TVS Supply Chain Solutions left investors disappointed on Wednesday, debuting on the stock exchange with only a modest premium and failing to ignite subsequent buying interest. This lackluster debut marked a departure from the recent trend of strong listings for new entrants, dampening investor sentiment.
The stock of TVS Supply Chain Solutions made a tepid entry onto Dalal Street, trading at a 5% premium at Rs 207.05 on the National Stock Exchange (NSE) and Rs 206.30 on the BSE, compared to its issue price of Rs 197 per share. Despite the initial uptick, profit booking set in, causing the stock to remain range-bound throughout the day, reaching a high of Rs 208.50 and a low of Rs 199.
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This sideways movement left investors pondering whether to hold onto their shares or exit following the modest listing gain. While the majority of analysts recommend exiting due to stretched valuations and the company’s recent history of losses, a minority advocate holding for the long term, but only for those with a high risk appetite.
Anubhuti Mishra, Equity Research Analyst at Swastika Investmart, noted that despite being a prominent player in supply chain management, TVS Supply Chain Solutions operates in a fiercely competitive sector and has reported losses over the past two years. She advised investors to book profits at the current elevated levels or maintain a stop-loss at the IPO price, cautioning against the issue’s expensive valuations.
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The IPO, which raised Rs 880 crore, was open for subscription from August 10 to 14. TVS Mobility Group sold shares in the range of Rs 187-197 apiece during the three-day bidding process, with a lot size of 76 equity shares. The offering was oversubscribed 2.85 times overall, with retail investors showing strong demand at 7.89 times their quota.
Dhruv Mudaraddi, Research Analyst at StoxBox (formerly BP Equities), attributed the subdued listing to rich valuations compared to peers, lackluster financial performance, and heightened competition in the industry. He advised allottees to explore other investment opportunities and consider revisiting the company in the future if financial metrics, especially margins, improve and valuations become more reasonable.
TVS Supply Chain Solutions, based in Chennai, offers supply chain management services to international organizations, government departments, and large and medium-sized businesses. It operates in two segments: integrated supply chain solutions (ISCS) and network solutions (NS).
While some see potential in the company’s fundamentals and strong promoter support, others suggest booking profits once the stock delivers at least a 10-15% return over the issue price, while risk-takers may find value in its asset-light strategy, global services, and growth potential in the organized logistics sector post-GST, according to Prashanth Tapse, Senior VP Research Analyst at Mehta Equities.
