TVS Supply Chain IPO Details and Review

TVS Supply Chain Solutions plans an IPO to open on August 10, 2023. TVS Supply Chain Solutions provides supply chain management services. The company has been performing well for the last three to four years. It turned a loss into a profit. But is his IPO price for TVS Supply Chain too high? should i invest be TVS Supply Chain IPO or avoidance?

TVS Supply Chain IPO Details

TVS Supply Chain Solution IPO Booking

What is the TVS Supply Chain IPO Market Lot?

About TVS Supply Chain Solutions Co., Ltd.

TVS Supply Chain Solutions Limited provides supply chain management services to international organizations, government departments, large and medium-sized companies.

The TVS supply chain has two main services.

#1 – Integrated Supply Chain Solutions (ISCS): They handle everything related to the supply chain, including purchasing and transporting products, running distribution centers, delivering finished goods, and advising on how to improve the supply chain.

#2 – Network Solution (NS): They manage the movement of goods around the world using different modes of transport such as ships, planes and trucks. We also provide warehousing and other essential services.

The company has many customers across the globe and in India, including some of the biggest names in industries such as Automotive, Defense, Engineering, FMCG (Fast Consumer Goods), Railways, Utilities, E-Commerce and Healthcare. will be

TVS Supply Chain Solutions Ltd Finance

Here is the financial situation of the company.

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The IPO size is Rs 880 crore, which includes a public offering and a fresh issue.

#1 – On Sale at Rs 280 Million – In OFS, these are sold by the selling shareholders and the proceeds are paid to the selling shareholders and the company gets nothing.

#2 – Latest issue of Rs 600 crore – Used for:

• advance or repay certain outstanding borrowings, in whole or in part, used by the Company and its subsidiaries, TVS LI UK and TVS SCS Singapore;
• General corporate purposes.

What is the valuation of this IPO?

TVS Supply Chain IPO price range of Rs 187-197 per share

• Taking into account last year’s 2023 EPS of Rs 1.02, the P/E ratio is 193x.
• Weighted EPS for the last three years is negative, so PER cannot be calculated based on this.
• Publicly traded peers like Blue Dart Express trade at 46x (highest) and TCI Express at 40x (lowest), with an industry average of 43x. So the 193x P/E IPO price range is expensive.

What is the expected return of TVS Supply Chain’s IPO?

The gray market premium is around 10%, but due to overvaluation, it may be listed at a discounted price after listing.

TVS Supply Chain IPO Date, Allocation and Listing Date

Competitiveness of TVS Supply Chain Solutions

• Significant scale in India’s fast growing and fragmented third-party logistics market
• End-to-end solution leader enabled by domain expertise, global network and knowledge base
• Strong in-house technology differentiation
• Long and consistent track record of successfully integrating acquisitions into support functions and customer acquisition
• Long-term relationships with customer networks in diverse and attractive industries
• A resilient business model with multiple drivers to drive profitable growth
• Strong parent-child relationship with management team with cross-industry experience

TVS Supply Chain IPO – a positive factor for investment

• Solid financial performance: TVS Supply Chain Solutions has experienced steady growth in total assets and total revenue over the years. In FY2011, the company recorded gross revenue of Rs 10,311 million and improved profit after tax to Rs 41.8 million.
• Market leadership: TVS SCS is a leader in India’s fastest growing third party logistics market and its significant scale gives it a competitive advantage.
• End-to-end solution: The company’s ability to provide comprehensive end-to-end supply chain solutions backed by its domain expertise and global network makes it an attractive choice for customers seeking integrated services.
• Robust in-house technology: TVS SCS’s powerful in-house technology platform improves operational efficiency and service quality.
• Acquisition integration success: The company’s track record of successfully integrating acquisitions demonstrates its ability to expand and enhance its offerings.
• Diverse customer base: TVS SCS serves a wide range of industries, reducing reliance on a single sector and diversifying business risks.
• A resilient business model: With multiple drivers that drive profitable growth, the company’s resilient business model allows it to adapt to market fluctuations.
• long term customer relationship: The company’s long-term relationships with its customers demonstrate customer satisfaction and loyalty, which are essential for sustainable growth.

TVS Supply Chain IPO – Risk or Downside

• Losses in the past: TVS SCS has incurred losses in 2021 and 2022 and future losses could adversely affect its financial health and cash flow.
• Foreign currency exposure: Fluctuations in exchange rates can affect our financial performance, as the majority of our revenues and borrowings are in foreign currencies.
• Previous stock issuance: The fact that TVS SCS has issued shares at low prices in the past may raise questions about the company’s perceived value among potential investors.
• Global operational complexity: Operating in multiple countries exposes TVS SCS to compliance risks and potential legal consequences for non-compliance.
• Key customer dependencies: If relationships with major customers were to be affected or terminated, it could adversely affect our finances and operations.

TVS Supply Chain IPO Review – Should You Invest or Avoid?

The IPO of TVS Supply Chain Solutions Limited has both positives and negatives.

• On the positive side, the company holds a dominant position in the growing Indian 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 reliance on key customers. The IPO price is 4.5 times the industry average. His OFS is included in the IPO proceeds and the company is not profitable. Even new issuances may be used to repay part or all of the loan.

Personally, I would avoid such an expensive IPO at this point.

Suresh KP is the founder of Myinvestmentideas. He is his NISM Certified – Investment Advisor and he is a NISM Certified – Research Analyst. He has been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.

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