TVS Supply Chain Solutions IPO Review: TVS Supply Chain Solutions Limited, part of the TVS group, is coming up with its Initial Public Offering. The IPO will open for subscription on August 10, 2023, and close on August 14, 2023.

In this article, we will look at the TVS Supply Chain Solutions IPO Review 2023 and analyze its strengths and weaknesses. Keep reading to find out!

TVS Supply Chain Solutions IPO – About The Company

TVS Supply Chain Solutions Ltd is an India-based multinational company, that pioneered the development of the supply chain solutions market in India.

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The company has managed large and complex supply chains across multiple industries in India and select global markets through customized tech-enabled solutions for more than 16 years. It is a part of the TVS business group.

The company offers its services in 2 segments:

  • Integrated Supply Chain Solutions (“ISCS”): The capabilities under the ISCS segment include sourcing and procurement, integrated transportation, in-plant logistics operations, logistics operation centres, finished goods, aftermarket fulfilment and supply chain consulting
  • Network Solutions (“NS”): The capabilities under the ISCS segment include e global forwarding solutions (“GFS”), which involves managing end-to-end freight forwarding and distribution across ocean, land and air, warehousing and at port storage and value-added services, and time-critical final mile solutions.

During FY23, the company provided supply chain solutions to 8778 customers globally and 902 customers within India. 

The company serves customers in various sectors like automotive, industry, consumer products, technology and tech infrastructure, rail and utilities, and healthcare.

It has built strong, long-lasting relationships with many of its clients. This has helped the company remain stable in terms of both making money and being profitable.

Here is a list of some of the company’s long-term customers as of FY23:

  • Johnson Controls-Hitachi Air Conditioning India Limited (3 years)
  • Electricity North West Limited (5 years)
  • VARTA Microbattery Pte Ltd (7 years)
  • Yamaha Motor India Private Limited (7 years)
  • Modicare Limited (7 years)
  • Diebold Nixdorf (8 years)
  • Hero MotoCorp Limited (8 years)
  • Daimler India Commercial Vehicles Private Limited (12 years)
  • Sony India Private Limited (12 years)
  • Panasonic Life Solutions India Private Limited (12 years)
  • Lexmark International Technology Sarl (6 years)
  • Torrot Electric Europa, S.A. (3 years)
  • TVS Srichakra Limited (10 years)
  • TVS Motor Company Limited (17 years)
  • Dennis Eagle Limited (17 years)
  • Hyundai Motor India Limited (13 years)
  • Ashok Leyland Limited (17 years)
  • Johnson Controls-Hitachi Air Conditioning India Limited (3 years)

TVS Supply Chain Solutions IPO Review – About The Industry

In comparison to other markets, the Indian logistics market is highly fragmented and disorganized. Additionally, supply chain solutions is an emerging business in India, with less than 5% of the logistics market in India compared to 11% in developed economies in FY22.

India has an inefficient logistics system, with overall logistics expenditure in India accounting for around 13% of GDP in Fiscal 2022, which is much more than in developed nations such as the United States, where logistics expenditure was approximately 8% of GDP in 2021.

According to Redseer Report, the market size of the logistics sector was at $205 billion in FY22 and is expected to $385 billion by Fiscal 2027 

TVS Supply Chain Solutions IPO – Financials

If we look at the financials of TVS Supply Chain Solutions Limited we can see that the company has been increasing its revenue in the past three years. Its revenues have increased from ₹6,999.69 Crores in FY21 to ₹10,311.01 Crores in FY23.

But this revenue is not accompanied by the company’s net profits as it incurred a loss in FY21 & FY22 and made a mere profit ₹41.76 Crores in FY23.

Over the past three years, the company has witnessed an upward trend in its total borrowings, culminating in a reported borrowing amount of ₹1989.62 Crores in FY23.

Though the company has reported a positive RoCE of 7.64%, it is a below-average percentage indicating  that the company resources haven’t been optimally utilized.

The Income Statement of the company 

Income statement of the company
(Source: RHP of the company)

Operational Parameters of the company

Operational parameter data
(Source: RHP of the company)

Geographical Revenue of the company

TVS Supply Chain Solutions IPO Review - Worldwide revenue
(Source: RHP of the company)

Key Players in the Market

Below are the listed peers of TVS Supply Chain Solutions Limited along with their key accounting ratios:

TVS Supply Chain Solutions IPO Review - Key players data
(Source: RHP of the company)

Strengths

  • The company’s distinctive technological approach as a provider of logistics solutions enables it to increase its visibility, speed, accuracy, and cost-efficiency for clients. Moreover, the company’s ability to personalize its technology-driven services to align with the unique needs of individual customers further sets it apart in the industry.
  • The company has established a track record of successful inorganic growth through strategic acquisitions that supplement its operations. It has made over 20 acquisitions in the last 16 years in order to grow across Europe, the United Kingdom, the United States and Asia Pacific
  • The company has developed with customers across diverse and high-growth sectors including automotive, industrial, consumer, tech and tech infra, rail and utilities, and healthcare. This offers them various outsourcing opportunities.
  • The asset-light model of the company and its long-term contracts allows it to adapt across the economic cycle, reducing costs during downturns and putting it in a position to expand quickly in growing markets.
  • The logistics market in India is highly fragmented and unorganized compared to the other markets. This reduces the market penetration into the industry. This makes TVS Supply Chain Solutions Limited to be strategically positioned to capitalize on the substantial growth opportunities

Weaknesses

  • The company’s obligation to repay the borrowings and the restrictions imposed by its financing agreements may reduce the funds available for purposes such as capital expenditures, acquisitions, and strategic investments. This will reduce the company’s flexibility in planning for or reacting to changes in the business, competition pressures, and market conditions.
  • As the majority of the company’s revenue from operations was denominated in foreign currencies. This makes the company exposed to foreign currency exchange rate fluctuations.
  • The company’s working capital requirement has been increasing and an inability to meet such requirements can adversely affect its operations.
  • The company derives 38.88% revenue from the top 20 customers. Any termination or impairment of relationship with these customers can adversely affect the revenues of the company.
  • As the company operates on an asset-light business model, its operations are significantly dependent on network partners and other third parties for our warehousing and transportation needs. If the company is unable is retain any of its partners, it can significantly impacts the company’s operations

TVS Supply Chain Solutions IPO Review – Key IPO Information

ParticularsDetails
IPO Size₹880.00 Cr
Fresh Issue₹600.00 Cr
Offer for Sale (OFS)₹280.00 Cr
Opening dateAugust 10, 2023
Closing dateAugust 14, 2023
Face Value₹1 per share
Price Band₹187 to ₹197 per share
Lot Size76 Shares
Minimum Lot Size1
Maximum Lot Size13 (988 shares)
Listing DateAugust 23, 2023

Promoters: Tvs Mobility Private Limited, T.S. Rajam Rubbers Private Limited, Dhinrama Mobility Solution Private Limited and Ramachandhran Dinesh

Book Running Lead Manager: JM Financial Limited, Axis Capital Limited, J. P. Morgan India Private Limited, BNP Paribas, Nuvama Wealth Management Limited, Equirus Capital Private Limited

Registrar to the Offer: Link Intime India Private Limited

The Objective of the Issue

The net proceeds of the IPO will be used for purposes as follows by the company:

  • Repayment or prepayment of certain borrowing of the company and its subsidiary, TVS LI UK.
  • General corporate purposes.

TVS Supply Chain Solutions IPO – GMP

Currently we don’t have information available right now, we shall update the article once we receive the information

In Closing

In this article, we looked at the details of TVS Supply Chain Solutions IPO Review 2023. Analysts remain divided on the IPO and its potential gains. This is a good opportunity for investors to look into the company and analyze its strengths and weaknesses. That’s it for this post.

Are you applying for the IPO? Let us know in the comments below.

Written By Aaron Vas

By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news, and make well-informed investment decisions.


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