IPO listed on 16 Sep'24
Tolins Tyres Ltd
Minimum Investment
₹ 14,916 / 66 shares
Grey market premium
₹ 25 (11% premium)
Issue price
₹ 226
Listing price
₹ 228
Listing day %
6%
Listing on
Sep 16, 2024
Our Verdict:
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- Tolins Tyres Ltd (TTL) has experienced substantial growth in both revenue and profits, attributed to expansions in capacity and vertical integration. The firm plans to use the proceeds from the issue to significantly reduce its debt, which is expected to lower interest expenses and boost profitability.
- Currently, capacity utilization stands at ~33%. TTL aims to incrementally boost this figure to 75% over the coming years, focusing on segments such as off-road highway, agricultural, and industrial tires, while also expanding into the two and three-wheeler markets. The firm is also diversifying its product lineup with new variants and stepping into the radial tyre market.
- In terms of valuation, the IPO is set at a price-to-earnings (P/E) ratio of 24x based on FY24 earnings, which is competitively lower than the industry average.
- With its appealing valuation, robust financial standing, and growth prospects, TTL presents a good opportunity for investors looking for long-term exposure in the tyre industry.
About the company
Founded in
10 Jul'03
Managing director
Dr. Kalamparambil Tolin
- TTL engages in the production of new tyres and tread rubber, positioning itself as a prominent provider of tyre retreading solutions throughout India. Additionally, it exports products to 40 countries, including regions such as the Middle East, East Africa, Jordan, Kenya, and Egypt.
- As of March 31, 2024, the firm operates through an extensive network that includes 8 depots and 3,737 dealers across India. It operates three manufacturing facilities; two are located in Kerala, India, and the third in the UAE.
STRENGTHS
- Exceptional Growth Trajectory: TTL has demonstrated impressive financial growth, with its operational revenue and net profit achieving compounded annual growth rates (CAGRs) of 42% and 542%, respectively, from FY22 to FY24.
- Diversified Product Range: TTL boasts a broad and varied product portfolio, featuring 163 stock keeping units (SKUs) in the tyre category and 1,003 SKUs in tread rubber.
- Solid Return Metrics: TTL exhibits impressive return metrics, with a Return on Equity (RoE) of 26% and a Return on Capital Employed (RoCE) of 36% for FY24, surpassing its industry counterparts.
- Improving Margins and Financial Health: The EBITDA margin has consistently risen from 5.37% in FY22 to 20.41% in FY24, while the Net Profit margin has increased from 0.56% to 11.45% over the same period. Additionally, the Debt:Equity ratio has markedly decreased from 2.42 in FY23 to 0.78 in FY24.
RISK FACTORS
- Supplier Dependence: TTL lacks long-term agreements with its suppliers. As of FY24, the top 1, 5, and 10 suppliers represented 29.07%, 77.92%, and 98.02% of total purchases, respectively. A disruption in these relationships could impact the manufacturing process, potentially affecting business operations and financial results.
- Cash Flow Concerns: TTL and its subsidiaries have recorded negative cash flow from operations in the past. Continued negative cash flows could negatively affect its liquidity needs and overall financial health.
- Legal Risks: TTL is currently involved in certain legal proceedings with its directors, promoters, and subsidiaries. Any unfavourable resolutions could detrimentally affect the firm’s reputation and financial standing.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 230 crore
Fresh Issue
₹ 200 crore
OFS
₹ 30 crore
Price range
₹ 215 - 226
Lot size
66 shares
Issue Objective
TTL plans to allocate the net proceeds from the fresh issue for the following purposes:
- Repayment and/or prepayment of certain existing loans;
- Augmentation of the firm’s long-term working capital needs;
- Investment in its wholly-owned subsidiary, Tolin Rubbers Pvt Ltd, specifically to repay and/or prepay its short-term and long-term borrowings in full, and to boost its working capital; and
- General corporate purposes.
Dates
Bidding open
9 Sep'24
Bidding close
11 Sep'24
Allotment date
12 Sep'24
Refund date
13 Sep'24
Listing
16 Sep'24
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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