| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 215 to ₹ 226 | 66 | 09th Sep, 2024 – 11th Sep, 2024 | ₹230.00 Cr |
About Tolins Tyres Ltd IPO
Tolins Tyres Ltd. (TTL) is a player in the tyre industry, known for its diverse product portfolio and extensive presence across India. TTL specializes in the production of bias tyres under the “Tolins Tyres” brand for a wide range of vehicles, including light commercial vehicles (LCVs), two-wheelers, three-wheelers, agricultural vehicles, and precured tread rubber. Additionally, the company manufactures auto ancillary products such as bonding gums, vulcanizing solutions, and tyre flaps & tubes. While the company’s primary market is India, they also export to the Middle East, the ASEAN region, and Africa. The company has each of its product BIS approved which is mandatory for manufacturing and marketing tyres in India. The company operates three manufacturing facilities: two in Mattoor, Kalady, Kerala, and one in the Al Hamra Industrial Zone, Ras Al Khaimah, UAE. These facilities cover approximately 8.99 acres and include a built-up area of 126,488 sq. ft. for end-to-end product development, including in-house design, production, and quality testing units. TTL has a consolidated manufacturing capacity of 1.51 million tyres, 12,486 tons of tread rubber, and 17,160 tons of rubber compound. The company generates 24.3% of its revenue from tyre business, while tread rubber contributes 75.7% of the revenue. Over the years, TTL has established itself as a leading provider of tyre retreading solutions nationwide and exports its products to 40 countries.
Objective of the Tolins Tyres Ltd IPO
The net proceeds from the fresh issue will be used towards the following purposes:
- Repayment and / or prepayment, in full, of certain outstanding loans availed by the company;
- Augmentation of long-term working capital requirements of the company;
- Investment in its wholly owned subsidiary, Tolin Rubbers Private Ltd. to repay and/ or prepay, in full, certain of its short term and long-term borrowings and augmentation of its working capital requirements; and
- General corporate purposes.
Rationale To Invest In Tolins Tyres Ltd IPO
Diverse portfolio and quality standards propel market reach
Over its three decades of rich experience, TTL has been able to foster healthy relationships with several established Indian and global customers like Marangoni GRP, Kerala Agro Machinery Corporation Ltd. (KAMCO), Redlands Motors, Tyre Grip. etc. for products. With the help of its diverse product portfolio, the company is able to cater to a wide spectrum of customers which includes OEMs, domestic dealer network and depots across the country. The company’s strength lies in its ability to tailor products to meet customer requirements and its long-standing track record of consistently delivering high-quality, cost-effective solutions. The company engages with key customers at various stages of product development to help the company understand customer requirement and future plans better, enabling the company to forecast, plan and manufacture products accordingly. Another aspect which contributes to the growth of its client base and retention could be attributed to the quality of products which adhere to the various qualitative standards. Owing to the various quality checks, the company is able to provide high quality and tailor-made products with minimum recall ratio which was as low as 0.2% in FY24. With the help of its in-house facilities, the company is able to further improve the quality of its products which ensures a competitive edge in the market. Moreover, the company has also been accredited with Department of Transportation certificate from the US for exporting its products and E mark E32 for Europe.
Integrated manufacturing operations driving margin expansion
The company’s manufacturing operations are backward integrated, encompassing raw materials, design, process engineering, machining capabilities, and mold production. This integration grants the company greater control over its processes, delivery timelines, pricing, and quality. Additionally, backward integration allows the company to remain agile, responding swiftly to emerging trends by developing molds and new products in anticipation of market demands. Furthermore, the company has forward integrated with a network of dealers across key states, ensuring effective control over product sales and distribution. This forward integration enhances customer service and satisfaction. The company also has a computer-aided design and computer aided manufacturing packages which helps TTL to create three dimensional models, in addition to a simulation software which enables manufacturing with higher accuracy. Such comprehensive integration of its operations reduces the company’s dependence on third parties, streamlines production processes, and improves operational efficiency. The financial benefits of these integrations are evident in the company’s performance. Between FY22 and FY24, the company expanded its EBITDA margins by 1147 basis points, and its PAT margin grew from 0.56% in FY22 to 11.65% in FY24. This robust margin expansion highlights the company’s ability to manage operations and costs efficiently while achieving significant growth.
Valuation of Tolins Tyres Ltd IPO
Tolins Tyres Ltd. relies on its product development capabilities to design and deliver proprietary products such as pre-cured tread rubber and bias tyres that fir market requirements. On the back of a consumer centric business model, the company has been successfully able to build a sustainable long-standing relationship with its customers. With the help of its comprehensively integrated operations, the company is effectively able to manufacture products which aligns with the client’s requirement. Such synergies within its operation enables the company to benefit from enhanced operational efficiency and cost management. This synergy is further reflected in the company’s financial performance, showcasing its ability to adapt to market demands and maintain a competitive edge. On the financial front, the company’s Revenue/EBITDA/PAT grew at a CAGR of 41.6%/174.9%/519.8% during FY2022-24 period, driven by the company’s cost effective and efficient production capabilities. Kross maintained a ROCE of 23.6% in FY24 vs 2.6% in FY22, which highlights the company’s effective utilization of capital investment to drive growth and profitability. The company also plans to prudently manage its debt by utilizing the fund from the offering. Their commitment to manage debt is well reflected in their balance sheet, maintaining a debt/equity ratio of 1.2x in FY24 vs 8.2x in FY22. On the sectoral front, the domestic tyre industry is poised for growth due to rising vehicle demand and the expanding automobile sector, which boosts the need for replacement tyres. Additionally, the increasing acceptance of Indian tyres in international markets is driving significant growth in tyre exports. The treads industry in India, catering to this demand, is also thriving thanks to higher vehicle ownership, improved road infrastructure, and rising disposable incomes. On account of such favourable macro trends, the company is expected to ride on the sectoral tailwinds and capitalise on market opportunities. The issue is valued at a P/E of 23.7x on the upper price band based on FY24 earnings, which is deemed fair compared to its peers. Therefore, we recommend a SUBSCRIBE rating for the issue.
What is the Tolins Tyres Ltd IPO?
Tolins Tyres IPO is a book built issue of Rs 230.00 crores. The issue is a combination of fresh issue of 0.88 crore shares aggregating to Rs 200.00 crores and offer for sale of 0.13 crore shares aggregating to Rs 30.00 crores. Login to your account now – https://campaign.StoxBox.in/redirect.html
How to apply for the Tolins Tyres Ltd IPO through StoxBox?
To apply for the Tolins Tyres Ltd IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Tolins Tyres Ltd IPO open?
Tolins Tyres Ltd IPO is opening on 09th September 2024. Apply Now
What is the lot size of the Tolins Tyres Ltd IPO?
The Lot Size of Tolins Tyres Ltd IPO is 66 equity shares. Login to your account now – https://campaign.StoxBox.in/redirect.html
When is the Tolins Tyres Ltd IPO allotment date?
The allotment Date for Tolins Tyres Ltd IPO is 12th September 2024. Login to your account now – https://campaign.StoxBox.in/redirect.html
When is the Tolins Tyres Ltd IPO listing date?
The listing Date for Tolins Tyres Ltd IPO is 16th September 2024. Login to your account now – https://campaign.StoxBox.in/redirect.html
What is the minimum investment required for the Tolins Tyres Ltd IPO?
In the Retail segment the minimum investment required is Rs. 14,916. Login to your account now – https://campaign.StoxBox.in/redirect.html
What is the maximum investment allowed for the Tolins Tyres Ltd IPO?
In the Retail segment the maximum investment requirement is Rs. 193,908. Login to your account now – https://campaign.StoxBox.in/redirect.html
What are the risks associated with investing in the Tolins Tyres Ltd IPO?
- The company does not enter into contractual agreements with its distributors and dealers and any failure to maintain the relationship with these dealers & distributors or find competent replacements could affect the sales of its products.
- TTL faces competition from both domestic as well as multinational corporations and its inability to compete effectively could result in loss of customers and market share, which could have an adverse effect on the business.
- The company is dependent on contract labour and any disruption to the supply of such labour for its manufacturing facilities or company’s inability to control the composition and cost of its contract labour could adversely affect its business and results of operations.
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When will the Tolins Tyres Ltd IPO shares be credited to my Demat account?
The Tolins Tyres Ltd IPO be credited to the account on allotment date which is 13th September 2024. Login to your account now – https://campaign.StoxBox.in/redirect.html
Where can I find the Tolins Tyres Ltd IPO prospectus?
The prospectus of Tolins Tyres Ltd IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to Tolins Tyres Ltd IPO?
| IPO Open Date | Monday, September 9, 2024 |
|---|---|
| IPO Close Date | Wednesday, September 11, 2024 |
| Basis of Allotment | Thursday, September 12, 2024 |
| Initiation of Refunds | Friday, September 13, 2024 |
| Credit of Shares to Demat | Friday, September 13, 2024 |
| Listing Date | Monday, September 16, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on September 11, 2024 |
