Popular Vehicles IPO Plunge 9% After Listing with Nearly 2% Discount

Popular Vehicles and Services falls 9% on day one

Popular Vehicles and Services IPO had a weak debut on the stock exchanges on 19 March. Its shares were listed at a 2% discount to the issue price on NSE listed at ₹289.2 per share compared to the issue price of ₹295 each. The stock then plummeted by 9.26% to a low of ₹262.4 per share because of high selling pressure amidst a weak market. Approximately 4.62 lakh shares were traded on NSE totaling a value of ₹12.6 crore as per the exchange data. On BSE the company was listed at ₹292 per share reflecting a 1% discount from the issue price. Shares on BSE also faced a decline of 6% to ₹268.95. In early trading on Tuesday Popular Vehicles and Services shares were down by 5.77% at ₹272.50 on NSE and 5.8% at ₹274.90 on BSE. At the close of the day Popular Vehicles and Services stock faced a decline of 6.38% closing at ₹276.15.

Popular Vehicles and Services IPO Subscription and IPO Details

Kochi based automotive dealer Popular Vehicles and Services IPO entered the capital market on 12 March to raise ₹601.55 crore through its initial public offering. The IPO consisted of a fresh issue worth ₹250 crore and an offer for sale of ₹352 crore comprising 1.19 crore equity shares by existing shareholders. Price band for Popular Vehicles and Services IPO was set at ₹280-295 per equity share with a lot size of 50 equity shares. Retail investors were required to invest a minimum of ₹14,750 at the upper end of the price band and ₹14,000 at the lower end. By the close of bidding on 14 March the IPO subscribed1.25 times the offer size with bids received for 1,78,01,250 equity shares against the 1,42,87,880 shares available.

Read Popular Vehicles & Services IPO Subscribed 1.24 times

Qualified institutional buyers category was oversubscribed 1.92 times while non institutional investors showed lukewarm interest with an overall subscription of 66%. Retail investors subscribed 1.07 times and the employee portion was oversubscribed 7.59 times. Popular Vehicles and Services intends to utilize the IPO proceeds primarily for repaying loans held by its subsidiary companies and for general corporate purposes. As per documents filed with the Securities and Exchange Board of India, the company plans to allocate ₹192 crore for debt repayment or prepayment of subsidiary firm debts. As of 31 December 2023 the company and its subsidiaries collectively had outstanding debt amounting to ₹637.06 crore.

About Popular Vehicles and Services

Popular Vehicles and Services, a prominent automotive dealership and service provider in South India has established itself as a key player in the industry since its inception in 1983. Offering a wide range of services including vehicle sales, retail of auto parts and accessories and pre owned vehicle sales the company operates through a network of 100 showrooms and 139 service centers across Kerala, Tamil Nadu and Karnataka.

Read What you must know about Popular Vehicles & Services IPO?

With dealerships representing renowned brands such as Jaguar, Maruti Suzuki, Honda,  Land Rover, BharatBenz, Tata Motors and Piaggio, Popular Vehicles caters to diverse customer needs in the automotive sector. This includes commercial vehicles, electric two wheelers and three wheelers alongside traditional passenger vehicles.

The company's robust financial performance highlights its success in the market. In FY23, Popular Vehicles recorded a net profit of ₹64.07 crore, marking a substantial 90.3% increase from the previous year. This remarkable growth is mirrored in the company's revenue which surged by 40.65% yoy to reach ₹4,875 crore. EBITDA witnessed a notable uptick rising by 35.5% to ₹217.2 crore.

To Summarize

Investors are facing a key decision whether to keep their shares or sell them. Those who aimed for quick gains might not be feeling good as the stock started trading at a discount on the first day itself giving them the option to sell. However, more risk tolerant investors might consider holding onto their shares for the potential benefits in the medium to long term.