Shares of Popular Vehicles and Services Ltd (PVSL) made a quiet start at Dalal Street on Tuesday, with the firm failing to attract buying interest from investors during its first trading session. The stock was avoided by investors following a soft debut on the exchanges.
Popular Vehicles shares were launched on the NSE at a 1.97 percent discount, at Rs 289.20, compared to an issue price of Rs 295 per share. The auto-dealership kicked-off its maiden trading session at Rs 292 on BSE, a discount of 1.02 per cent over its issue price. However, the stock fell another 10% to Rs 262.90, bringing the total decrease to 12% over the issue price.
Analysts watching the topic are generally favorable in the long run and advise investors to hold it. They feel that investors should have a strict stop-loss in place.
Popular Vehicles & Services is a well-established automobile dealer with a presence in four states and longstanding relationships with leading OEMs. PV&S has a fully integrated business model and a proven track record of capitalizing on growth opportunities, but is listed at a discount, according to Shivani Nyati, Head of Wealth at Swastika Investmart.
"The Indian auto market is highly competitive, and unresolved customer complaints can negatively impact the brand's reputation. Allottees who applied for the public offering for listing premium are advised to maintain their stop loss at Rs 250 and wait for further upside, whereas those who have a medium- to long-term perspective can also hold the stock," she said.
Popular Vehicles & Services, situated in Kerala, sold shares for Rs 280-295 each. Investors could bid for a minimum of 50 shares and multiples thereof. It collected a total of Rs 601.66 crore through an IPO, which included the selling of new equity shares for Rs 250 and an offer-for-sale (OFS) of up to 1,19,17,075 equity shares.
The IPO was only subscribed to 1.23 times, receiving a lackluster reaction and only making it through in the last hours of bidding. The quota for qualified institutional bidders (QIBs) was reserved 1.97 times. The share earmarked for retail investors and employees received bids of 1.05 times and 7.59 times, respectively. Only 66% of the non-institutional investor quota was subscribed.
Popular Vehicles has over 70 years of expertise in the automotive industry, with a diverse dealership network and a fully integrated corporate model. Aside from the natural synergies generated by its business verticals, the company's diverse income streams lead to improved profitability margins, according to Parth Shah, Research Analyst at StoxBox.
"Numerous demand drivers such as growth in new PV sales, rise in average vehicle prices, rising financial penetration, and digital technology, we remain positive on the automotive dealership business in India. Therefore, even after a discounted opening to the issue, we suggest that the market participants who have been allotted the shares hold them for a medium to long-term," he said.
Popular Vehicles and Services, incorporated in 1983, operates automobile dealerships in India. Popular Vehicles offers comprehensive services throughout the vehicle ownership life cycle, including new and used vehicle sales, servicing, spare parts distribution, driving schools, and third-party financial and insurance products sales.
The Popular Vehicles & Services IPO is led by Nuvama Wealth Management, Centrum Capital, and ICICI Securities, with Link Intime India serving as the registrar.
