Tolins Tyres Limited, established in 1982 as a small-scale industry, has grown into a leading player in the tyre manufacturing industry, offering a wide range of products, including two and three-wheeler tyres, Light Commercial Vehicle (LCV) tyres, and agricultural tyres. Over the years, Tolins has established itself as a reliable manufacturer with a reputation for high-quality products that cater to diverse market segments. Their growth from a small industry to a key player in the tyre industry is a testament to their innovation and commitment to quality.

In 2024, Tolins Tyres is launching its Initial Public Offering (IPO), with a Book Built Issue amounting to ₹230 crores. The IPO consists of a Fresh Issue of 8.84 lakh shares, worth ₹200 crores, and an Offer for Sale of 1.32 lakh shares, totaling ₹30 crores. Investors can subscribe to the Tolins Tyres IPO from September 9, 2024, to September 11, 2024.

The price band for this IPO has been set between ₹215 and ₹226 per equity share, with a minimum lot size of 66 shares. This means that retail investors will need to invest a minimum of ₹14,916, while High-Net-Worth Individuals (HNIs) will need to invest in at least 14 lots (924 shares), requiring a minimum investment of ₹208,824.

The book-running lead manager for this issue is Saffron Capital Advisors Private Limited, and Cameo Corporate Services Limited is the registrar for the issue. Shares of Tolins Tyres are expected to be listed on the BSE and NSE, with a tentative listing date of Monday, September 16, 2024.

IPO Subscription and Allotment Status

As of 06:04 PM on September 9, 2024, the Tolins Tyres IPO subscription status indicated that the IPO was subscribed 1.80 times on its first day of the subscription period, reflecting a strong demand among investors. Investors interested in tracking the live subscription status can check updates through the BSE or NSE.

The IPO allotment date is expected to be Friday, September 13, 2024. Investors will be able to check their Tolins Tyres IPO allotment status on the registrar’s website. To check the allotment status:

Navigate to the IPO allotment status page.

Select Tolins Tyres Limited IPO from the dropdown list.

Enter your application number, PAN, or DP Client ID.

Submit the information to determine your allotment status.

This process allows investors to confirm whether they have been allotted shares and proceed accordingly with their investments.

Grey Market Premium (GMP) Insights

The Grey Market Premium (GMP) for Tolins Tyres IPO is projected to range between ₹65 and ₹70, indicating potential listing gains of 28% to 30%. The Grey Market Premium, although not an official measure, gives an indication of market sentiment toward the IPO. However, investors should note that the GMP is highly speculative and may not accurately predict the IPO’s final listing price. It should only be used as a reference when considering investment decisions.

Financial Performance

Tolins Tyres has demonstrated consistent financial growth over the past few years, showing a steady improvement in both revenue and profitability. In FY22, the company reported revenue of ₹1,143.86 million, which increased slightly to ₹1,196.79 million in FY23. By FY24, the company's revenue had grown substantially to ₹2,286.93 million, reflecting its expanding market presence and operational scalability.

In terms of profitability, EBITDA increased from ₹60.90 million in FY22 to ₹122.61 million in FY23, and then sharply rose to ₹463.74 million in FY24. This indicates significant improvements in operating margins and cost control. The company’s Profit After Tax (PAT) also grew steadily, from ₹6.31 million in FY22 to ₹49.92 million in FY23, and further to ₹260.06 million in FY24, demonstrating its ability to convert sales into profit effectively.

For the Tolins Tyres IPO, the shares are being issued at a pre-issue EPS of ₹9.52 and a post-issue EPS of ₹6.58. The pre-issue P/E ratio is 23.74x, while the post-issue P/E ratio is 34.34x, in comparison to the industry P/E ratio of 34.17x. These metrics suggest that the IPO is fairly priced, but slightly on the higher side in terms of valuation.

The company’s Return on Capital Employed (ROCE) for FY24 is 36.08%, and its Return on Equity (ROE) stands at 25.87%, which indicates strong capital efficiency and profitability. These numbers reflect solid financial health and suggest that the company is generating strong returns on investment for its shareholders.

Objectives of the IPO

The proceeds from the Tolins Tyres IPO will be utilized for several critical purposes:

₹699.69 million will be used for the repayment and/or prepayment of certain outstanding loans, including any applicable foreclosure charges. This will help the company reduce its debt burden and improve its financial leverage.

₹750.00 million will be allocated toward augmenting long-term working capital requirements, ensuring that the company has sufficient liquidity to support its expanding operations.

₹231.54 million will be invested in Tolins Tyres’ wholly owned subsidiary, Tolin Rubbers Private Limited, to repay its short-term and long-term borrowings and support its working capital needs.

The remaining funds will be used for general corporate purposes, helping the company manage its day-to-day activities and fund future growth initiatives.

Tolins Tyres IPO Review and Recommendation

Tolins Tyres, with its diverse product portfolio and strong market presence, has become a key player in the tyre manufacturing industry. The company’s focus on producing high-quality tyres for the two-wheeler, three-wheeler, and LCV segments has allowed it to carve out a niche in the automotive sector. Under the leadership of Dr. Kalamparambil Varkey Tolin, the company has achieved consistent growth and demonstrated a solid track record of financial performance.

With the company's revenue more than doubling in FY24, along with significant improvements in EBITDA and PAT, Tolins Tyres is well-positioned for future growth. The IPO’s pricing, although slightly higher in comparison to industry peers, is supported by the company’s strong ROCE and ROE, indicating capital efficiency and profitability.

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