Following a busy week that just went by, the Indian IPO market is once again buzzing with activity around TVS Supply Chain IPO. Being a business entity of the revered TVS group and a targeted fundraise of INR 880 crore, this IPO has captured the attention of investors. In this in-depth TVS Supply Chain IPO review, we delve into the intricacies of its business model and provide an analysis for investors to determine whether seizing this opportunity aligns with their investment strategy.
TVS Supply Chain Solutions: A Comprehensive Overview
As of the fiscal year 2023, TVS Supply Chain Solutions (TSCS) holds its position as India’s largest and one of the fastest-growing integrated supply chain solution providers in terms of both revenue and revenue growth. With over 16 years of experience, the company has refined its expertise in managing complex supply chains across various industries in India and select global markets. In the fiscal year 2023 alone, the company’s total income surged to INR 10,311.01 crores, marking a significant leap.
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TVS Supply Chain IPO Review: Business Segments
The core operations of TVS Supply Chain Solutions are divided into two primary segments: Integrated Supply Chain Solutions (ISCS) and Network Solutions (NS). Under the ISCS segment, the company excels in sourcing, procurement, transportation, logistics operations, in-plant logistics, aftermarket fulfillment, and supply chain consultation. On the other hand, NS encompasses a broader spectrum including global forwarding solutions, warehousing, port storage, value-added services, and time-critical final mile solutions.
As of 31 March 2023, TVS Supply Chain Solutions managed 22,532,509 square feet of logistics warehouse space. In FY 2023, its provided ISCS services to 308 customers and NS services to 594 customers in India, spanning across industries such as automotive, industrial, consumer, and tech and tech infra. In FY 2023, it carried 2,074 tons of air freight and 32,720 TEU of sea freight in India.
Dominant Market Forces
In the landscape of India’s logistics, TVS Supply Chain Solutions holds a commanding presence, boasting the highest consolidated revenue within its peers and securing a top-three position in terms of operational history. This achievement gains even more significance considering India’s logistics market potential, which has demonstrated remarkable resilience even during the challenges posed by the COVID-19 pandemic.
In the fiscal year 2022, India’s outsourced supply chain solutions market (excluding e-commerce) was valued at a range of USD 7.5 to USD 7.7 billion. The trajectory ahead appears promising, with projections indicating a Compound Annual Growth Rate (CAGR) of 20-22% by the fiscal year 2027, which could propel this market to an estimated value between USD 20 to USD 21 billion. The company’s extensive reach is evident through its management of over 22 million square feet of logistics warehouse space and its services catering to a multitude of customers spanning diverse industries.
TVS Supply Chain IPO: Issue Structure
TVS Supply Chain IPO is scheduled to start from 10 August and is likely to remain open through 14 August, with a per share price range falling between INR 187 to 197. This offering comprises an Offer For Sale (OFS) of 14,213,198 shares, alongside a Fresh Issue of INR 600 crore, summing up to a comprehensive offering value of INR 880 crore. Notably, retail investors will be allocated 10% of the total shares available.
TVS Supply Chain IPO Analysis: Competitive Advantages
The remarkable success of TVS Supply Chain Solutions stems from its considerable scale in India’s burgeoning logistics market. India’s logistics spending constitutes approximately 13% of its GDP which is on the higher side and is indicative of inefficiencies. This also represents substantial growth potential for efficient and integrated players. Moreover, India’s logistics landscape remains largely fragmented and unorganized, thereby creating ample prospects for integrated supply chain solution providers.
Beyond geographical borders, the company’s influence extends to 26 countries worldwide, enabling it to cater to evolving customer demands for end-to-end visibility, flexibility, and dynamic optimization. Complemented by in-house technology, a history of successful acquisitions, and a resilient business model, these factors collectively fortify the company’s competitive edge.
Insights into Financial Performance
The financial trajectory of TVS Supply Chain Solutions is notably commendable. While the fiscal year 2021 experienced a deficit in net income, the company reversed this trend by generating a net income of INR 41.8 crores in the fiscal year 2023. This transformation is a testament to the company’s adaptability and resilience within a constantly evolving market.
|FY 2021||FY 2022||FY 2023|
The revenues are diversified in terms of customers, geographies, and industries. It serviced 8,788 customers globally in FY 2023 spread across industries. The following table provides information on revenue from operations from customers engaged in the various industries for the years indicated:
TVS Supply Chain IPO Review – Peer Comparison
When juxtaposed with industry counterparts such as Mahindra Logistics, TCI Express, Blue Dart Express, and Delhivery, TVS Supply Chain Solutions emerges as a formidable contender concerning revenue growth and profitability. The company’s consistent expansion through acquisitions and robust client relationships position it advantageously in this dynamic sector.
|Revenue Growth Rate (%)||Revenue CAGR FY 20-23 (%)||EBITDA (%)||ROCE (%)||RONW (%)|
|TVS Supply Chain Solutions Limited||10,235.38||10.66||16.0||6.86||7.64||5.50|
|Mahindra Logistics Limited||5,128.29||23.85||14.0||5.07||7.32||4.89|
|TCI Express Limited||1,241.01||14.75||6.0||15.67||30.71||23.35|
|Blue Dart Express Limited||5,172.22||17.27||18.0||18.13||37.32||31.41|
Global Presence and Employee Strength
With a global workforce of 17,913 permanent employees, TVS Supply Chain Solutions possesses a significant human resource base. This includes 13,869 employees located within India and 4,044 situated internationally. Additionally, temporary labor provided by manpower agencies supplements the total contracted workforce, amounting to 16,141.
TVS Supply Chain IPO Analysis – Should You Invest?
Taking into account the comprehensive insights from the TVS Supply Chain IPO Review, it is evident that the company occupies a prominent position within India’s logistics market. The combination of a resilient asset-light business model, technological innovation, diversified revenue streams, and strategic acquisitions collectively contribute to a promising outlook.
In terms of valuations, the PE ratio range is 183.33 – 193.14 which appears to be quite high as some of its peers are available at lower levels. However, its Price to Sales ratio works out to 0.85 which is much attractive than TCI Express and Delhivery.
Given the projected growth within the logistics sector and the company’s potential for further expansion, this IPO presents an enticing investment opportunity for investors seeking exposure to India’s evolving logistics arena. However, as is the case with any investment endeavor, it is strongly advised that investors conduct thorough due diligence, taking into consideration their risk tolerance and long-term investment objectives prior to making an informed decision.