Popular Vehicles and Services disappointed investors after the stock made a weak debut, listing at a 2 percent discount over the issue price. The weak debut aligned with analyst estimates who had expected the scrip to list with little-to-no gains.
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"Despite a muted listing, we suggest the investors who have been allotted the shares to hold them for a medium to long-term horizon," Parth Shah, research analyst at StoxBox said. Shah also added that apart from benefiting from the inherent synergies arising out of its business verticals, the company's diversified income streams contribute to higher profitability margins.
"The company offers fully integrated services through its authorized service centres that contribute to higher-margin business at each of the dealerships and help mitigate the cyclicality that has historically impacted some elements of the automobile sector," he said.
Also read: Popular Vehicles and Services disappoints, lists at 2% discount to issue price
Shivani Nyati, head of wealth at Swastika Investmar, recommends allottees maintain their stop loss at Rs 250 and wait for further upside. Those with a medium-to-long-term perspective are advised to hold the stock. The analyst also said that some key risks necessitate careful consideration, mainly the company's reliance on OEMs and the competitiveness of the automobile industry. "Despite these risks, the IPO valuation appears reasonable."
Read more: Popular Vehicles and Services likely to see muted debut on March 19
Amit Goel, chief global strategist at Pace 360, says that the issue looks fully priced. Popular Vehicles and Services is one of the multifaceted leaders in the automobile dealership and servicing segment. With a relationship with Maruti Suzuki, a leading Indian automaker, it leads the segment with over 400 touchpoints which bodes well for the company.
The IPO was subscribed only 1.23 times. Qualified institutional buyers showed relatively higher interest, subscribing 1.97 times the portion reserved for them, while retail investors subscribed 1.05 times their allotted quota of shares.
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