Tolins Tyres is coming up with its IPO fresh issue of Rs.200 crores and offers for sale worth Rs. 30 crores, totaling Rs. 230 crores. The IPO will open on 9th September 2024 and close on 11th September 2024. The stock will be listed on the exchange on 16th September 2024. In this article, we will look at the IPO of Tolins Tyres. Thereby, reviewing and analyzing its strengths and weaknesses. Keep reading to learn about the company.
Tolins Tyres IPO – About the Company
Tolins Tyres Limited, incorporated in 2003, manufactures tyres and provides retreading solutions in India. The company is exporting to 40 countries, including the Middle East and East Africa. It operates in two main verticals: tyre and tread rubber.
The company produces a wide range of products, including tyres for various vehicles and tread rubber. It maintains 8 depots and a network of 3,737 dealers across India. Furthermore, Tolins Tyres operates three manufacturing facilities, two in Kerala and one in the UAE.
With 163 SKUs in the tyre category and 1,003 in tread rubber, the company is serving clients like Marangoni GRP and KAMCO. It is also holding quality certifications such as ISO 9001:2015. Additionally, the company is employing a sales team of 55 members, who are reporting directly to the Chairman and Managing Director.
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The company is constantly innovating and expanding its product line. As of March 31, 2024, it is boasting 163 new designs and products, along with their corresponding molds. Moreover, Tolins Tyres offers a diverse range of accessories, including bonding gum, tyre flaps, and vulcanizing solutions. This comprehensive product portfolio is enabling the company to meet various customer needs and maintain its competitive edge in the market.
Tolins Tyres IPO – About the Industry
The Indian tyre industry is experiencing remarkable growth, with its turnover doubling from Rs 46,000 crore in fiscal 2013 to Rs 90,000 crore in fiscal 2023. This expansion is primarily due to increasing vehicle demand and rising disposable incomes. Additionally, the industry is venturing into the luxury segment and seeing growth in exports.
Major players like Apollo Tyres and Bridgestone are dominating the market, accounting for over 80% of revenue. Meanwhile, global companies are setting up manufacturing units in India. However, their market share remains low due to price-sensitive customers. The industry turnover is projected to reach Rs 51,599.14 billion in FY24.
Tyre exports from India are reaching new heights, with a 9% year-on-year increase to Rs 23,125 crore in fiscal 2023. The US remains the largest market, accounting for 22% of total exports. Furthermore, Farm/Agri tyres are leading the export pie with a 40% share, followed by OTR/Industrial tyres at 22%.
The industry is expecting further expansion in the coming years. Companies are investing in manufacturing capacity, modernization, and R&D. Moreover, the replacement tyre market is growing alongside the automobile sector. The shift towards radialization and the incorporation of Industry 4.0 are providing new growth opportunities.
Government infrastructure efforts are contributing to the industry’s growth. Additionally, Indian tyres are gaining acceptance in overseas markets, leading to increased exports. Consequently, these factors are contributing to the overall positive outlook for the Indian tyre industry, with an estimated turnover growth of 6.9%.
Disclaimer: The financial report for the fiscal year 2023-2024 is disclosed up to 30th September 2023 on a consolidated basis as the company transitioned from GAAP to IFRS reporting standards, while the reports for fiscal years 2021, 2022 and 2023 are based on a standalone basis in RHP.
Tolins Tyres IPO – Financial Highlights & Segments
Tolins Tyres has experienced steady revenue growth over the past three years. The company’s revenue has increased from Rs. 105.89 crore in 2021 to Rs. 113.37 crore in 2022. Furthermore, in 2023, the revenue has risen to Rs. 118.25 crore, showing a consistent upward trend.
The company’s net profit is demonstrating a remarkable upward trajectory. It has risen from Rs. 0.77 crore in 2021 to Rs. 4.99 crore in 2023, the net profit has significantly jumped, indicating a substantial improvement in profitability.
Earnings Per Share (EPS) are reflecting the company’s improved performance. The EPS has increased from Rs. 0.43 in 2021 to Rs. 0.35 in 2022. Furthermore, in 2023, it has dramatically risen to Rs. 2.55, signifying a considerable enhancement in shareholder value.
Tolins Tyres IPO – Listed Key Players
The key peers of Tolins Tyres include TVS Srichakra, GRP, Elgi Rubber, Indag Rubber, and Vamshi Rubber.
Strengths of the Company
- Diverse Product Range: The company is offering 154 SKUs in tyres and 993 SKUs in tread rubber, catering to various market requirements.
- Customer-Centric Approach: Tolins is focusing on customized products to meet specific customer demands, thereby expanding its customer base.
- Quality Assurance: The company is adhering to various quality standards and has obtained certifications like ISO 9001:2015 and IATF 16949:2016.
- Strong Customer Relationships: Tolins is maintaining long-standing partnerships with OEMs and a wide dealer network across India.
- Integrated Manufacturing: The company operates three manufacturing facilities, two in Kerala, India, and one in UAE.
- In-house Capabilities: Tolins is conducting in-house design, mold production, and quality testing, ensuring better control over processes.
- Strategic Location: The facilities in Kalady benefit from proximity to airports, seaports, and railway stations.
- R&D Focus: The company is investing in research and development, with a dedicated R&D center and team of 10 employees.
- Financial Commitment: Tolins is allocating 0.13% to 0.19% of its revenue towards R&D expenses annually.
- Market-Driven Innovation: The R&D team is developing products based on customer requirements and market trends.
Weaknesses of the Company
- Limited Suppliers: The tyre manufacturing industry has a limited number of suppliers of raw materials. Volatility in the prices and availability of raw materials or any failure by the suppliers to make timely delivery of raw materials or breakdown of the relationship with such suppliers could hurt the business, financial condition and results of operations.
- Pending Legal Cases: There are outstanding legal proceedings involving the Company, Directors, Promoters and the subsidiaries. Any adverse outcome in such proceedings may hurt the reputation, business, financial condition, results of operations and cash flows.
- Negative Publicity: the business depends heavily on the reputation and consumer perception of the brand, and any negative publicity or other harm to the brand or failure to maintain and enhance the brand recognition may materially and adversely affect the business, financial condition, results of operations and cash flows.
- Cyclical Business: The cyclical and seasonal nature of businesses, in particular, the automobile industry, can adversely affect the business.
- Contingent Liabilities: They have certain contingent liabilities which, if materialized, may adversely affect the financial condition.
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Tolins Tyres IPO – GMP
The shares of Tolins Tyres Ltd’s price in the grey market are trading at an 11.06% premium as of September 5th, 2024. The shares in Grey Market trades at Rs 251. This gives it a premium of Rs 25 per share over the IPO price of Rs 226.
Tolins Tyres IPO – Key IPO Information
Promoters: DR. KALAMPARAMBIL VARKEY TOLIN AND JERIN TOLIN
Book Running Lead Manager: Saffron Capital Advisors Private Limited
Registrar to the Offer: Cameo Corporate Services Limited
Objects of the Issue
1. Repaying outstanding loans: The company is allocating 625.53 million for settling existing debts, including potential foreclosure charges.
2. Boosting working capital: A significant portion (750 million) is being dedicated to enhancing the company’s long-term working capital requirements.
3. Supporting subsidiary: The company is investing 243.66 million in Tolin Rubbers Private Limited, its wholly-owned subsidiary. This investment is being split into two parts:
a. Repaying loans: 163.66 million is being used to settle outstanding loans of Tolin Rubbers Private Limited.
b. Increasing working capital: The remaining 80 million is being allocated to augment the subsidiary’s long-term working capital needs.
4. Addressing general corporate purposes: Although not specified, some funds are being set aside for general corporate use.
Conclusion
Tolins Tyres Limited is preparing for its IPO. The company is actively expanding its product range and market presence. They are currently allocating funds strategically to strengthen their financial position. Meanwhile, the firm is repaying outstanding loans and bolstering working capital.
Additionally, they are supporting their subsidiary, Tolin Rubbers Private Limited. Furthermore, the company is investing in R&D and maintaining quality standards. However, they are facing challenges such as limited suppliers and pending legal cases. Consequently, Tolins Tyres is positioning itself for growth while navigating industry challenges.
Nevertheless, the company’s success will depend on its ability to capitalize on strengths and mitigate weaknesses in a competitive market. Questions for the readers: So what do you think of this company? Will it be able to increase its market presence and maintain growth based on its competition with peers? What is the view? Let us know in the comments below.
Written By DIpangshu Kundu
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