Five things to know about Popular Vehicles and Services IPO
Upstox
4 min read • Updated: March 11, 2024, 2:18 PM
Summary
Kochi-based automotive dealer Popular Vehicles and Services Ltd will hit the capital market with its ₹602-crore maiden public offer on 12 March. The public issue will be open for subscription till 14 March.
Popular Vehicles and Services IPO will open for subscription from 12 March 2024. The company operates multi-brand integrated auto dealerships and services, backed by Banyan Tree Growth Capital. Here are the key things to know before you apply for this IPO:
Popular Vehicles and Services offer details
The ₹602-crore public offer of Popular Vehicles and Services comprises a fresh issue of shares worth ₹250 crore and an offer for shares of 1.19 crore (11,917,075) equity shares worth ₹352 crore.
Promoter Banyan Tree Growth Capital is divesting 19% of the total 29% stake in Popular Vehicles and Services through the offer for shares. The public offer will open for subscription on March 12 and close on March 14.
The allotment of shares is expected to be announced on March 15, while the company may make its market debut on exchanges on March 19 on both National Stock Exchange (NSE) and BSE. The company has set aside around 35% of the offer size for retail individual investors. It has reserved 50% of the IPO size for qualified institutional investors while the rest is 15% for non-institutional players.
IPO Objectives
Popular Vehicles and Services has come up with a fresh issue of equity shares worth ₹250 crore. The company has proposed to use the proceeds from the fresh issue mainly for the repayment of loans by its subsidiary companies and meeting general corporate purposes.
The company seeks to use ₹192 crore for debt repayment or prepayment of subsidiary companies Popular Autoworks Pvt Ltd, Kuttukaran Cars Pvt Ltd, Kuttukaran Green Pvt Ltd and Prabal Motors Pvt Ltd.
As of December 31, 2023, Popular Vehicles and Services and its subsidiaries had an amount outstanding of ₹637.06 crore under the fund-based and non-fund-based working capital and term loan facilities on a consolidated basis.
Also Read: Eight IPOs to hit markets this week: 2 mainboard, 6 SME IPOs
Price Details and Lot Size
Popular Vehicles and Services last week announced the price band for the public offer at ₹280-295 per equity share. The total IPO size will be around ₹602 crore at the upper end of the price band.
The company has set the lot size at 50 equity shares and multiples of that after, which means the minimum investment size for retail investors will be ₹14,750 at the upper end. At the lower band, the minimum investment value is ₹14,000 for the IPO which is a 100% book-built issue.
Nuvama Wealth Management, ICICI Securities, and Centrum Capital are the book-running lead managers for the IPO.
Key Risk Factors
Popular Vehicles and Services has listed the introduction of modern technologies for new vehicles, such as autonomous driving systems, changes in emission norms and ban on diesel vehicles in major cities in India as key risk factors.
Also, sales from the dealerships network of Maruti Suzuki and Tata Motors account for 80% of its revenue from operations. Hence, any possible termination of agreements with original equipment makers poses risks for the company.
Popular Vehicles and Services had negative cash flows in the past including in the six months to September 30, 2023. According to the prospectus, it may experience negative cash flows in the future.
About Popular Vehicles and Services
Popular Vehicles and Services Ltd is engaged in automotive dealerships and services space, retail sales of auto parts and accessories and pre-owned vehicles. The company has 432 touchpoints which comprise 100 showrooms and 139 service centers in three states – Tamil Nadu, Kerala and Karnataka.
The company runs the dealerships network for passenger vehicles brands like Maruti Suzuki, Honda and Jaguar Land Rover. It also operates dealerships of Tata Motors and BharatBenz commercial vehicles. In addition, it has electric two-wheeler and three-wheeler dealerships of Ather and Piaggio, respectively.
Popular Vehicles and Services is promoted by Naveen Philip, who is also the managing director of the company, his Kuttukaran family and the PE firm, Banyan Tree.
Naveen Philip and his family hold a 69% stake in the company, while Banyan Tree Growth Capital has around 29% of the stake. Banyan Tree has been with the company since 2015, when it invested ₹65 crore for a 33% stake. It sold 3% of the stake to the company ahead of the IPO.