The initial public offering (IPO) of Tolins Tyres continued to attract a decent robust from the investors during the second of the bidding process, thanks to the push from retail investors. The issue, which had kicked off on Monday, September 09, was subscribed nearly two times on day one.
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 3,10,52,868 equity shares, or 4.15 times, compared to the 74,88,372 equity shares offered for the subscription by 2.50 pm on Tuesday, September 10. The three-day bidding for the issue will conclude on Wednesday, September 11.
The allocation for retail investors was subscribed 6.92 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 2.62 times. However, the quota set aside for qualified institutional bidders (QIBs) was subscribed 44 per cent 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.
Tolin's clientele includes Marangoni GRP, Kerala Agro Machinery Corporation (KAMCO), Redlands Motors and Tyre Grip for products. The company has developed 163 new designs and products and has also created moulds for them, said Ventura Securities in its IPO note.
"There is also an absence of long-term contracts with suppliers by the company. The business is focused on providing products to automotive original equipment manufacturers (OEMs), and its performance depends on the Indian automotive sector," it added with a 'subscribe' rating.
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 has experienced significant growth, with profits-after-taxes increasing by a compound annual growth rate of 541.98 per cent from FY22 to FY24. The funds raised through the new issue will be used to repay loans, increase working capital, invest in subsidiaries, and meet general corporate needs, said SMC Global Securities.
"However, the tyre manufacturing industry faces challenges due to limited suppliers of key raw materials like natural rubber and carbon black. Investors with a high-risk appetite might consider investing in Tolins Tyres given its rapid growth and potential," he added.
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.