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TVS Supply Chain Solutions IPO comprises a fresh issue size of ₹600 crore and an OFS portion of 1,42,13,198 shares for about ₹280 crore which translates to a total IPO issue size of ₹880 crore. There will 6 holders offering shares under the OFS portion which includes Tata Capital. TVS Supply Chain Solutions (TVSCS), part of the TVS mobility group is one of the fastest growing integrated supply chain solutions provider managing large and complex supply chains across multiple industries in India and select global markets through customized tech-enabled solutions.

About TVS Supply Chain Solutions:

• Over the years, the company has brought in its in-depth understanding of multi-sector dynamics and local markets, operational experience, corporate governance standards, and the implicit trust of stakeholders.
• TVS SCS was promoted by the erstwhile TVS Group, one of the reputed business groups in India and is now part of the TVS Mobility Group.and is promoted by TVS Mobility Private Ltd, TS Rajam Rubbers Private Ltd and Dhinrama Mobility Solutions Private Ltd.
• TVS Supply Chain Solutions (TVS SCS), is part of TVS Mobility Group (part of the reputed TVS group of South India). TVS SCS is among the largest and fastest growing integrated supply chain solutions provider in India.
• TVS Supply Chain Solutions Ltd that pioneered the development of outsourced logistics industry in India. They have managed complex value chains across sectors for 15 years. TVS Supply Chain Solutions Ltd has vast experience addressing supply chain challenges for global businesses; apart from government departments, and MSMEs through a fully integrated offerings.
• Within the supply chain solutions, TVC SCS provides Integrated Supply Chain Solutions, Global Forwarding and Last Mile Solutions that are customized to customers’ needs.
• TVS Supply Chain Solutions employs over 18,000 logistics professionals, has more than 100 owned operating locations and services over 55 global Fortune 500 customers.
• It provide logistics solutions include Automotive, beverages, FMCG, defence, ecommerce healthcare, railways, telecom, utilities, technology, ITES, and financial services. Some of its blue chip customers include Babcock, Denso, Coca Cola, Daimler Trucks, Diageo, Ford, GM, Isuzu, Hagemeyer, Ministry of Defence, Siemens, and Volkswagen.
• It serviced 11,546, 10,531 and 8,788 customers globally in Fiscals 2021, 2022 and 2023, respectively, and these customers were spread across 26 countries.

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TVS Supply Chain Solutions IPO: Salient Points

• The logistics industry in India is expected to grow to US$385 billion by Fiscal 2027 at a CAGR of 13% from US$205 billion in Fiscal 2022 as per Redseer Report.
• The outsourced supply chain solutions market is expected to grow at a CAGR of ~22% by FY27.
• The automotive sector supply chain solutions is expected to grow at a CAGR of 15%-17% till FY27 which should benefit TVS Supply Chain Solutions as automobile market is currently the largest end-use sector for 3PL (Third-party logistics industry) in which TVS operates.
• An IPO is coming from TVS group after almost 3 decades/+. The last IPO was TVS Electronics. However it may be noted that the group now stands divided and this company is not part of TVS Motors group in the strict sense for last few years. The only listed company in this group is TVS Srichakra.
• For more than 16 years, TVS SCS has managed large and complex supply chains across multiple industries in India and select global market.
• Its customers included 72 ‘Fortune Global 500 companies, while Indian customers included 25 ‘Fortune Global 500 companies.
• Over the years the company has done successful integration of 20 acquisitions supplementing their operations to support capabilities and further customer acquisition.
• TVSCS operates on an asset light business model through leases with network partners and clients.
• TVSCS provide specialized solutions to reduce complexity in customers supply chains by using technology, data analytics and execution experience building tailor-made solutions.
• It applies technology to each key part of the supply chain to bring three key advantages to existing traditional supply chains: flexibility, intelligence, and efficiency.
• Strong Diversified Revenues across Segments and operation in diversified geographies is expected to lend stability.
• The proceeds of the fresh issue portion will be used to repay / prepay outstanding loans availed by TVS Supply Chain Solutions Ltd and its subsidiaries. This should help to improve profit margins.
• The company has undertaken a Pre-IPO Placement of 8,486,970 Equity Shares, aggregating to ₹ 150 Crore as on 27th July, 2023, as under:

• A major portion of pre IPO allotment has been made by company at Rs. 167.55.
• Currently the promoters hold 46.65% of the company, which will get diluted post the IPO
• In this type business, a lot of costs get front-ended and so profits can multiply fast there after.
• 30% of its revenue from India and balance comes from overseas
• FY23 revenue is divided as 35% from industrials, auto 23%, consumer 12% and 12% from tech and tech infra.
• On FY23 earnings TVS Supply Chain Solutions IPO is valued at 209x P/E.
• ROE stands at 5.5% which is not impressive.
• Though I like the company, I could skip TVS Supply Chain Solutions IPO. I can apply for a small amount if there is some unexpected heavy rush during final hours of IPO closing. While it has merits from a longer perspective, Iam not quite sure about listing gains in this case. The anchor book and pre IPO placement (at a lower price than IPO) may not qualify as top notch in my view.
• Also what weighs on mind is the performance of IPOs in logistic space. with Delhivery, Mahindra Logistics faring poorly on the bourses and erasing investors wealth.
• Capability wise company looks strong with its revenue in FY23 comes from the United Kingdom (29.67%), India (29.57%), Europe excluding UK (13.37%) and Rest of the world (70%).
• GMP as reported on social media is almost negligible.
• Please do your own diligence. There is good amount of risk in all equity investments including this IPO.
• Many such companies with good technical prowess in past have faltered on the bourses on listing.
• Despite its promoters background, company’s price performance on bourses are determined by plethora of factors including demand , supply, visibility, current trends, profit visibility, growth prospects etc.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in 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.