Popular Vehicle and Services IPO: Key Details, Financials, Strengths, and Weaknesses

The IPO market is buzzing again because Popular Vehicle and Services is looking to raise capital and is a market leader in selling and distributing old and new vehicles through its strong dealership network.

In today’s blog, we will uncover the details of the company’s financial statements, strengths, weaknesses, key performance indicators, and issue details.

Overview

Popular Vehicle and Services Limited was established in 1983, and over time, it established itself as a prominent player in the market. The company sells and distributes new and old vehicles, servicing, and distribution of spare parts. They also provide driving classes for new learners and engage in third-party financing and insurance. The company was established as the first batch of dealers by Maruti Suzuki.

Network

The company has a vast network which includes 61 showrooms, 133 sales and booking outlets, 32 pre-owned vehicles showrooms, 139 authorized service centres, and 24 warehouses, which is spread around 14 districts in Kerala, 12 districts in Tamil Nadu, and 9 districts in Maharashtra.

In FY 2023, the company serviced 7,91,360 vehicles, 5,212 luxury vehicles, 1,63,013 commercial vehicles, 1,918 electric two-wheelers, and 857 three-wheelers through their 139 authorized service centers.

Promoters

The company’s promoters are John K. Paul, Francis K. Paul and Naveen Philip; they together own 65.79% shares of the company.

Details of the Issue

To raise the 601.55 crores that Popular Vehicles and Services Ltd. is seeking, a combination of both offers for sale (roughly 351.55 crores) and a new issue (roughly 250 crores) is being implemented. The lot of the issue will be 50 shares, the lower price band is 280 INR and the upper price band is 295 INR per share. 

Key Details

Timeline of IPO

Allotment Size

Objective of the Issue

The primary objective of the IPO is to repay a significant portion of the debt.

Financial Highlights

Balance Sheet

Income Statement

Cash Flow Statement

KPIs

The EPS of the financial year ended 2022-23 comes at 10.22, based on which, the PE on the upper price band will come around 28.86x and on the lower price band will be around 27.39x.

Strengths

1.  The company has a very diversified product portfolio, such as the sale of new and old vehicles, driving school, insurance, etc.

2.  The company has a very vast network in Southern India, and they are expanding it to other parts of the country.

3.  Though the company’s Debt-to-equity ratio has increased from 1.33 in March 2022 to 1.47 in March 2023, it is still below the industry average.

Weaknesses 

1.  The company is majorly dependent on manufacturers such as Maruti Suzuki, Tata Motors, etc. Any policy changes could majorly impact their performance.

2.  Most of the company’s revenue comes from a specific region. Any policy changes made in the region could adversely impact the business.

3.  The company has inconsistent cash flow from operating activities. They reported cash flow figures as 95.174 crores for FY 2021 and 69.69 for FY 2022.

4.  The company operates at 1.31% of profit after tax margin. Any changes in the pricing of raw materials could adversely affect its margins.

Conclusion

Popular Vehicles and services have a strong presence across the country, and their dealerships are considered among the most prominent in the industry. However, there are certain risks associated with investing in this company. Hence, it is suggested for an investor to go through all the risk factors before making any investment decision.

Frequently Asked Questions (FAQs)

Q1. What does the Popular vehicle and services company do?
Ans. The company is engaged in selling and distribution of old and new vehicles. The company is also involved in spare parts distribution and vehicle repair in their authorized service center.

Q2. The company is experiencing turbulent cash flows. Should we be worried about this?
Ans. Whether or not this fact deters you from investing is a decision that should be taken after considering all the factors. 

Q3. What is the listing date of the popular vehicle company IPO?
Ans. On NSE and BSE, the company’s listing is on 19th March 2024.

Q4. Is the popular vehicle and services company in profit?
Ans. Yes, based on the data provided by the company in their red herring prospectus, the company is posting profit from the last 3 years.

Q5. What is the minimum amount a retail investor requires to apply for a popular vehicle company IPO?
Ans. The minimum investment amount required by a retail investor is 14750 INR.

Disclaimer: The securities, funds, and strategies mentioned in this blog are purely for informational purposes and are not recommendations.