The initial public offering (IPO) of Tolins Tyres continued to attract a decent response from the investors during the third and final day of the bidding process, thanks to the push from retail and HNI investors. The issue was subscribed nearly two times on day one and ended day two with over 5.5 times bidding.
The Kerala-based Tolins Tyres is selling its shares in the price band of Rs 215-226 apiece. Investors can apply for a minimum of 66 shares and its multiples thereafter. It is looking to raise Rs 230 crore via IPO, which includes a fresh share sale of Rs 200 crore, and an offer-for-sale (OFS) of up to 13.27 lakh equity shares.
According to the data, the investors made bids for 8,05,00,002 equity shares, or 10.75 times, compared to the 74,88,372 equity shares offered for the subscription by 1.15 pm on Wednesday, September 11. The three-day bidding for the issue, which kicked-off on Monday, September 9, concludes today.
The allocation for retail investors was subscribed 14.63 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 13.36 times. However, the quota set aside for qualified institutional bidders (QIBs) was subscribed 2 times as of the same time.
Incorporated in 2003, Tolins Tyres is a tyre manufacturing company. It provides tyre retreading solutions in India and exports to 40 countries, including the Middle East, East Africa, Jordan, Kenya, and Egypt. The company's business can be divided into two verticals- tyre manufacturing and tread rubber manufacturing.
The grey market premium of Tolins Tyres has remained stable amid the rising volatility in the broader markets. Last heard, the company was commanding a premium of Rs 39-40 per share in the unofficial market, suggesting a listing pop of about 18 per cent for the investors. However, the premium in the grey market stood around Rs 30 on the first day of the bidding.
Brokerages are mostly positive on the issue suggesting investors to subscribe to it for a long term citing its diversified product portfolio, long relationships with customers, experienced and efficient management. However, fluctuations of raw materials, lack of long term contracts and dependence on select clients are the major issues for the company.
At the upper price band of Rs 226, Tolins Tyres is valued at a P/E of 34.8 times based on FY24 EPS, suggesting a fair valuation in line with its peers. The company has delivered robust growth in revenue, Ebitda and PAT at a CAGR of 42 per cent, 176 per cent and 542 per cent from FY22 to FY24, driven by capacity expansion and vertical integration, said Indsec Research.
"As a leading player in tyre retreading, Tolins Tyres also manufactures tyres and plans to expand into the radial tyre market and the aerospace and defense sectors. With growth opportunities in agricultural and EV segments, and reasonable valuations, we assign a 'subscribe' rating to the issue," it said.
For the year ended on March 31, 2024, Tolins Tyres reported a net profit of Rs 26.01 crore with a revenue of Rs 228.69 crore. It has reserved 50 per cent of the net offer for qualified institutional bidders, while 15 per cent of the shares have been reserved for non-institutional investors (NIIs) and retail investors will get 15 per cent and 35 per cent of the net offer.
Tolins Tyres offers product diversity and has a widespread customer base, including domestic and international customers. A smaller player, gradually expanding. Strong financial performance with consistent growth. The IPO's valuation appears reasonable, said Swastika Investmart.
"Investors seeking long-term exposure to the tyre industry may consider applying for the Tolins Tyres IPO, recognizing the potential challenges posed by the competitive landscape and IPO timing," it said.
Saffron Capital Advisors Private Limited is the book running lead manager of the Tolins Tyres IPO, while Cameo Corporate Services Limited is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with September 16 as the tentative date of listing.