TVS Supply Chain shares fail to deliver big listing pop; should you exit or hold it?

TVS Supply Chain Solutions disappointed investors on Wednesday as the stock was listed at a mild premium and did not see any follow-up buying post debut. The latest debutant at Dalal Street broke the series of bumper listings for recent debutants and dented investor sentiments.

Shares of TVS Supply Chain Solutions delivered a mild listing pop at debut on Dalal Street on Wednesday as TVS Group company was listed at a premium of 5 per cent at Rs 207.05 on the National Stock Exchange (NSE) and Rs 206.30 on BSE, compared to its issue price of Rs 197 apiece.

However, the stock saw some profit booking after the listing but the stock remained range-bound for the day. The stock inched up to high at Rs 208.50, while it declined to low at Rs 199 for the day. This range-bound movement has confused the investors if they should hold the stock or exit the counter after a mild listing pop.

Majority of the analysts are suggesting investors to exit the counter following the dull gains citing the stretched valuations and loss-making nature of the business. However, a few analysts have a view to hold the stock for a longer run only for the long term and high risk appetite investors.

Given that this IPO's subscription was lower than that of some recent IPOs, the listing is a respectable debut. Although TVS Supply Chain Solutions is a leading supply chain management company, it operates in a highly competitive industry and has reported losses in the past two years, said Anubhuti Mishra, Equity Research Analyst at Swastika Investmart.

"We suggest investors booking profits after listing at such a higher level. Those who still want to hold should maintain a stop loss at the IPO price," he suggested, citing her caution over the expensive valuations of the issue.

The Rs 880-crore initial stake sale of TVS Supply Chain Solutions was open for subscription between August 10-14. The TVS Mobility Group company sold its shares in the range of Rs 187-197 apiece with a lot size of 76 equity shares during the three-day bidding process.
The primary stake sale was overall subscribed 2.85 times. The portion for qualified institutional bidders was booked 1.37 times, while the non-institutional investors' category was subscribed 2.44 times. The quota reserved for retail investors was subscribed 7.89 times.

As expected, TVS Supply Chain Solutions saw a tepid listing compared to the issue price due to rich valuation vis-à-vis other listed peers, average financial performance and increased competitive intensity in the industry, said Dhruv Mudaraddi, Research Analyst at StoxBox, formerly known as BP Equities.

"We advise investors who have received allotment to move to other investment avenues and stay away from this counter at least in the short-term. Given the strong parentage of TVS Group, investors may reconsider the company in future following sustained improvement in financial metrics, especially margin expansion, and reasonable valuation," he added.

Chennai-based TVS Supply Chain Solutions provides supply chain management services for international organizations, government departments, and large and medium-sized businesses. It offers its services in two segments namely- integrated supply chain solutions (ISCS) and network solutions (NS).

The company with sound fundamentals and strong promoter backing sees good growth in the coming years. We believe investors shall continue to stay invested for a longer time horizon, said Mahesh M Ojha, AVP – Research at Hensex Securities. "However, investors looking for listing gain can book profits once the stock displays at least 10-15 per cent returns over the issue price."

Investors should consider selling allotted shares on listing day. Risk-takers might find value in TVS Supply Chain's asset-light strategy, global services, and post-GST growth potential for organized logistics, suggested Prashanth Tapse, Senior VP Research Analyst at Mehta Equities.

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