TVS Supply Chain Solutions IPO opens today. Should you subscribe?
Analysts have given a mixed verdict on the IPO due to aggressive pricing. «The issue is priced at 10.5 times based on its NAV of 18.89 as of March 2023. Given good legacy parentage, tech-enabled and process-driven solution company and retirement of debt from IPO proceeds to improve net margins, we recommend a „Subscribe“ to the issue for long-term rewards,» said Reliance Securities.
Despite steep pricing, the company's asset-light business model is likely to draw investors' attention. At the upper price band of Rs 197, TVS Supply chain is available at a P/E of 209x (FY23), which appears aggressively priced compared to peers, Geojit Financial Services said. «The company's asset-light approach, diverse global services, long-term contracts, and integrated capabilities position it well for growth.
We assign a „Subscribe“ rating for the issue on a short-to-medium-term basis,» it added. Swastika Investmart, however, gave an «avoid» rating to the IPO as it believes the risks outweigh the potential benefits. «The valuation is very high, at a price-to-earnings ratio of 189x, which is significantly above the industry average of 43.03.
We recommend staying away from it for now,» the brokerage said. The company has fixed the price band at Rs 187-197 per share for its public offer. Investors can bid for a minimum of 76 shares and in multiples thereafter.
About 75% of the offer is reserved for qualified institutional buyers, 15% for non-institutional investors and 10% for retail investors. The company is an Indian supply chain logistics solution provider with a network across the value chain and cross-deployment abilities. Its operating segments include integrated supply chain solutions (ISCS) and network solutions (NS).
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