Tolins Tyres' Initial Public Offering (IPO) opened for subscription on September 9 and closed today, September 11. The company aims to raise approximately ₹230 crore through the offering, which will be listed on both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE)
The IPO price band has been set between ₹215 and ₹226 per share. Tolins Tyres raised ₹69 crore from anchor investors ahead of the public subscription. A total of 30.53 lakh shares were allocated to these investors at ₹226 per share, the upper end of the price band, bringing the total transaction size to ₹69 crore.
The IPO witnessed overwhelming demand, with the issue subscribed 10.18 times till 12:35 pm on Day 3 of bidding.
The IPO received bids for 7.25 crore shares against the 71.23 lakh shares on offer. Specifically, the subscription breakdown was notable across different segments: the retail investor segment saw a subscription of 14.33 times, and non-institutional investors booked 11.28 times. Meanwhile, the Qualified Institutional buyers segment saw 2.10 times bidding.
The Tolins Tyres IPO comprises a fresh issue of 0.88 crore shares, raising ₹200 crore, and an offer for sale of 0.13 crore shares, amounting to ₹30 crore. The promoters, Kalamparambil Varkey Tolin and Jerin Tolin will sell shares worth ₹15 crore each through the offer for sale (OFS) route. They currently hold an 83.31 per cent stake in the company.
Of the ₹200 crore raised from the IPO, ₹75 crore will be allocated to enhance the company's long-term working capital, ₹62.55 crore will be used to pay off debt, and ₹24.36 crore will be invested in the subsidiary, Tolin Rubbers, for debt repayment and working capital support.
The minimum lot size for the IPO application is 66 shares, totalling ₹14,916. The allotment date is anticipated to be September 12, 2024, with the shares expected to be listed on the BSE and NSE on September 16, 2024.
Saffron Capital Advisors Private Limited is the book-running lead manager for the IPO, and Cameo Corporate Services Limited is the registrar.
Tolins Tyres, founded in 2003, is a leading tyre manufacturing company in India. It specializes in tyre retreading solutions and exports products to 40 countries. The company offers a broad product range, including tyres for two-wheelers, three-wheelers, light commercial vehicles, agricultural machinery, tread rubber, and various accessories like bonding gum, tyre flaps, and vulcanizing solutions.
Tolins Tyres operates three manufacturing facilities and manages 163 stock-keeping units (SKUs) within the tyre category. Its distribution network features eight depots and a nationwide presence of 3,737 dealers.
In its IPO note, SMC Global suggests that investors with a high-risk tolerance might consider the Tolins Tyres IPO due to the company's rapid growth and potential. The note points out that the tyre manufacturing industry faces challenges from limited suppliers of essential raw materials, such as natural rubber and carbon black. At the upper end of the price band, the stock is valued at a pre-IPO price-to-earnings ratio of 26.64 times, based on the financial year 2024 earnings per share of ₹8.48.
Swastika Investmart advises investors interested in long-term exposure to the tyre sector to consider the Tolins Tyres IPO. The firm highlights Tolins Tyres' product diversity, extensive customer base, gradual expansion, and solid financial performance. It also finds the IPO's valuation reasonable.
Master Capital Services encourages investment in the IPO for a medium—to long-term horizon. Analysts at Master Capital anticipate a 4-6 per cent growth in the Indian tyre industry for fiscal 2025. They believe Tolins Tyres will capitalize on this by optimizing capacity utilization, expanding its domestic market reach, and introducing new products.
The IPO's grey market premium (GMP) today is ₹39 per share, indicating an expected listing price of ₹265, a premium of 17.26 percent from its issue price of ₹226. The GMP has been the same since September 9.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
