About the Company:

Incorporated in 1983, Popular Vehicles and Services Limited is engaged in the business of automobile dealerships in India. Company is a diversified automobile dealership in India having a fully integrated business model. Company caters to the complete life cycle of vehicle ownership, right from the sale of new vehicles, servicing and repairing vehicles, distributing spare parts and accessories, to facilitating sale and exchange of pre-owned vehicles, operating driving schools and facilitating the sale of third-party financial and insurance products. Company categories their automobile dealership business into three key segments, namely,

(a) passenger vehicles including luxury vehicles,
(b) commercial vehicles and
(c) electric two-wheeler and three-wheeler vehicles.

The total number of showrooms, sales outlets and booking offices and authorized service centers, across three business segments is as follows:

Other business verticals –

· Services and Repairs 

· Pre-Owned Vehicles 

· Spare Parts and Accessories Distribution 

· Facilitating the Sale of Third-party Financial and Insurance Products 

· Driving Schools

Industrial Overview:

• The automobile industry is one of the primary contributors to the Indian economy. Its contribution to India’s GDP has increased from 2.80% in Fiscal 1993 to approximately 7.10% in Fiscal 2023.

• India’s domestic automobile market is one of the largest automobile markets in the world, with annual domestic sales of over 20 million vehicles in Fiscal 2023. 

• Further, in Fiscal 2023, domestic automobile industry was dominated by the two-wheeler vehicle sub-segment which contributed more than 70.00% to the overall automobile industry, followed by passenger vehicles contributing 18.00% of automobile sales volume in Fiscal 2023. 

• Tractors, commercial vehicles and three-wheeler vehicles contributed the rest 10.00%.

IPO Objectives:

Company proposes to utilise the Net Proceeds towards funding the following objects: 

1. Repayment and/or pre-payment, in full or part, of certain borrowings, availed by our Company and certain of our Subsidiaries, namely, PAWL, PMMIL, KGPL, KCPL and PMPL; and 

2. General corporate purposes.

Financials:

The Company’s revenue from operations increased from Rs. 2893.53 crores in FY 2020-21 to Rs. 4875 crores in FY 2022-23 indicating a CAGR growth of 29.80%.

The company's EBITDA expanded from Rs. 174.85 Crores in FY 2020-21 to Rs. 234.85 Crores in FY 2022-23, with a CAGR of 15.89%.

The company's Net Profit was Rs. 32.46 Crores in FY 2020-21 to Net Profit of Rs. 64.07 Crores in FY 2022-23.

The company's ROCE has improved from 17.09% in FY 2020-21 to 18.32% in FY 2022-23.

The ROE has been ranging from FY 2020-21 to FY 2022-23 being 13.39% in FY 2020-21 to 18.68% in FY 2022-23.

Valuation:

The company's price-to-earnings ratio stands at 28.86, while the industry's PE ratio is 34.84.

Peer Comparison:

Key Risks:

• Company has significant influence of OEMs(Original Equipment Manufacturer). Their top two OEMs i.e., Maruti Suzuki and Tata Motors (commercial), account for more than 80% of Company’s consolidated revenue in the six months period ended September 30, 2023 and each of Fiscal 2023, 2022 and 2021. 

• A large portion of their business operations, which is approximately 96.91 

• A summary of such outstanding material legal proceedings as on the date of this Red Herring Prospectus is set out below:

IPO Details: