Tolins Tyres IPO
Discover the comprehensive narrative behind Tolins Tyres Limited's groundbreaking initial public offering (IPO). Unveil the company's origins, offering specifics, financial milestones, and expert investment guidance. Witness the IPO's strategic goal of raising capital for debt management, operational stability, and subsidiary advancements.
RI
by RA ALOK DAIYA SEBI Reg. INH000011468
Company Overview
Tolins Tyres Ltd. (TTL) is a leading player in the tyre and tread rubber manufacturing industry with a pan-India presence. The company has over four decades of experience and exports to 40 countries. Its key products include:
- Two-wheeler, three-wheeler, light commercial vehicle and agricultural tyres
- Precured tread rubber
- Ancillary products like bonding gum, tyre flaps, and vulcanizing solutions
TTL has a widespread customer base across India and international markets in the Middle East, ASEAN region, and Africa. As of March 31, 2024, it had 8 depots and 3,737 dealers across India.
Company Logo
The official logo of Tolins Tyres Limited
Manufacturing Facility
One of Tolins Tyres' state-of-the-art manufacturing facilities
Product Range
A selection of Tolins Tyres' diverse product offerings
Competitive Strengths
Operational Efficiency
TTL's strategic facility locations near raw material sources and key infrastructure give it a competitive edge in addressing market requirements.
Quality Control
The company maintains stringent quality control measures, with all product categories having BIS (ISI) certification.
Product Innovation
TTL relies on its product development capabilities to design and deliver proprietary products that are market fit.
Integrated Operations
The company has backward integration with raw materials and forward integration with a network of sales channels, allowing greater control over processes and quality.
Objects of the Issue
The Company proposes to utilise the Net Proceeds from the Fresh Issue towards funding the following objects:
- Repayment and/or prepayment, in full, of certain outstanding loans (including foreclosure charges, if any) availed by the Company;
- Augmentation of long-term working capital requirements of the company;
- Investment in the wholly owned subsidiary, Tolin Rubbers Private Limited, to repay and/ or prepay, in full, certain of its short-term and long-term borrowings and augmentation of its working capital requirements; and
- General corporate purposes.
IPO Details
The Tolins Tyres IPO consists of:
- Fresh equity issue worth Rs. 200 crore (approx. 8,849,558 shares)
- Offer for Sale (OFS) worth Rs. 30 crore (approx. 1,327,434 shares)
Key details:
The issue constitutes 25.76% of the post-IPO paid-up equity capital. The company plans to utilize the net proceeds for debt repayment, working capital, investments in subsidiaries, and general corporate purposes.
Tolins Tyres IPO Timeline
1
IPO Open Date
Monday, September 9, 2024
2
IPO Close Date
Wednesday, September 11, 2024
3
Basis of Allotment
Thursday, September 12, 2024
4
Initiation of Refunds
Friday, September 13, 2024
5
Credit of Shares to Demat
Friday, September 13, 2024
6
Listing Date
Monday, September 16, 2024
Financial Performance
Tolins Tyres' financial performance for the last three fiscal years:
The company experienced a setback in FY23 due to volatile crude oil and natural rubber prices. However, it showed significant growth in FY24 due to eased raw material prices and increased capacity.
1
FY22
Steady performance with Rs. 114.39 cr total income and Rs. 0.63 cr net profit
2
FY23
Minor setback due to market volatility, with Rs. 119.68 cr total income and Rs. 0.50 cr net profit
3
FY24
Significant growth with Rs. 228.69 cr total income and Rs. 26.06 cr net profit, driven by improved market conditions and increased capacity
Valuation and Peer Comparison
Based on FY24 earnings, the IPO is priced at a P/E of 34.35. The company has listed Indag Rubber, Vamshi Rubber, TVS Srichakra, GRP Ltd., and Elgi Rubber as their peers, trading at P/E ratios of 52.9, 31.3, 34.8, 69.1, and 149.0 respectively (as of September 05, 2024).
Key valuation metrics:
- Average EPS (last three fiscals): Rs. 5.67
- Average RoNW: 22.47%
- P/BV: 6.14 (based on NAV of Rs. 36.80 as of March 31, 2024)
- Post-IPO P/BV: 2.67 (based on NAV of Rs. 84.52 per share)
The issue appears to be fully priced relative to its financials and peer comparisons.
Investment Recommendation
IPO Review
We recommend subscribing for medium to long-term investment, given Tolins Tyres' strong growth potential. While the issue is priced fairly based on FY24 earnings, the company's future prospects justify a long-term investment.