TVS Supply Chain Solutions shares list at premium of 5% over IPO price

Shares of TVS Supply Chain Solutions, a part of TVS Mobility Group, made a positive debut on the domestic stock exchanges on Wednesday, better than Street expectations, despite receiving lower than estimated response to its initial public offer (IPO). The shares of TVS Supply Chain Solutions opened at ₹207.05 on the NSE, a premium of 5.1% against the issue price of ₹197 per equity share. On the BSE, the share price of the transportation, logistics and warehousing company opened at ₹206.3 per share.

Post listing, TVS Supply Chain Solutions shares gained as much as 5.9% to hit a high of ₹208.6 on the NSE, while it touched a high of ₹208.5 on the BSE. The market capitalisation stood at ₹8,768 crore at the time of reporting.

“Given that this IPO's subscription was lower than that of some recent IPOs, the listing is respectable—even above expectations. Although TVS Supply Chain Solutions is a leading supply chain management company, it operates in a highly competitive industry and has reported losses in the past two years. Additionally, the valuation of the IPO was also very high,” says Anubhuti Mishra, Equity Research Analyst at Swastika Investmart.

“We suggest investors book profits after listing at such a higher level. Those who still want to hold should maintain a stop loss at the IPO price,” he adds.

The ₹880 crore IPO of TVS Supply Chain Solutions was booked 2.78 times, which opened for subscription between August 10 and August 14. The price band of the issue was fixed from ₹187 to ₹197 per equity share.

The quota reserved for QIBs was booked nearly 1.35 times, while the non-institutional investors (NIIs) category subscribed 2.35 times. The portion for retail investors managed to garner a good response from investors as the quota reserved for them attracted 7.6 times bid, as per the BSE data. The TVS Group company had reserved 75% of the issue for QIBs, 15% for NIIs, and the remaining 10% for retail investors.

The supply chain logistics solution provider’s IPO comprised an issue of fresh equity shares up to ₹600 crore and an offer for sale of 14,213,198 equity shares. The company, in consultation with the BRLMs, undertook a pre-IPO placement of 8,486,970 equity shares aggregating ₹150 crore on July 27, 2023, to several investors including SBI Life Insurance.

A day before its IPO opened for subscription, TVS Supply Chain Solutions raised around ₹396 crore from 18 anchor investors. The anchor book was fully subscribed as the company allotted 2,01,01522 equity shares at ₹197 per share.

The Chennai-based company intends to use more than half of its IPO proceeds raised from the fresh equity shares to repay loans and invest in its overseas operations. It also plans to use a part of the fund for the purpose of strategic acquisitions.

Several brokerage houses have recommended a ‘subscribe’ to the offer with a long-term investment horizon. TVS Supply Chain Solutions (TVS SCS), a $1.2 billion organisation, is an India-based multinational company, which pioneered the development of the supply chain solutions market in India. The company claimed to be amongst India’s largest and fastest growing integrated supply chain solutions providers in terms of revenues in fiscal 2021. With a workforce of over 18,000 employees, the company has a presence in over 25 countries and works with 733 customers in India and 7,120 customers globally.  

As of September 30, 2022, TVS SCS has worked with 64 ‘Global Fortune 500 2021’ companies. As per the company, 75% of business comes from non-auto clients and 95% of business from non TVS group companies. TVS SCS has a long-term relationship with customers and the average period of relationship with the top 10 customers is 10—13 years.

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