Popular Vehicles and Services likely to see muted debut on March 19

Popular Vehicles and Services to debu on March 19

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Automobile dealer Popular Vehicles and Services shares are unlikely to see any listing premium on March 19, given the muted IPO subscription numbers and the subdued market conditions, experts said.

Its initial public offering has managed to get fully subscribed as investors bought only 1.23 times the IPO size during March 12-14. Qualified institutional buyers picked 1.97 times the reserved portion, and retail investors bought 1.05 times the allotted quota, while non-institutional investors bid 0.66 times the portion set aside for them.

The Kerala-based company, which competes with Landmark Cars, has raised Rs 601.55 crore through its public issue at the upper price band. The IPO was comprised of fresh issue of Rs 250 crore worth shares and an offer-for-sale (OFS) of 1.19 crore equity shares worth Rs 351.55 crore by private equity fund BanyanTree Growth Capital II, LLC.

Meanwhile, during the IPO subscription period, the equity benchmark indices and broader markets corrected sharply after the overvaluation concerns raised by the capital markets regulator, and remained in a consolidation mode. The benchmark index lost 2 percent and the Nifty Midcap 100 index fell nearly 5 percent last week.

Also read: Krystal Integrated Services IPO bought 13.14 times on final day

"The company is set to be listed at its subscription price without fetching any premium," Parth Shah, research analyst at StoxBox said.

Popular Vehicles and Services is a diversified automobile dealership company in India, having a fully integrated business model. It caters to the complete life cycle of vehicle ownership, right from the sale of new vehicles, servicing and repairing vehicles, distributing spare parts and accessories, to facilitating sale and exchange of pre-owned vehicles, operating driving schools and facilitating the sale of third-party financial and insurance products.

Amit Goel, co-founder and chief global strategist at Pace 360 also expects the muted listing for Popular Vehicles & Services at around Rs 290-295. Looking at the issue's annualized earnings for FY24, it looks fully priced, he feels.

Also read: Rekha Rakesh Jhunjhunwala-backed Baazar Style Retail files draft IPO papers

Its IPO shares were not trading at any premium in the grey market, the market observers said. The grey market is an unofficial platform for trading in IPO shares till the listing.

Popular Vehicles that operates dealerships for Maruti Suzuki India, Honda Cars India, Jaguar Land Rover India, Tata Motors, Daimler India Commercial Vehicles, Piaggio Vehicles, and Ather Energy has recorded net profit at Rs 64.07 crore for the year ended March FY23, rising 90.3 percent over a year-ago period, but there was a bit of pressure in the operating margin.

Its revenue from operations increased by 40.65 percent year-on-year to Rs 4,875 crore during the year, while EBITDA (earnings before interest, tax, depreciation and amortisation (EBITDA) in FY23 jumped 35.5 percent to Rs 217.2 crore, but margin dropped to 4.45 percent, from 4.6 percent in previous year.

Its net profit for six months period ended September FY24 stood at Rs 40 crore on revenue of Rs 2,835 crore.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.