What You Must Know About Tolins Tyres IPO: Price Band ₹215 to ₹226 Per Share

Incorporated in 2003, Tolins Tyres Limited is a prominent tyre manufacturing company that has established a strong presence in India and exports to 40 countries, including the Middle East, East Africa, Jordan, Kenya, and Egypt. The company's business is divided into two main verticals:

• Tyre Manufacturing
• Tread Rubber Manufacturing

Tolins Tyres offers a diverse range of products, including:

• Light Commercial Vehicle Tyres
• Off Road/Agriculture Tyres (OTR)
• Two-wheeler & Three-wheeler Tyres
• Tyre Tubes & Tyre Flaps
• Precured Tread Rubber (PCTR)
• Conventional Tread Rubber
• Bonding Gum
• Vulcanising Solution
• Rope Rubber & Others

Key highlights of Tolins Tyres' operations include:

• Three manufacturing facilities: two in Mattoor, Kalady, Kerala, and one in Al Hamra Industrial Zone, Ras Al Khaimah, UAE
• 8 depots and 3,737 dealers nationwide as of 31st March 2024
• 163 stock-keeping units (SKUs) in the tyre category and 1,003 SKUs in the tread rubber category
• Quality certifications: ISO 9001:2015 and IATF 16949:2016 issued by UK Certifications
• Notable clients include Marangoni GRP, Kerala Agro Machinery Corporation Ltd (KAMCO), Redlands Motors, and Tyre Grip
• 163 new designs and products developed as of 31st March 2024
• Sales and marketing team of 55 employees as of 31st March 2024

The Objective of the Issue

Tolins Tyres intends to utilise the net proceeds from the Fresh Issue for the following purposes:

• Repayment of Loans: Repayment and/or prepayment of certain outstanding loans availed by the Company.
• Working Capital: Augmentation of long-term working capital requirements.
• Subsidiary Investment: Investment in the wholly-owned subsidiary, Tolin Rubbers Private Limited, to repay its borrowings and augment working capital.
• General Corporate Purposes: For various corporate activities aligned with the company's strategic goals.

Highlights of Tolins Tyres IPO

• Tolins Tyres IPO is set to launch with a book-built issue of ₹230.00 crores. The issue combines a fresh issue and an offer for sale. Here are the key details of the IPO:
• The IPO opens for subscription on 9th September 2024 and closes on 11th September 2024.
• The allotment is expected to be finalised on 12th September 2024.
• Refunds will be initiated on 13th September 2024.
• Credit of shares to Demat accounts is also expected on 13th September 2024.
• The company will tentatively list on BSE and NSE on 16th September 2024.
• The price band is set at ₹215 to ₹226 per share.
• The fresh issue comprises 0.88 crore shares, aggregating to ₹200.00 crores.
• The offer for sale comprises 0.13 crore shares, aggregating to ₹30.00 crores.
• The minimum lot size for the application is 66 shares.
• Retail investors need to invest a minimum of ₹14,916.
• The minimum investment for small NII (sNII) is 14 lots (924 shares), amounting to ₹2,08,824.
• The minimum investment for big NII (bNII) is 68 lots (4,488 shares), amounting to ₹10,14,288.
• Saffron Capital Advisors Private Limited is the book-running lead manager for the IPO.
• Cameo Corporate Services Limited serves as the registrar.

Tolins Tyres IPO - Key Dates

The cut-off time for UPI mandate confirmation is 5:00 PM on 11th September 2024. This deadline is crucial for investors to ensure their applications are processed successfully. Investors are advised to complete their applications well before this deadline to avoid any last-minute technical issues or delays.

Tolins Tyres IPO Issue Details/Capital History

The Tolins Tyres IPO is scheduled from 9th September to 11th September 2024, with a price band of ₹215 to ₹226 per share and a face value of ₹5. The total issue size is 10,176,992 shares, raising up to ₹230.00 crores. This includes a fresh issue of 8,849,558 shares aggregating to ₹200.00 crores and an offer for sale of 1,327,434 shares aggregating to ₹30.00 crores. The pre-issue shareholding is 30,659,272 shares, which will increase to 39,508,830 shares post-issue.

Tolins Tyres IPO Allocation & Minimum Investment Lot Size

The IPO shares are allocated across different investor categories as follows:

Investors can place bids for a minimum of 66 shares, with additional bids required in multiples of this figure. The table below illustrates the minimum and maximum investment amounts for retail investors and HNIs, expressed in shares and monetary values.

SWOT Analysis: Tolins Tyres Ltd

Strengths:

• Established presence in India with a strong export market
• Diverse product portfolio catering to various vehicle types
• Quality certifications ensuring product reliability
• Extensive dealer network and multiple manufacturing facilities

Weaknesses:

• High dependence on the automotive industry
• Potential vulnerability to raw material price fluctuations
• Relatively small scale compared to larger tyre manufacturers

Opportunities:

• Growing automotive market in India and export destinations
• Potential for expansion into new product categories or markets
• Increasing demand for retreading solutions

Threats:

• Intense competition in the tyre industry
• Economic downturns affecting automotive sales
• Regulatory changes impacting manufacturing or raw material sourcing

Financial Highlights: Tolins Tyres Ltd

Below are the consolidated (FY24) & standalone financial results for the Fiscal years FY23, and FY22:

Tolins Tyres Limited has demonstrated remarkable financial growth over the past three years, with a significant leap in FY24 due to the transition to consolidated reporting. 

The company's assets grew steadily from ₹991.42 lakhs in FY22 to ₹838.24 lakhs in FY23 on a standalone basis before surging to ₹2,215.98 lakhs in FY24 on a consolidated basis, reflecting both organic growth and the impact of including subsidiary assets.

Revenue trends show a similar pattern of growth, with a modest increase from ₹1,143.86 lakhs in FY22 to ₹1,196.79 lakhs in FY23 on a standalone basis, followed by a substantial jump to ₹2,286.93 lakhs in FY24 on a consolidated basis. This dramatic increase indicates the company's expanded operations and market reach and encompasses the revenue contributions from its subsidiaries.

The company's profitability has seen a remarkable upward trajectory. Standalone profit after tax rose significantly from ₹6.31 lakhs in FY22 to ₹49.92 lakhs in FY23, showcasing improved operational efficiency. The shift to consolidated reporting in FY24 revealed an impressive PAT of ₹260.06 lakhs, highlighting the collective profitability of the Tolins Tyres group and potential synergies realised through its subsidiary operations.

Net worth has shown consistent growth, increasing from ₹108.25 lakhs in FY22 to ₹194.23 lakhs in FY23 on a standalone basis before leaping to ₹1,005.33 lakhs in FY24 on a consolidated basis. This substantial increase reflects the company's ability to generate and retain earnings and the combined equity of its subsidiaries.

The company's financial leverage has evolved over the years. On a standalone basis, total borrowings decreased slightly from ₹488.72 lakhs in FY22 to ₹470.29 lakhs in FY23, indicating prudent debt management. The consolidated figure for FY24 shows borrowings of ₹787.72 lakhs, which, while higher, should be viewed in the context of the significantly larger asset base and revenue.

Key performance indicators for FY24 (Consolidated) paint a picture of a robust financial position, with a Return on Equity (ROE) of 25.87%, Return on Capital Employed (ROCE) of 36.08%, and a healthy PAT margin of 11.45%. The debt-to-equity ratio of 0.78 suggests a balanced capital structure, though this represents a group-wide figure and may vary among individual entities within the group.

Tolins Tyres Limited's financial journey from FY22 to FY24 showcases strong growth and improving profitability, culminating in impressive consolidated figures. While the transition to consolidated reporting in FY24 limits direct year-over-year comparisons, it provides a more comprehensive view of the company's financial health and performance. Potential investors should consider the standalone growth from FY22 to FY23 and the expanded scope of operations reflected in the FY24 consolidated figures when evaluating the company's financial trajectory and prospects.