Popular Vehicles & Services Limited is a diversified automobile dealership in India in terms of revenue as of Fiscal 2023, having a fully integrated business model. They cater to the complete life cycle of vehicle ownership, right from the sale of new vehicles, servicing and repairing vehicles, distributing spare parts and accessories, to facilitating sale and exchange of pre-owned vehicles, operating driving schools and facilitating the sale of third-party financial and insurance products. They categorise the automobile dealership business into three key segments, namely, (a) passenger vehicles including luxury vehicles, (b) commercial vehicles and (c) electric two-wheeler and three-wheeler vehicles, which contributed to the revenue from operations aggregating to Rs 16,918.51 million, Rs 9,616.33 million and Rs 450.41 million, respectively, during the six months period ended September 30, 2023. They operate (a) passenger vehicle dealerships covering economy, premium and luxury vehicles across the dealerships for the following OEMs: (i) Maruti Suzuki India Limited ('Maruti Suzuki') for both Arena and Nexa, through the Company, (ii) Honda Cars India Limited ('Honda') through the Subsidiary, VMPL, and (iii) Jaguar Land Rover India Limited ('JLR') through the Subsidiary, PAWL; (b) commercial vehicle dealerships of (i) Tata Motors Limited ('Tata Motors (Commercial)'), through the Subsidiary, PMMIL and (ii) Daimler India Commercial Vehicles Private Limited ('BharatBenz'), through the Subsidiary, PMPL; and (c) electric three-wheeler vehicle dealership of Piaggio Vehicles Private Limited, including commercial and cargo vehicles ('Piaggio'), through the Subsidiary, KGPL and electric two-wheeler vehicle dealership of Ather Energy Private Limited ('Ather'), through the Subsidiary, KCPL. In Fiscal 2023, passenger vehicle sales in India were concentrated in a few major states. The top 5 states are Maharashtra, Uttar Pradesh, Gujarat, Karnataka, and Tamil Nadu. These states cumulatively contributed to more than 40% of national sales. In Fiscal 2023, Kerala, Tamil Nadu and Maharashtra featured in the top 10 contributing states of the country, contributing 23% to the national sales. In line with the overall domestic market, Maruti Suzuki dominated sales in all these states. As of December 31, 2023, they operated through the network of 61 showrooms, 133 sales outlets and booking offices, 32 pre-owned vehicle showrooms and outlets, 139 authorised service centres, 43 retail outlets, and 24 warehouses located across 14 districts of Kerala, 8 districts in Karnataka, 12 districts in Tamil Nadu and 9 districts in Maharashtra. While the sales outlets and booking offices complement the sales through the showrooms, the retail outlets facilitate sale and distribution of spare parts and accessories. They acquired 11 service centres and 2 showrooms from a dealer of Maruti Suzuki in Kerala in 2021. Further, they acquired 8 showrooms, 17 service centres and 3 sales outlets and booking offices of BharatBenz in Tamil Nadu and Maharashtra. They have also expanded the post-sale services and repair verticals in the last three Fiscals. The revenue from servicing of passenger vehicles and commercial vehicles has seen a significant increase, from Rs 3,651.64 million and Rs 675.06 million in Fiscal 2021 to Rs 5,716.13 million and Rs 1,418.65 million in Fiscal 2023, respectively. In Fiscal 2023, they were ranked ‘All India Highest in the Bodyshop Load’ for Maruti Suzuki. Further, the number of electric two-wheeler and three-wheeler vehicles sold by them has also increased from 252 in Fiscal 2022 to 3,381 in Fiscal 2023. As per financial performance, Popular Vehicles & Services Limited has posted total income / net profits of Rs 2,919.25 Cr / Rs 32.46 Cr (FY21), Rs 3,484.20 Cr / Rs 33.67 Cr (FY22), Rs 5,140.03 Cr / Rs 67.46 Cr (FY23) and Rs 2,848.21 Cr / Rs 40.04 Cr (Q2 FY24). So as per previous financials data, company has shown good growth. Company has an average EPS of Rs 7.76 and average RoNW of 15.55% for last three fiscals. Issue is priced at a P/BV of 4.82 as per NAV of 61.26 as on 30.09.23. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 62.38, 31.13 and 26.22 respectively, which looks fairly priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, three lead managers are associated with this IPO, and have handled around 82 IPOs in last three fiscals. ICICI Securities Limited: This is 63rd Main Board IPO from this BRLM. From last 10 Main Board IPOs, three opened below issue and remaining opened above issue price on the day of listing. As of now, from last 10 Main Board IPOs, three are trading below issue price and remaining are trading above issue price.( As on 06.03.2024 ) Nuvama Wealth Management Limited : This is 21st Main Board IPO from this BRLM. From last 10 Main Board IPOs, three opened below issue and remaining opened above issue price on the day of listing. As of now, from last 10 Main Board IPOs, four are trading below issue price and remaining are trading above issue price.( As on 06.03.2024 ) Centrum Capital Limited : This is 1st Main Board IPO from this BRLM. As per financials, Popular Vehicles & Services Limited has shown good results, RoNW is 18.68% and P/E is respectively 62.38, 31.13 and 26.22 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fairly priced compared to peers. Company is in business of diversified automobile dealership in India, which is competitive segment. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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