Looks like India is zooming in on a fast-growing economy! Popular Vehicles & Services (Popular Vehicles) IPO comes at the right time as people are buying more cars, giving the industry a big boost. If you’ve been following the buzz around the upcoming IPO on 12 March 2024, let’s delve into some key details.
Popular Vehicles IPO Details
| Offer Price | ₹280 – ₹295 per share |
| Face Value | ₹2 per share |
| Opening Date | 12 March 2024 |
| Closing Date | 14 March 2024 |
| Total Issue Size (in Shares) | 20,391,651 |
| Total Issue Size (in ₹) | ₹601.55 Cr |
| Issue Type | Book Built Issue IPO |
| Lot Size | 50 Shares |
1. Business Overview
Founded in 1983, Popular Vehicles is a leading automobile dealership group with a presence across multiple car brands in India. They offer sales, service, and spare parts for various vehicles, catering to a large customer base. These include buying a new or used vehicle and servicing and repairing it.
2. Objective of the Issue
The company plans to use the net proceeds from the IPO for the following:
- Debt Repayment: Utilize ₹192 crore to repay or prepay some or all of its borrowings and those of its subsidiaries: VMPL, PAWL, PMMIL, KGPL, KCPL, and PMPL.
- General Corporate Purposes: The remaining Net Proceeds will be used for general business needs.
3. Financial Performance
The company achieved a 90.3% year-on-year increase in net profit, reaching a total of ₹64.07 crore for the financial year ending March FY23. The revenue from operations also saw a 40.65% increase, climbing to ₹4,875 crore compared to the previous year. Its EBITDA (earnings before interest, tax, depreciation, and amortization) showed a 35.5% growth, reaching ₹217.2 crore during the same period.
4. Competitive Landscape
With the increasing demand for automobiles, Popular Vehicles faces stiff competition from many seasoned players in the private and commercial vehicles space, including:
- Maruti Suzuki India Limited
- Tata Motors Limited
- Mahindra & Mahindra Limited
- TVS Motor Company Limited
- Bajaj Auto Limited
As the competitive landscape in each segment is constantly evolving with new players and technological advancements, it’s crucial to evaluate Popular Vehicles’ market position to gauge its efficiency and success.
5. Growth Potential
Popular Vehicles’ growth potential in the Indian automobile dealership market is promising. The Indian passenger vehicle market is expected to witness a healthy growth rate of 5-7% CAGR over the next five years. Car companies expect sales to grow faster this year by over 8%.
The booming luxury car segment and the government’s push for electric vehicles could also contribute to the company’s growth. Add a diversified portfolio and an established network, and the company will likely live up to its name.
6. Risks and Challenges
- Intense Competition: The Indian automobile market is highly competitive. Popular Vehicles must strategize effectively to differentiate themselves and stand out.
- Economic Fluctuations: Economic downturns can impact consumer spending and affect vehicle sales.
- Disruption from Online Sales: The growing trend of online vehicle sales could challenge traditional dealerships. Popular Vehicles may need to adapt their strategies.
7. Lead Managers
ICICI Securities, Nuvama Wealth Management, and Centrum Capital are the book-running lead managers for Popular Vehicles IPO. Link Intime India is the registrar.
Here’s a SWOT analysis of Popular Vehicles to provide a better understanding:
| STRENGTHS | WEAKNESSES | |
| 1. The company’s performance relies heavily on the car manufacturers they represent. A slowdown in sales from any particular manufacturer could negatively impact its business. 2. The Indian automobile dealership sector is highly competitive. Popular Vehicles must constantly innovate and adapt to stay ahead of the curve. 3. Popular Vehicles have a strong presence in some regions; their reach in other parts of India might be limited. Expanding their geographical footprint could be a key growth strategy. | 1. The company’s performance relies heavily on the car manufacturers they represent. A slowdown in sales from any particular manufacturer could negatively impact its business. 2. The Indian automobile dealership sector is highly competitive. Popular Vehicles must constantly innovate and adapt to stay ahead of the curve. 3. Popular Vehicles have a strong presence in some regions; their reach in other parts of India might be limited. Expanding their geographical footprint could be a key growth strategy. | |
| OPPORTUNITIES | THREATS | |
| 1. The Indian automobile market is expected to witness significant growth in the coming years, presenting an opportunity for Popular Vehicles to expand their market share. 2. The demand for premium cars is on the rise. Its portfolio of established brands is well-positioned to capitalize on this trend. 3. Developing a robust online sales platform could help the company reach a wider customer base and cater to the growing trend of online car buying. | 1. An economic slowdown could lead to decreased consumer spending, impacting sales. 2. Rising fuel prices can deter potential car buyers, affecting Popular Vehicles’ business. 3. The rise of electric vehicles (EVs) could disrupt the traditional automobile market. Popular Vehicles must adapt their strategy to accommodate the growing EV segment. |
While India’s booming car market sets the stage for Popular Vehicles’ IPO, competition and economic factors are also crucial to consider.
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
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I’m Archana R. Chettiar, an experienced content creator with
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