TVS Supply Chain makes steady debut; lists at 5% premium over issue price

TVS Supply Chain Solutions (TVS SCS) made a steady stock market debut, with its shares listed at Rs 207.05, a 5 per cent premium over its issue price of Rs 197 per share on the National Stock Exchange (NSE) on Wednesday. The stock of logistics solution provider opened at Rs 206.30 on the BSE.

At 10:01 AM; TVS SCS was quoting at Rs 201.30, up 2 per cent as against its issue price. The stock hit a high of Rs 208.50 and a low of Rs 200.05 on the BSE in intra-day trades so far. A combined 5.7 million shares changed hands on the NSE and BSE.

The IPO had received a decent response, as the issue was subscribed to 2.85 times overall. The retail category was subscribed 7.89 times, qualified institutional buyer (QIB) category 1.37 times and the non institutional investor (NII) category 2.44 times.

TVS Supply Chain Solutions (TVS SCS), a subsidiary of TVS Mobility Group, is a leading integrated supply chain solutions provider in India. With substantial revenue and growth in fiscal 2023, TVS SCS operates across 25+ countries - serving 8,778 global and 902 domestic clients in FY23, the company caters to diverse sectors such as automotive, industry, consumer products, technology, rail, utilities, and healthcare.

Although TVS SCS 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. All these factors could impact its listing. Therefore, we would suggest investors to book profits after listing, said Anubhuti Mishra, Equity Research Analyst at Swastika Investmart.

At its issue price, TVS SCS was available at a P/E of 209x (FY23), which appears aggressively priced compared to peers. However, favourable factors include the fragmented Indian logistics market, growth potential for organized players, post-GST logistics focus, and outsourcing trends. TVS SCS's asset-light approach, diverse global services, long-term contracts, and integrated capabilities position it well for growth, analysts at Geojit Financial Services said.

TVS SCS operates on an asset light business model and operates through leases with its network partners and clients. It has a long and consistent track record of successful integration of 20 acquisitions supplementing their operations to support capabilities and customer acquisition. The margin trend is improving y-o-y and expected to smoothen further as the company is focusing on C3 framework – Customer, Capability and Country with outsourcing trend and presence in high growth sectors.

The issue is priced at 10.5 times based on its NAV of 18.89 as of 31 March 2023 and with good legacy parentage, tech enabled and process driven solution company and retirement of debt from IPO proceeds to improve net margins, said analyst at Reliance Securities had siad in its IPO note.