Last Updated on December 26, 2023 by BFSLTeam BFSLTeam
In recent years, the logistics and supply chain sector in India has evolved from its supportive role to a high-impact sector with substantial growth potential. In 2020, the Indian logistics industry was worth $100 billion and it is expected to reach $380 billion by 2025.
TVS Supply Chain Solutions Limited is currently one of the largest supply chain management companies in the country in terms of revenue. It is expected to launch its Initial Public Offering (IPO) on 10th August. But, is it a good investment?
In the following sections, we have presented all the important details you will need to know to make an informed decision. Read on to know about the company, its financials, strength, risks and more.
Table of Content
IPO details
The TVS Supply Chain Solutions Limited IPO will open on 10th August, Thursday and close on 14th August, Monday. Here are the essential details of this IPO you should check before you decide to invest:
| Issue period | 10th to 14th August, 2023 |
| Listing date | 23rd August, 2023 |
| Issue type | Book built IPO |
| Listing at | BSE and NSE |
| Total issue size | Around Rs. 880 crore (4,46,70,051 shares) |
| Fresh issue | Around Rs. 600 crore (3,04,56,853 shares) |
| Offer for sale | Around Rs. 280 crore (1,42,13,198 shares) |
| Face value | Re. 1 per share |
| Price range | Rs. 187 to Rs. 197 |
| Lot size | 76 shares |
| Minimum investment | Rs. 14,972 (1 lot) |
| Maximum investment | Rs. 1,94,636 (13 lots) |
About the company
TVS Supply Chain Solutions Limited is an international supply chain management service provider with a presence in over 25 countries. As of fiscal 2023, it is the largest supply chain solutions provider in India in terms of consolidated revenue and among the top three companies in years of operation.
TVS Supply Chain Solutions is known for providing end-to-end supply chain and logistics solutions to government departments, international companies and medium-sized businesses.
In the financial year 2021-22, it served over 10,531 customers across the world. Some of the biggest names on this company’s client list are Sony India, Hyundai Motor India, Hero MotoCorp, Ashok Leyland, Yamaha Motor India, Panasonic Life Solutions India, etc.
TVS SCS Ltd has two main verticals- Integrated Supply Chain Solutions (ISCS) and Network Solutions (NS). The former involves providing tailored and integrated solutions for supply chain problems. In this segment, the company is involved in sourcing, integrated transportation, procurement, consulting services, aftermarket fulfilment and in-plant logistics operations.
Under the NS vertical, the company provides end-to-end solutions for freight forwarding, warehousing, port storage and distribution as a part of its Global Freight Solutions (GFS). For Time-Critical Final Mile Solutions (TCFMS), it provides closed-loop logistics services and assistance. TVS SCS also provides in-person training for their network partners and employees on customer service, communication and other skills.
IPO tentative timeline
If you are planning to subscribe to the TVS SCS IPO, you will want to check the opening, closing and listing dates. Here is the complete timeline for this IPO:
| Opening date | 10th August, 2023 |
| Closing date | 14th August, 2023 |
| Cut-off date for UPI mandate confirmation | 5 p.m., 14th August, 2023 |
| Finalisation of allotment date | 18th August, 2023 |
| Date for initiation of refunds | 21st August, 2023 |
| Date for credit of shares | 22nd August, 2023 |
| Listing date | 23rd August, 2023 |
IPO lot size
Here are the details of minimum and maximum lot sizes for the TVS Supply Chain Solutions IPO for different investor categories:
| Application type | Number of lots | Total amount |
| Retail (minimum) | 1 (76 shares) | Rs. 14,972 |
| Retail (maximum) | 13 (988 shares) | Rs. 1,94,636 |
| S-HNI (minimum) | 14 (1064 shares) | Rs. 2,09,608 |
| S-HNI (maximum) | 66 (5016 shares) | Rs. 9,88,152 |
| B-HNI (minimum) | 67 (5092 shares) | Rs. 10,03,124 |
| B-HNI (maximum) | No upper limit | No upper limit |
Company financials
Here’s the summary of financial information of TVS SCS for the previous three financial years (all figures are in Rs. millions):
| Particulars as of | 31st March, 2023 | 31st March, 2022 | 31st March, 2021 |
| Total assets | 62,109.22 | 57,897.29 | 49,900.60 |
| Total liabilities | 54,509.10 | 50,358.14 | 44,594.02 |
| Total income | 1,03,110.10 | 92,999.36 | 69,996.91 |
| Total expenses | 1,02,657.26 | 92,532.20 | 71,657.88 |
| Profit/loss after tax | 417.61 | (458.00) | (763.44) |
| EBITDA | 6,836.51 | 6,125.64 | 3,866.90 |
| Total earnings/loss per share | 1.04 | (1.44) | (2.26) |
Strengths
These factors demonstrate what a company excels at and its uniqueness in the market. Analysing a company’s strengths will enable you to understand its competitive position and future scope.
Here are the top competitive strengths of TVS Supply Chain Solutions Ltd:
- Being a large player in a fragmented market
The Indian logistics market is more expensive (13% of total GDP) compared to most developed countries. As such, there is a growing demand for cost-effective, modernised and well-integrated logistics services. Moreover, the market is highly fragmented and unorganised, which minimises the competition for a large player like TVS SCS.
- Track record of successful acquisitions
Over the years, TVS Supply Chain Solutions has made over 20 strategic acquisitions across many countries. Through its acquisitions, the company has acquired companies specialising in repair and refurbishment services, freight forwarding solutions, tech logistics, same-day express delivery and more. This has allowed it to build an extensive portfolio of offerings.
- Having a resilient business model
The company has built a business with well-diversified revenue sources. As of FY2023, it has 8,788 clients spread across 26 countries and different sectors such as automobiles, consumer tech, utilities, etc. Most of these clients have multi-year contracts with TVS SCS which ensure long-term profits.
- Leading provider of one-stop logistics solutions
According to a report by Redseer, TVS Supply Chain Solutions Ltd is the largest supply chain solutions provider in India. Its market leader position in an industry expected to $385 billion by FY2027 provides attractive growth potential for investors. Moreover, the company provides end-to-end logistics services, which is still uncommon in our country.
- Asset light operations
Despite its relatively large size, the company operates an asset-light business as it does not maintain ownership of its assets. However, it has full control over the scheduling, routing and storage of goods to deliver. This allows this company to keep its expenses low while maintaining control over performance and quality metrics.
- Predictive analysis capabilities
TVS Supply Chain Solutions Limited has successfully integrated emerging technologies such as artificial intelligence, machine learning and big data into its algorithms. This enables the company to use real-time data analytics to optimise its network density, equipment utilisation and improve customer service and operational efficiency.
Risks involved
When making any investment decision, proper risk management is necessary to identify threats before they occur. That is why you should study the following risk factors if you are planning to invest in TVS Supply Chain Solutions IPO:
- Dependence on a few key customers
The company derives a portion of its revenue from a few key clients. As of FY2023, the top 20 customers accounted for as much as 38.88% of its total revenue from operations. Hence, if one or two clients refuse to renew their contracts or their demand for services decreases, it could result in a decline in the company’s revenue.
- High operating expenses
TVS Supply Chain Solutions spends a large portion of its revenue on operating expenses. In FY2023, 36.47% of its operating revenue was spent on freight, forwarding, carrying and handling charges. Meanwhile, 20.45% of its revenue was spent on employee benefits and 10.46% on sub-contracts. Any increase in these expenses will affect the company’s profits.
- Losses in previous financial years
If you check the company’s restated financials, you will see that the company realised Rs. 417.61 million in profits in FY2023. However, in the previous two fiscals, the company incurred losses of Rs. 458 million and Rs. 763.44 million, respectively. A labour strike and various macroeconomic events resulted in overall losses. In similar situations, TVS SCS may incur losses in the future.
- Exposed to currency fluctuations
A significant portion of this company’s revenues are from foreign countries. While international diversification has several benefits, it also exposes its profit margin to foreign currency fluctuations. Hence, the weakening of the Indian rupee against various foreign currencies, including US Dollar, Euro, British Pound, etc., can affect its bottom line.
A comprehensive analysis of the above strength and risk factors will provide you with key insights into the company’s fundamentals. You can get more details from the Red Herring Prospectus (RHP) that the company has filed with SEBI.
Summary
TVS Supply Chain Solutions Limited is a leading Indian supply chain management company that operates in multiple countries in Asia-Pacific, North America and Europe. The company will launch its IPO on 10th August which will remain open till 14th August. It aims to raise funds worth Rs. 880 crore through this public offering, of which Rs. 280 crore is reserved as an Offer for Sale (OFS).
If you want to invest in this IPO, you should stay prepared by opening a Demat account and studying the company’s strength and weaknesses. Ensure to thoroughly study the RHP of TVS Supply Chain Solutions Limited and check its previous years’ financial statements to weigh the pros and cons of investing here.
