TVS Supply Chain IPO shares see a tepid debut; what should investors do now?

The stock jumped almost 6 per cent in intraday trade with respect to its issue price. However, it cooled off later and at around 11:45 am, the stock was up 1.57 per cent at ₹200.10 on BSE.

Earlier, the IPO of the company, which consisted of a fresh issue of shares worth ₹600 crore and an offer for sale of shares worth ₹280 crore, was subscribed 2.85 times in total from August 10 to August 14. The IPO received 7.89 times subscriptions in the retail category and 1.37 times in the Qualified Institutional Buyers (QIB) category. The Non-Institutional Investors’ (NII) portion was booked 2.44 times.

TVS Supply Chain Solutions had earlier raised ₹396 crore from 18 marquee anchor investors ahead of the IPO opening.

What should investors do now?

Many experts are of the view that investors can book profits in the counter and those who want to hold the stock should maintain a stop loss near the IPO price.

Prashanth Tapse, Senior VP Research Analyst at Mehta Equities said one can consider selling allotted shares on the listing day. However, he added that risk-takers might find value in TVS Supply Chain’s asset-light strategy, global services, and post-GST growth potential for organized logistics.

Anubhuti Mishra, an equity research analyst at Swastika Investmart pointed out that given that this IPO’s subscription was lower than that of some recent IPOs, the listing is respectable—even above expectations.

Mishra added that although TVS Supply Chain Solutions 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.

“We suggest investors book profits after listing at such a higher level. Those who still want to hold should maintain a stop loss at the IPO price,” said Mishra.

Dhruv Mudaraddi, a research analyst at StoxBox advises investors to stay away from the stock for the short term.

“As expected, we saw a tepid listing for the TVS Supply Chain Solutions issue which opened on a mostly flat note compared to the issuance price of ₹197 per share due to rich valuation vis-à-vis other listed peers, average financial performance and increased competitive intensity in the industry,” Mudaraddi said.

“We advise investors who have received allotment to move to other investment avenues and stay away from this counter at least in the short-term. Given the strong parentage of TVS Group, investors may reconsider the company in future following sustained improvement in financial metrics (especially margin expansion) and reasonable valuation,” said Mudaraddi.

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Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Updated: 23 Aug 2023, 12:33 PM IST