TVS Supply Chain Solutions IPO: 5 Things to Know

Amid the remarkable surge in financial markets, captivating the steadfast attention of investors, one prevailing trend has emerged at the forefront: Initial Public Offerings (IPOs).

The alignment of escalating market indices with early market entry accentuates an enticing opportunity.

Building on the resounding triumph of several modest-sized public offerings in July, market dynamics are poised for another bout of enthusiasm, as around 8-10 companies prepare to make their public debut, collectively aiming to secure a noteworthy Rs 80 bn.

Among these highly anticipated offerings, TVS Supply Chain Solutions emerges as a notable standout.

Here are the key details of the IPO.

Issue period: 10 August 2023 to 14 August 2023

Type of issue: Book Built Issue

Price band: Rs 187 to Rs 197 per share

Face value: Rs 1 per equity share

Lot size: 76 shares

Application limit: Maximum one lot for retail investors

The company has reserved not less than 75% shares of the offer for qualified institutional buyers (QIB). It has reserved not less than 15% for non-institutional buyers (HNI). Hence not more than 10% of shares are available for retail individual investors.

Tentative IPO allotment date: 18 August 2023

Tentative listing date: 23 August 2023

#1 About the company

TVS Supply Chain Solutions is an Indian-based multinational company that is the pioneer in developing supply chain solution market in India.

The brand has managed large and complex supply chains across multiple industries in India and selected global markets.

The brand's in-depth domain knowledge, with strong global expertise, helps them to customise solutions according to customers' needs and demands.

The brand has a diversified customer profile such as automotive, industrial, consumer, tech and tech infra, rail and utilities, and healthcare.

TVS SCS offers its services in two segments:

• Integrated supply chain solutions (ISCS)
• Network Solutions (NS)

#2 A look at the financials

The company's revenue has grown at a CAGR of 13.7% in the last three years, while the net profit has shown steady growth decreasing the losses and making it profitable.

This was due to Strong demand from manufacturing led by Make in India campaign, retail, automotive, and pharmaceutical sectors and the need for efficiency improvement in the newly created demand.

For the financial year 2023, the company reported an 8.7% YoY jump in revenue to Rs 103.1 bn, led by increasing demand in the domestic and global markets.

The net profit also reported a net profit of Rs 417.6 from the net loss of Rs 458 m reported a year back.

TVS Supply Chain Solutions Financial Snapshot (2021-23)

Particulars	31-Mar-23	31-Mar-22	31-Mar-21
Revenues (Rs in bn)	103.1	92.9	69.9
Revenue Growth (%)	8.7	32.9
Net Profit (Rs in bn)	417.6	-458	-763.4
Net Worth (Rs in bn)	7.2	7.1	4.9

Data Source: Company's Red Herring Prospectus (RHP)

Going forward, the company aims to expand its global presence and enhance its market share within the automotive sector.

#3 Peer comparison

As per the company's red herring prospectus, TCI Express, Mahindra Logistics, Blue Dart, Delhivery.

Peer Comparison

Company	Total Income (2023)	Net Profit	Return on Net Worth (%)
	(Rs in bn)	(Rs in m)
TVS Supply Chain Solutions	924.9	-1.4	20.8
TCI Express	108.1	33.4	139.2
Mahindra Logistics	408.3	5.2	82.2
Blue Dart	441	161.1	367.5
Delhivery	688.2	-16.9	92.9

Data Source: Company's Red Herring Prospectus (RHP)

#4 Arguments in favour of the business

• The company has a critical scale in fast-growing and fragmented third-party logistics market in India. This advantage allows the company to assert its leadership in delivering comprehensive end-to-end solutions bolstered by its extensive domain expertise, global network, and well-established knowledge base.
• It stands as a foremost leader in delivering comprehensive end-to-end solutions, leveraging its domain expertise, global reach, and extensive knowledge base.
• The company possesses a distinct technological advantage bolstered by its proprietary in-house technology, enhancing its competitive edge.
• The company has resilient business model, driven by diverse sources of profitable growth, underscores the its stability and sustainability.
• The brand has consistently demonstrated a successful history of effectively integrating acquisitions. The brand has carried out more than 20 acquisitions in the last 15 years.

#5 Risk Factors

• The company relies on third-party partners for certain operations, and any disruption or dissatisfaction in its services could negatively impact its overall operations, financial health, and cash flow.
• The company's heavy dependence on its technology infrastructure leaves it vulnerable to potential disruptions or failures, which could harm its growth prospects, reputation, and financial stability.
• Operating across 26 countries exposes the company to foreign exchange risks, as a significant portion of its revenues is generated in foreign currencies. Fluctuations in exchange rates could affect its financial performance.
• The company faces a potential risk due to its indebtedness and the fact that it leases all of its warehouses, as well as its registered and corporate office.

Conclusion

Over the next four years, the company's e-commerce logistics business is expected to reach US$ 6 bn. While the non-e-commerce supply chain is poised for an even more substantial growth of US$ 12 bn, making it a strong competitor.

Notably, the company's recent diversification into complementary sectors like rail, utilities, defence, and beverages, along with its exploration of emerging domains such as EV, clean energy, and health-tech, positions it to benefit from burgeoning trends like the EV and green hydrogen megatrends in India.

Furthermore, the presence of esteemed international investors such as Exor or Gateway instils a sence of market confidence due to their robust governance practices.

As with any investment opportunity, TVS Supply Chain Solutions bears its own set of advantages and disadvantages.

Therefore, one should conduct their thorough research.

For more information on IPOs, check out the list of upcoming IPO's.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...