IPO Synopsis
IPO synopsis
Popular Vehicles and Services Ltd has filed a DRHP with SEBI and the issue consists of a fresh issue worth Rs.150 crore and an offer for sale of up to 4,266,666 equity shares. The book running lead managers are Axis Capital Ltd, DAM Capital Advisors and Centrum Capital Ltd. The promotes are John K. Paul, Francis K. Paul and Naveen Philip.
Objectives of the issue
Rs.120 crore of the net proceeds will be used to prepay or repay the debts and working capital loans undertaken by the company and their subsidiaries- PAPL, PMMPL and VMPL.
About Popular Vehicles & Services Ltd
Popular vehicles is one of the leading diversified automotive dealerships in the country, in terms of revenue. They are present across the automotive retail chain, sale of new passenger and commercial vehicles, spare part distributions and also third party financial and insurance products. They also have passenger vehicle dealerships of Maruti Suzuki, Honda and Jaguar and the commercial vehicle dealership of Tata Motors Ltd.
As of 31 March, 2021, Popular Vehicles has the sixth largest passenger vehicle dealership for Maruti Suzuki, they have the fifth largest passenger dealership for Jaguar, sixth largest for Honda and the third largest commercial vehicle dealership for Tata Motors, in terms of sales volume. They have an enviable network of 59 showrooms, 99 sales outlets and booking offices along with 83 authorized service centers, 29 retail outlets and 25 warehouses. These are located across 14 districts of Kerela and Tamil Nadu. Both Kerela and Tamil Nadu are the top contributors to the national passenger vehicle sales.
The company has divided its business into 4 segments – passenger cars, luxury vehicles, commercial vehicles and others. The first ever dealership they were awarded was of Maruti Suzuki in 1984, in Kerela. This was the first batch of Maruti Suzuki cars in India.
Popular Vehicles & Services Ltd Financial Status
Financials
|
Particulars (In Rs cr) |
FY21 |
FY20 |
FY19 |
|
Total Income |
2,919.25 |
3,180.45 |
3,916.34 |
|
PAT |
32.45 |
12.5 |
21.37 |
|
EPS (In Rs) |
25.88 |
9.96 |
17.42 |
|
Particulars (In Rs cr) |
FY21 |
FY20 |
FY19 |
|
Total Assets |
1,118.9 |
1,131.16 |
1,211.6 |
|
Total Borrowings |
353 |
349.1 |
558.4 |
|
Equity Share Capital |
12.54 |
12.54 |
12.54 |
Key Metrics
|
Segment (FY21) |
Volume |
Revenue (In Rs cr) |
EBITDA (In Rs cr) |
|
New Passenger vehicles sales |
28,393 |
1,472.46 |
39.13 |
|
New Commercial vehicles sales |
6,504 |
613.53 |
24.36 |
|
Pre-owned Passenger vehicles sales |
10,115 |
245.94 |
5.80 |
|
Services and Repairs |
646,280 |
432.15 |
88.91 |
|
Spare parts distribution |
NA |
154.57 |
10.83 |
|
Other Income |
NA |
9.8 |
5.8 |
Peer comparison
|
Company |
Operating Revenue (Rs bn) |
EBITDA Margin (%) |
PAT Margin (%) |
ROCE (%) |
Debt/Equity |
|
Popular Vehicles and Services Ltd |
31.8 |
3.5 |
0.4 |
12.7 |
1.7 |
|
Sai Service |
27.8 |
6.3 |
2.9 |
24.8 |
0.002 |
|
Indus Motors |
20.6 |
0.5 |
-0.9 |
12.2 |
5 |
|
Kataria Automobiles |
20.2 |
3.6 |
0.6 |
12.8 |
10.2 |
|
Bhandari Automobiles |
17.8 |
3.4 |
0.2 |
13.4 |
4.4 |
|
Competent Automobiles |
11.7 |
3.8 |
3.3 |
24 |
0.4 |
|
Navnit Motors |
11.3 |
-1.9 |
-5.2 |
4.5 |
-3 |
|
VST Motors |
5.8 |
2.2 |
0.1 |
7.6 |
1.7 |
|
Pebco Motors |
1.3 |
3.4 |
0.8 |
8.3 |
0.3 |
The Key Points are-
IPO Key Points
-
Strengths
1. The company offers fully integrated services and repairs which leads them to have a higher revenue and the repair offerings lead to business stability
2. They have penetrated deep into the market, and this is complemented by very innovative market strategies
3. In FY21, the company was named the No.1 Preowned Car Dealer in India by Maruti Suzuki, in terms of sales by volume. They sold 9,413 pre-owned vehicles in 2021
4. They are presence across the entire life cycle of the vehicle ownership which leads them to have a higher customer retention rate and provides the company various revenue streams
-
Risks
1. The company’s business operations are wholly dependent on their relationships with the OEMs with which the company has dealership agreements
2. The industry is very susceptible to sudden changes in the economic conditions of the country, and this could have a material adverse effect on the operations and financials of the business
3. A large part of the business is concentrated in the southern part of India
4. The competition has increased drastically in this market and the marketing initiatives have reduced the company’s profit margin
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