1 week Ago
The initial public offering ( IPO ) of Tolins Tyres , which opened today for subscription and closes on September 11, was subscribed 70% so far on the first day of the bidding process. Around 11:45 am, the highest demand was driven by the retail investors, booking the issue by 1.3 times, followed by the non-institutional investors, subscribing the issue by 20%.
The portion for qualified institutional buyers saw a subscription of merely 4,488 shares out of 21.4 lakh shares reserved for them. Ahead of the public issue, Tolins Tyres has secured Rs 69 crore from anchor investors.
Notable anchor investors include BofA Securities Europe SA, NAV Capital VCC, Chhatisgarh Investments among others. The IPO comprises a fresh issue of equity shares worth Rs 200 crore and an offer-for-sale (OFS) of equity shares valued at Rs 30 crore. Under the OFS, promoters Kalamparambil Varkey Tolin and Jerin Tolin will sell shares worth Rs 15 crore each.
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8x based on FY24 EPS, suggesting a fair valuation in line with its peers. "As a leading player in tyre retreading, Tolin also manufactures tyres and plans to expand into the radial tyre market and the aerospace and defense sectors. We assign a subscribe rating to the issue as valuations seem fair," said Indsec Securities.
"Investors seeking long-term exposure to the tyre industry may consider applying for the Tolins Tyres IPO, recognizing the potential challenges posed by the competitive landscape and IPO timing," said Swastika Investmart. Also read: Kross IPO opens: Should you subscribe to this Rs 500 crore issue? Other details Of the Rs 200 crore IPO proceeds, Rs 75 crore will be used to augment long-term working capital requirements, Rs 62 crore for repayment of debut. Further, about Rs 24 crore will be used for investment in the company's subsidiary Tolin Rubbers to repay its debt and support its working capital requirements.
Tolins Tyres is present in both verticals – manufacturing of new tyres and tread rubber. It is primarily engaged in the manufacturing of bias tyres for vehicles (including LCV, agricultural, and two/three-wheeler vehicles) and procured tread rubber. The company also makes ancillary products like bonding gum, vulcanizing solution, tyre flaps, and tubes.
Tolins Tyres' competitive strengths lie in its operational efficiency, ensuring timely delivery, stringent quality control, and product innovations. The company has delivered robust growth in Revenue, EBITDA and PAT at a CAGR of 42%, 176% and 542% from FY22 to FY24, driven by capacity expansion and vertical integration. Its revenue from operations in the fiscal year 2024 came in at Rs 227 crore and profit was at Rs 26 crore.
For FY24, the company generated revenues of Rs 51 crore from sales of new tyres, which accounted for 24% of the total sales. Meanwhile, revenue from tread rubber made up for the rest 76% of the total sales. Saffron Capital Advisor is acting as the sole book-running lead manager to the issue, while cameo corporate services is the registrar.
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