Popular Vehicles and Services IPO Reviews
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Popular Vehicles and Services Limited IPO

Popular Vehicles Services Limited’s IPO consists of a fresh issue of shares worth INR 250 crores and an offer to sell 1.42 crores of existing equity shares. The company will use the funds raised to repay loans and subsidiaries’ borrowings and meet general corporate needs.

Popular Vehicles Services  IPO DateMarch 12, 2024 to March 14, 2024
Popular Vehicles Services  IPO Listing DateMarch 19, 2024
Popular Vehicles Services  IPO PriceINR 280 to 295 per share
Popular Vehicles Services  IPO Lot Size50 Shares
Popular Vehicles Services  IPO Total Issue SizeINR 601.55 crores
Popular Vehicles Services  IPO Basis of AllotmentMarch 15, 2024
Popular Vehicles Services  IPO Initiation of RefundsMarch 18, 2024
Popular Vehicles Services  IPO Credit of Shares to DematMarch 18, 2024
Popular Vehicles Services  IPO Issue TypeBook Built Issue IPO
Popular Vehicles Services  IPO Listing AtBSE, NSE

Popular Vehicles, a leading Indian auto dealership, operates with a fully integrated model, covering the entire vehicle ownership cycle. Segments include passenger vehicles (including luxury), commercial vehicles, and electric two/three-wheelers, contributing to diverse revenue streams.

They operate passenger vehicle dealerships for Maruti Suzuki, Honda, and Jaguar Land Rover, commercial vehicle dealerships for Tata Motors and Daimler India, and electric vehicle dealerships for Piaggio and Ather. They are diversified across vehicle categories, enhancing revenue streams.

They expanded through acquisitions, adding 11 service centers and two showrooms (Maruti Suzuki) in Kerala and acquiring eight showrooms, 17 service centers, and three sales outlets (BharatBenz) in Tamil Nadu and Maharashtra. 

Popular Vehicles Service’s financials from 2021 to 2023 reveal robust revenue growth, doubled profits, and enhanced shareholder equity, positioning it strongly for its upcoming IPO. Key metrics like RoNW and EPS significantly improve, indicating a promising investment opportunity.

Revenue Growth: 

The company has shown significant revenue growth, increasing from ₹28,935.25 million in 2021 to ₹48,750.02 million in 2023. This indicates strong market demand and business expansion.

Equity Growth: 

Equity has steadily increased from ₹2,460.02 million in 2021 to ₹3,430.44 million in 2023, suggesting robust internal growth and possibly successful equity financing.

Expenses: 

Expenses have increased proportionally with revenue, indicating effective cost management in line with business growth.

Profit After Tax: 

Net profit has almost doubled from ₹324.55 million in 2021 to ₹640.74 million in 2023, reflecting increased profitability.

Return on Net Worth (RoNW): 

RoNW has improved, rising from 13.19% in 2021 to 18.68% in 2023, indicating efficient use of shareholder equity.

Earnings Per Share (EPS): 

There’s a significant increase in EPS from ₹5.17 in 2021 to ₹10.22 in 2023, suggesting increased profitability per share.

Net Asset Value (NAV) per Equity Share: 

The NAV per share has consistently increased, a positive sign of growing intrinsic value.

Total Assets and Liabilities: 

The company’s total assets have grown notably, with a corresponding increase in liabilities. The growth in assets outpaces the growth in liabilities, which is a healthy sign.

ParticularAs of 31 March 2021As at 31 March 2022As at 31 March 2023
Revenue (₹ in Million)28,935.2534,658.7948,750.02
Equity (₹ in Million)2,460.022,798.863,430.44
Expenses (₹ in Million)28,720.0034,356.5348,077.61
Profit and Loss After Tax (₹ in Million)324.55336.69640.74
RoNW (%)13.1912.0318.68
NAV per Equity Share (₹)39.2244.6254.69
Diluted EPS only (₹)5.175.3710.22
Total Assets (in millions)11,189.3612,632.8815,037.80
Total Liabilities (in millions)8,729.349,384.0211,607.36

Popular Vehicles and Services Limited, with revenue of ₹48,750.02 million and RoNW of 18.68%, outperforms Landmark Cars Limited in revenue but has a lower EPS (₹10.22) compared to Landmark’s ₹22.56, indicating differing profit efficiencies between the companies.

CompanyRevenue (₹ in million)Face Value per Equity Share (₹)P/EEPS (Basic) (₹)EPS (Diluted) (₹)RoNW (%)NAV per Equity Share (Basic) (₹)
Popular Vehicles and Services Limited48,750.022NA10.2210.2218.6854.69
Landmark Cars Limited33,823.51536.4122.5621.7418.04118.55

The main objective of Popular Vehicles Limited’s IPO is to repay borrowings by the company and subsidiaries. Additionally, funds support general corporate goals, covering strategic initiatives, partnerships, acquisitions, subsidiary investments, and working capital needs.

1.    Repayment and pre-payment, in whole or part, of certain borrowings availed by the Company and certain of the Subsidiaries, VMPL, PAWL, PMMIL, KGPL, KCPL, and PMPL: The company intends to utilize INR 192 crore of Net Proceeds towards full or partial repayment or pre-payment of certain borrowings, availed by their company and certain of their Subsidiaries. The company aims to guide borrowing choices, considering restrictions, consents, penalties, and legality.

2.    General corporate purposes: The company plans to deploy the balance funds towards the general corporate goals, including strategic initiatives, partnerships, acquisitions, subsidiary investments, and meeting working capital needs and necessities.

Popular Vehicles faces industry uncertainties, operates diverse dealerships under OEM agreements, and expands into Maharashtra, increasing exposure. Concentration in key states poses risks from economic fluctuations and natural disasters, impacting sales and operations.

  • The company faces uncertainties in the automotive industry, with challenges such as economic fluctuations, technology shifts, changing credit conditions, and potential adverse impacts from tariffs and incentive withdrawals, especially in the electric vehicle segment.
  • Operates Maruti, Honda, JLR, Tata Motors, BharatBenz, Ather, and Piaggio dealerships. OEM agreements influence operations, capital expenditure, and service levels. Conflicts may arise, impacting expansion, termination rights, pricing changes, and margins.
  •  Expansion into Maharashtra increases exposure. Concentration in Kerala, Tamil Nadu, and Karnataka poses risks from economic slowdowns, natural disasters, and fuel price fluctuations, impacting vehicle sales and operations.

The Indian auto industry, a significant contributor to the economy, has grown to ~7.1% of GDP. Despite challenges like the fiscal 2020 slowdown and the COVID-19 impact, it remains one of the world’s largest auto markets.

After liberalization, Maruti Suzuki’s joint venture shifted India’s auto landscape. Hyundai, Honda, and others entered, fostering widespread manufacturing. Despite contractions, domestic PV sales rose at a 3% CAGR from fiscal 2018 to 2023, reaching 3.9 million in fiscal 2023.

India, a signatory to the Paris Agreement, actively promotes adoption of electric vehicle (EV) through incentives, tax cuts, and infrastructure development. Government initiatives aim for a 30% EV sales share by 2030, supported by the FAME subsidy, addressing range anxiety and fostering EV growth.

Popular Vehicles Services plans a fresh issue of shares, seeking INR 250 crores to augment the capital needs of the company. Additionally, the company proposes an offer for sale, intending to sell 1.42 crore existing shares.

1.  Fresh Issue: The company will issue new shares to raise capital, aiming to collect INR 250 crores. The company intends to utilize the proceeds from the fresh issue to repay loans, subsidiaries’ borrowings, and meet general corporate needs.

2.  Offer for sale: Popular Vehicles Services is offering to sell 1.42 crore existing shares. The following are the details of the existing shareholders who are also the promoters selling the shares:

Name of the promoter selling shareholderMaximum number of offered shares for sale (in millions)
Banyan Tree Growth Capital II, LLC14,275,401

The offer size of Popular Vehicles & Services Limited’s IPO is  INR 601.55 crores. This comprises a new issuance of shares totaling INR 250 crores and the sale of 1.42 crores of existing equity shares. The funds generated will be utilized to repay loans and subsidiaries’ borrowings and meet general corporate needs.

Popular Vehicles Services allocation will be as follows: 50% for Qualified Institutional Buyers (QIB), 15% for Non-Institutional Investors (NII), and 35% for Retail Individual Investors (RII) in accordance with SEBI regulations. A portion of the issue is also set aside for the eligible employees.

Qualified Institutional Buyers (QIB): As per SEBI regulations, 50% of the shares offered through the IPO will be reserved for Qualified Institutional Buyers. These include entities such as banks, mutual funds, and insurance companies.

Non-Institutional Investors (NII): 15% of the shares will be reserved for Non-Institutional Investors. These typically include corporate bodies or individuals investing more than Rs.2 lakhs.

Retail Individual Investors (RII): The remaining 35% of the shares will be allotted to Retail Individual Investors. These individual investors apply for shares with a total value of less than Rs.2 lakhs.

Eligible Employees: A portion of the issue is reserved for eligible employees.

To apply for the Popular Vehicles Services IPO through Alice Blue,