue, and net worth have also exhibited steady growth, indicating a favorable trajectory. However, investors should be cautious of the company's reliance on borrowings to finance its operations, and a careful assessment of its debt management is essential before considering investment.
What is the size of TVS Supply Chain IPO?
The IPO size is Rs 880 Crores comprising of 600 crores fresh issue and 280 crores of offer for sale.
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Very high valuation is the principal reason for zero GMP as well as no interest in this issue.
Your conclusion is our guideline.AVOID.