TVS Supply Chain Solutions IPO subscribed 2.78 times at close

TVS Supply Chain Solutions IPO worth ₹880 crore, consisted of a combination of fresh issue and offer for sale. The fresh issue was to the tune of ₹600 crore while the offer for sale (OFS) was worth ₹280 crore. The IPO pricing was done in the band of ₹187 to ₹197 with the final price to be discovered through the process of book building. The QIB portion did not really pick up traction even on the last day, despite a strong anchor showing. The HNI / NII response was slightly better, but it was the retail segment that got the best subscription of the lot. In fact, even the overall IPO subscription at 2.78 times was relatively tepid.

Quick update on the overall  TVS Supply Chain Solutions IPO response

TVS Supply Chain Solutions IPO saw fairly tepid response on Day-1 and Day-2 of the IPO and it also closed with rather moderate subscription numbers at the close of Day-3. Only the retail portion got fully subscribed on Day-1, with the overall issue also getting fully subscribed only by the close of the second day. However, the traction on the third day was very tepid across the board, probably due to pricing issues. As per the combined bid details put out by the BSE at the close of Day-3, TVS Supply Chain Solutions Ltd IPO was subscribed just about 2.78X overall, with best demand coming from the retail segment, followed by the HNI / NII segment and the QIB segment in that order. In fact, the institutional segment saw limited traction even on the last day, and even the HNI portion did moderately as surge in funding applications and corporate applications were largely missing on the last day of the IPO. Retail portion got fully subscribed on Day-1 and built up heft gradually. Firstly, let us look at the details of overall allocation.

As of close of 14th August 2023, out of the 251.22 lakh shares on offer in the IPO, TVS Supply Chain Solutions Ltd saw bids for 699.15 lakh shares. This implies an overall subscription of 2.78X overall. The granular break-up of subscriptions was in favour of the retail investors followed by the HNI / NII investors while the QIB portion got the lowest subscription among the various categories. QIB bids and NII bids typically gather most of the momentum on the last day, and that was however not the case in this issue, with QIB and NII / HNI bids tepid on the last day. Both the QIB and the NII bids failed to pick up momentum on the last day and added to the heft of the previous days. Here are the details of the category-wise subscription.

Subscription status of QIB Portion

Let us first talk about the pre-IPO anchor placement. On 09th August 2023, TVS Supply Chain Solutions Ltd did an anchor placement with 45% of the IPO size getting absorbed by the anchors. Out of the 4,46,70,051 shares on offer, the anchors picked up 2,01,01,522 shares accounting for 45% of the total IPO size. The anchor placement reporting was made to the BSE late on 09th August 2023. The IPO of TVS Supply Chain Solutions Ltd opened on 10th August 2023 in the price band of ₹187 to ₹197 and closed for subscription on 14th August 2023 (both days inclusive). The entire anchor allocation was made at the upper price band of ₹197. Here are the details of the anchor allocation with the principal subscriber names and quantity absorbed for those with the highest allocation. It is just a cross section.

Data Source: BSE Filings

The QIB portion (net of anchor allocation as explained above) had a quota of 135.48 lakh shares of which it has got bids for 183.34 lakh shares at the close of Day-3, implying a subscription ratio of 1.35X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the TVS Supply Chain Solutions Ltd IPO subscription overall, the actual demand did not turn to be quite robust in the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 2.35X (getting applications for 163.51 lakh shares against the quota of 69.45 lakh shares). That is a very moderate response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day, which did not happen this time around. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was somehow not visible as the overall HNI / NII portion could not add to their heft on the last day of the IPO. Apart from the QIB portion, even HNIs saw very limited traction on the last day.

Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 2.30X while the below ₹10 lakh bid category (S-HNIs) got subscribed 2.46X. This is just for information and is already part of the overall HNI bids explained in the previous para.

Subscription status of Retail Individuals

The retail portion was subscribed just 7.61X at the close of Day-3, showing steady to strong retail appetite. It must be noted that retail allocation is just 10% in this IPO. For retail investors; out of the 46.30 lakh shares on offer, valid bids were received for 352.31 lakh shares, which included bids for 309.43 lakh shares at the cut-off price. The IPO is priced in the band of (₹187 to ₹197) and has closed for subscription as of the close of Monday, 14th August 2023.

Read about TVS Supply Chain Solutions IPO

Brief on the business model of TVS Supply Chain Solutions Ltd

TVS Supply Chain Solutions (TVS SCS), is part of TVS Mobility Group (belonging to the reputed TVS group of South India). It is among the largest and fastest growing integrated supply chain solutions provider in India and has been handling complex projects for a long time. Over the years, it brought in-depth understanding of multi-sector dynamics and local markets, operational experience, corporate governance standards, and the implicit trust of millions of stakeholders. The company has managed very complex value chains across sectors for more than 15 years and that is captured in this business model of TVS Supply Chain Solutions. The company has over 100 years of cumulative experience addressing supply chain challenges for global businesses; apart from government departments, and MSMEs through fully integrated offerings.

The issue is jointly lead managed by JM Financial, Axis Capital, JP Morgan India, BNP Paribas, Equirus Capital and Nuvama Wealth. Link Intime India Private Ltd will be the registrars to the issue. The company will use the fresh funds to repay the loans of the parent and some of its global subsidiaries.