Tolins Tyres IPO, one of the most feted names in the tyre manufacturing world, finally seemed to set to take its debut on the Indian Stock Exchange, standing all upright after three-day bidding processes got successfully culminated. The company’s IPO received a great response from the investors and an intrinsic base of grey market witnessed some pretty decent shares commanding a very impressive premium. The IPO’s Share Allotment happened on Thursday, September 11, paving the company’s way to list both on the Bombay Stock Exchange and National Stock Exchange.
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Grey Market Premium: What does it mean for Investors?
Tolins Tyres shares are fast turning into a hot cake in the grey market ahead of its launch on the bourses. InvestorGain has reported that the Tolins Tyres shares are selling at a premium of ₹30. The expected listing price of Tolins Tyres share may be available at ₹256, reflecting a premium of 13.27% from the IPO issue price.
The reason for significance is the grey market premium, GMP. GMP reveals the investors’ willingness to pay more for a company’s shares at an issue price than the senses prevailing in the markets. In other words, GMP is not official or regulated, but it may turn out to be a good indication of the possible performance of the company’s shares when those shares are listed on the stock exchange. However, GMP values can change very rapidly in accordance with market trends, demand, and investor sentiment as a whole.
GMP for Tolins Tyres has hit the lowest at ₹0 and the highest at ₹39. Till date, the stock is expected to yield positive returns for investors considering the grey market turnover has gone optimistic.
Tolins Tyres IPO: Subscription Numbers Strong
Tolins Tyres public issue received an overwhelmingly positive response with the issue being over-subscribed by 23.89 times on the final day of bidding, Wednesday. This kind of subscription across all investor categories suggests confidence in growth potential and the company’s standing in the market.
The IPO received an outstanding response of 17,89,26,528 applications for the 74,88,372 shares. Subscriptions in each of the investor categories were quite impressive as follows:
Retail Investors: The shares alloted to them subscribed at 21.52 times.
NIIs subscribed at 27.41 times.
QIBs subscribed at 25.42 times.
The high subscription rates of the IPO are indicative of the positive vibes surrounding the IPO and listing of Tolins Tyres. The demand, cut across all investor categories, further indicates that Tolins Tyres has managed to attract strong interest from retail as well as institutional investors.
Tolins Tyres IPO Details: Scratching the Surface
Tolins Tyres IPO will raise around ₹230 crores, that would unlock further growth and expansion plans of the company. The company had issued shares in a price band of ₹215 to ₹226 per share. Hence, as indicated in this response, the issue has been priced at the higher end of the price band due to its very high demand in the market among the investors.
Prior to the public offering, Tolins Tyres had already secured ₹69 crore from anchor investors. These investors were allocated 30.53 lakh shares at the upper limit of the price band, ₹226 per share. This early involvement of anchor investors provided a boost of confidence, signaling that the IPO would likely perform well once it opened to the public.
Offer for Sale (OFS) by Promoters
As part of the IPO, promoters of Tolins Tyres Kalamparambil Varkey Tolin and Jerin Tolin have agreed to divest some of their ownership through the Offer for Sale (OFS) component. Each of them will sell shares worth ₹15 crore. Pre-ipo, both promoters together held an 83.31% stake, and the OFS is likely to shave a fraction of that off in total.
The selling of some shares by the promoters is normally found in most IPOs. The OFS gives the existing shareholders a chance to sell their equities to the public, thus partly exiting or cutting down their holding while the new investors are given an opportunity to invest in the company.
Objective of the IPO
The funds are expected to be used on a number of primary areas for example to increase Tolins Tyres’ operational capacity and business expansion. In fact, some of the funds would obviously go towards capital expenditure to enhance the company’s production efficiency as well as its manufacturing footprint in response to growing demand.
Apart from these growth-oriented goals, the IPO proceeds can be employed to reduce debt and improve working capital as well as the financial positioning of the company. This could assist in an improvement in the balance sheet and put Tolins Tyres in an excellent position to take up future opportunities that may emanate in the tyre manufacturing sector.
Market Position of Tolins Tyres
Tolins Tyres was established in 1982, and since its formation, it has been a trusted tyre manufacturer in the Indian market. The company was a two wheeler tyre manufacturer earlier but at present is located in Kerala and produces the most diversified product portfolio from tyres for trucks to passenger cars.
Tolins Tyres has, over the years, expanded its operations across India, covering a healthy distribution network and partnering with several leading automotive manufacturers. Tolins Tyres are known to be quality tyres catering specifically to the requirements of the Indian market: “durable and performing well on various road conditions”.
Tolins Tyres would focus on consolidating its business in the competitive market of tire manufacturing following the infusion of this new capital. With the increase in vehicles’ demand in India that has been driven by economic growth and increment in consumer spending, the business is in an excellent position to benefit with an increased market share.
Listing on BSE and NSE: Expectations
Shares of Tolins Tyres are slated to list on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) from September 16. The listing has been eagerly awaited by investors, who have seen high subscription numbers and a positive grey market premium as comforting factors.
This is likely to open the stock above the IPO issue price thereby giving a potential gain to the early investors. The stock is likely to list around ₹256, rising by a premium of 13.27 % from the issue price of ₹226 calculated based on the grey market premium of ₹30.
However, listing price is governed by volatility in the stock market and thus differs with the actual listing price influenced by broader market conditions and investor sentiment on the day of listing.
Role of Lead Managers and Registrar
Any successful IPO depends on the lead managers and registrars. For Tolins Tyres, the book-running lead manager is Saffron Capital Advisors Private Limited. They have taken care of all aspects of the application-the book-building process, including the regulatory compliance done by the company and the marketing and investor demand management.
Cameo Corporate Services Limited is the registrar for this offering and would be handling the process of an IPO application and allotments of shares. All critical administration work related to the public offering would be dealt with by them. The presence of seasoned managers and registrars again brings in that much more credibility and confidence to the IPO process.
Conclusion: A Promising Start for Tolins Tyres
With Tolins Tyres coming in with a strong market command, impressive IPO subscription numbers, and a grey market premium that is clearly positive, all bases are covered for it to hit the right notes on the stock markets. Listing is expected on September 16, and brokers are bracing up for immense interest from not only the retail fraternity but also institutional investors as well.
These factors make Tolins Tyres an investment opportunity with a sense of security, especially for those who are interested in capitalizing on the rise of the Indian automotive market. Given that the IPO proceeds are likely to be used towards expanding and growing the business, this is clearly more than a safe bet on being able to count on a steady increase in the stock price after listing.
For investors who participated in the IPO, Tolins Tyres is an opportunity to capitalise on its future growth potential. New investors might look for an entry point after listing, depending on their investing strategy and risk appetite.