Subdued Listing: Popular Vehicles Makes Debut On Exchanges; Lists At 2% Discount From IPO Price

Popular Vehicles and Services, the Kerala-based automobile dealer, made its stock market debut on Tuesday, March 19, amid cautious sentiments, as shares listed at a discount to the issue price. The stock opened at Rs 289.20 per share on the National Stock Exchange (NSE), marking a 1.97% discount from the offer price of Rs 295 per share. Similarly, on the Bombay Stock Exchange (BSE), it debuted at Rs 292 per share, down 1% from the issue price.

Prior to its listing, the grey market premium (GMP) for Popular Vehicles remained nil, indicating subdued expectations for its debut. The grey market serves as an unofficial platform for trading IPO shares until their official listing.

The initial public offering (IPO) of Popular Vehicles garnered mixed responses during its subscription period. The issue was fully subscribed on the final day, with bids received for 1.69 crore shares against 1.44 crore shares on offer. The retail portion was subscribed 1 times, while Qualified Institutional Buyers (QIBs) bid 1.85 times. However, non-institutional investors showed lesser enthusiasm, subscribing only 65% of their portion.

Popular Vehicles offered its shares in the price band of Rs 280 to Rs 295 per share, raising over Rs 600 crore at the upper end. The company's market capitalization post-IPO stands at Rs 1,450 crore. The IPO comprised fresh shares worth Rs 250 crore and an offer-for-sale (OFS) of 1.19 crore equity shares by private equity fund BanyanTree Growth Capital II LLC.

As of now, promoters hold a 69.45% stake in the company, while the rest is owned by public shareholders, including BanyanTree, which is the largest shareholder. Notably, three promoters-John K Paul, Francis K Paul, and Naveen Philip-each own 23.15%.

Proceeds from the IPO will be utilized primarily to reduce the company's debt burden, with Rs 192 crore allocated for this purpose. The remaining funds will be deployed for general corporate activities. Popular Vehicles had consolidated debt of Rs 637.06 crore as of December 2023.

Popular Vehicles and Services is a prominent player in India's automotive dealership sector, offering a range of services across the automotive retail value chain. The company's operations encompass the sale of new passenger and commercial vehicles, service and repairs, spare parts distribution, pre-owned vehicle sales, and facilitation of financial and insurance products. It holds dealership rights for Maruti Suzuki, Honda, JLR, and Tata Motors.

In terms of financial performance, Popular Vehicles witnessed significant growth in FY23. Revenue from operations surged 41% year-on-year to Rs 4,875 crore, while net profit soared by an impressive 91% to Rs 64 crore. However, there was a slight pressure observed in operating margins during the same period.

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