TVS Supply Chain headed for flat listing? Here's what grey market premium indicates

TVS Supply Chain Solutions is all set to make its Dalal Street debut on Wednesday. However, the stock may break the series of listing pops and may disappoint the investors on its debut, if one goes by the volatility in the listed space and signals from the grey market.

Last heard, TVS Supply Chain Solutions was commanding a grey market premium (GMP) of up to Rs 5 per shares, suggesting a flat-to-slightly positive listing against its issue price of Rs 197 apiece. The GMP for the counter has corrected sharply amid the volatile market sentiments and lower subscription levels.

The current grey market premium of TVS Supply Chain Solutions indicates that the shares could list at a price of around Rs 200 per share. The IPO was subscribed to 2.85 times overall, which is a decent response. However, the subscription was lower than some recent IPOs, and the listing might not be that attractive, said Anubhuti Mishra, Equity Research Analyst at Swastika Investmart.

"Although TVS Supply Chain Solutions is a leading supply chain management company, it operates in a highly competitive industry and has reported losses in the past two years. Additionally, the valuation of the IPO was also very high. All of these factors could impact its listing. Therefore, we would suggest investors to book profits after listing," he said.

The Rs 880-crore initial stake sale of TVS Supply Chain Solutions was open for subscription between August 10-14 as the company sold its shares in the range of Rs 187-197 apiece with a lot size of 76 equity shares during the three-day bidding process.

Also read: Nifty, Sensex end flat; Adani Enterprises, HDFC Life top gainers; Jio Financial, Cipla top losers; Paytm, Adani Power, other stocks that buzzed in trade on August 22, 2023

"We expect a tepid listing for the issue when it lists on Wednesday. We expect the issue to open lower than the issuance price of Rs 197 per share due to rich valuations, average financial performance and increased competitive intensity in the industry," said Dhruv Mudaraddi, Research Analyst at StoxBox.

He advised investors who have received allotment to move to other investment avenues and stay away from this counter at least in the short-term. "Given the strong parentage of TVS Group, investors may reconsider the company in future following sustained improvement in financial metrics, especially margin expansion, and reasonable valuations," he added.

The primary stake sale was overall subscribed 2.85 times. The portion for qualified institutional bidders was booked 1.37 times, while the non-institutional investors' category was subscribed 2.44 times. The quota reserved for retail investors was subscribed 7.89 times.

Chennai-based TVS Supply Chain Solutions provides supply chain management services for international organizations, government departments, and large and medium-sized businesses. It offers its services in two segments namely- integrated supply chain solutions (ISCS) and network solutions (NS).

Also read: Hot stocks on August 22, 2023: Adani Power, Zomato, BHEL, Welspun Enterprises, Union Bank and more

Also read: Voda Idea, Zomato, Sulzon Energy, YES Bank, HCC shares gain up to 6% amid high volumes; SJS leads turnover