Popular Vehicles and Services Ltd. is a Kerala-based auto dealership chain established four decades ago which has subsequently expanded its footprint to more states. Popular Vehicles IPO | Popular Vehicles & Services IPO is a combination of fresh issue of 0.85 cr shares to ₹250.00 cr and offer for sale of 1.19 cr shares to ₹351.55 crores.
IPO opens
March 12, 2024
IPO Closes
March,14, 2024
IPO Size (Rs.)
₹601.55 Cr
IPO Size (shares)
20,391,651 shares
Breakup
Fresh issue ₹250.00 Crr+ OFS ₹351.55 Cr
Face Value:
₹2
IPO Price in Rs :
₹280 to ₹295 per share
Minimum Lot
50 Shares
Listing At
NSE, BSE
QIB
~50%
NII Quota
~15%
Retail Quota
~35%
Lead Manager
ICICI Securities, Nuvama Wealth Management, Centrum Capital
Registrar
Link Intime
About Popular Vehicles & Services Limited:
They are a diversified automobile dealership in India in terms of revenue for Fiscal 2023, having a fully integrated business model.
They cater 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.
Popular Vehicles began its automobile dealership business in 1984, with a Maruti Suzuki showroom in Trivandrum, Kerala.
Subsequently, it expanded to Chennai in 2002. In 2015, the company ventured into spare parts distribution.
The company now has 61 showrooms, 133 sales outlets, 32 preowned vehicle showrooms, 139 authorized service centers, 43 retail outlets, and 24 warehouses.
These showrooms cover 14 districts in Kerala, 8 districts in Karnataka, 12 districts in Tamil Nadu, and 9 districts in Maharashtra.
The company has been promoted by John K. Paul, Francis K. Paul and Naveen Philip.
Financials: Popular Vehicles & Services Limited
Particulars/ Rs (in crore)
H1FY24
FY23
FY22
FY21
Revenue
2,848
4,893
3,484
2,919
Profit before tax (PBT)
54
85
49
47
Net Profit
40
64
34
32
Post issue Share Capital
14.24
FV
2.0
IPO price
295.0
EPS Fy23
9.0
PE Fy23
32.8
EPS Fy24 (annualized)
11.2
PE Fy24 (annualized)
26.3
Market cap in Lacs
2,100.3
Market cap / Sales
0.43
Popular Vehicles IPO: Anchors
Good response. Partial list is indicated.
Popular Vehicles IPO: Salient Points
Currently, there are only a handful of very large dealerships in India with more than 100 outlets and a presence across 4-5 states.
58%of OFS is by PE investor Banyan Tree . They have been invested for about 8 years and are exiting partially at IR of 34%.
From the Rs. 250 cr fresh issue proceeds it will repay Rs. 192 cr Debt. Net Debt is upward of 700 crore.
The company, which began its operations with Maruti Suzuki dealerships, apart from repaying certain borrowings, intends to expand into high-growth markets like Delhi, NCR, and Gujarat while expanding its presence in existing regions.
Details of the income generated from sales of vehicles and services provided
Particulars
For six months period ended, September 30,2023
Fiscal 2023
Fiscal 2022
Fiscal 2021
Amount (in ₹ million)
%contribution to total income
Amount (in ₹ million)
%contribution to total income
Amount (in ₹ million)
%contribution to total income
Amount (in ₹ million)
%contribution to total income
Sales
Sale of new vehicle
19,411.07
68.15%
33,305.06
68.07%
23,222.61
66.65%
19,395.41
66.44%
Sale of Accessories
439.42
1.54%
771.22
1.58%
433.59
1.24%
336.69
1.15%
Insurance commission & Finance Commission
237.07
0.83%
395.15
0.81%
286.02
0.82%
272.04
0.93%
Income from schemes and incentives
701.34
2.46%
1,049.48
2.15%
956.26
2.74%
803.52
2.75%
Others
192.81
0.68%
340.94
0.70%
193.50
0.56%
138.20
0.47%
Services
Labour Income
1,605.17
5.64%
2,871.91
5.87%
2,367.73
6.80%
1,818.50
6.23%
Sale of spare parts
2,406.52
8.45%
3,879.05
7.93%
2,577.39
7.40%
2,144.98
7.35%
Insurance commission
110.32
0.39%
192.52
0.39%
167.59
0.48%
172.11
0.59%
Income from schemes and incentives
60.88
0.21%
114.04
0.23%
91.46
0.26%
72.97
0.25%
Others
41.88
0.15%
84.20
0.17%
121.51
0.35%
117.87
0.40%
A large portion of their business operations, which is approximately 96.91% of Company’s consolidated revenue for the six months period ended September 30, 2023, are concentrated in the states of Kerala, Tamil Nadu and Karnataka.
They operate the passenger vehicle dealerships of Maruti Suzuki, Honda and JLR, commercial vehicle dealership of Tata Motors (Commercial) and BharatBenz and electric two-wheeler and three-wheeler vehicle dealership of Ather and Piaggio, respectively.
OEM
Total consolidated revenue from vehicle sales in %
Six months period ended September 30, 2023
Fiscal 2023
Fiscal 2022
Fiscal 2021
Maruti
48.15
51.32
53.57
58.06
Tata Motors (Commercial)
24.13
29.35
27.52
23.87
Honda
4.75
6.59
9.09
8.15
Total
77.03
87.26
90.18
90.08
Peers
Company
CMP (₹)
Revenue(₹cr)
Net Profit(₹ cr)
NPM %
PE
Macp/sales
RONW
Popular Vehicles and Services
295
4875.0
64.0
1.3%
32.8(26.3)
0.4
18.68%
Landmark Cars Limited
722
3382.4
85
2.5%
41
0.91
18.04%
Metrics H1Fy24
Units
Popular Vehicles
Landmark Cars
Revenue from Operations
₹ mn
28,349.97
14,646.68
– Sales of new vehicles
₹ mn
19,411.07
NA
– Sale of spare parts and accessories
₹ mn
4,115.54
NA
– Sale of pre-owned vehicles
₹ mn
1,938.74
NA
– Sale of services
₹ mn
1,605.84
NA
– Other Operating income
₹ mn
1,278.78
NA
Total Income
₹ mn
28,482.08
14,697.49
Profit for the period
₹ mn
400.44
277.68
Inventory turnover days
days
103
181
Working capital days
days
95
135
Gross Profit
₹ mn
4,334.04
2,994.63
Gross Margin
%
15.29%
20.45%
EBITDA
₹ mn
1459.09
1,015.99
EBITDA Margin
%
5.12%
6.91%
PAT Margin
%
1.41%
1.89%
RoE
%
10.42%
5.56%
Net Debt / EBITDA
times
5
4.1
Vehicle sales form the lion share contributing 85% of revenue, the service and repair segment is smaller at 15% of revenue, but generates a significantly higher EBITDA margin of 55%.
The company recorded good growth in net profit at ₹64.07 Crore for the financial year ended March FY23, representing a 90% increase yoy. Revenue jumped to ₹4,892.63 Crore in FY23 from ₹3,484.20cr FY22.Net profit for the six months ended September FY24 stood at ₹40 Crore on revenue of ₹2,835 Crore suggesting good growth.
Popular Vehicles IPO is coming at a PE ratio of 32x(fy23 earnings) and 26x ( fy24 annualized earnings).
Not quite sure if I will apply for Popular Vehicles IPO. May prefer to purchase some after listing if available at discount. Primary reason is present market conditions for midcaps and small caps and many mainline IPOs have recently witnessed extremely muted listings. Anchor response is good and should translate to good QIB demand. The IPO appears reasonably priced compared to Landmark Cars and may do well.
GMP as reported on social media has been Rs. 5.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.
