The colossus TVS group with over 60 companies divided b/w 4 families is bringing an IPO after 28 years. (RT if beneficial)
Let's do a deep dive into the business of TVS Supply Chain Solutions 🧵👇
Let's do a deep dive into the business of TVS Supply Chain Solutions 🧵👇
1/ What caught our eye?
This company has grown at 35% cagr in the last 15 years, also boasts of being India’s largest and fastest-growing integrated supply chain solutions provider.
An India-based multinational company (how many terms do you use this term!)
This company has grown at 35% cagr in the last 15 years, also boasts of being India’s largest and fastest-growing integrated supply chain solutions provider.
An India-based multinational company (how many terms do you use this term!)
2/ Why MNC?
Customers include 61 of the Global Fortune 500.
9K customers catered to in total, of which ~0.8K are in India.
Presence in 25 countries.
Customers include 61 of the Global Fortune 500.
9K customers catered to in total, of which ~0.8K are in India.
Presence in 25 countries.
3/ What's the differentiating factor? The end-to-end capabilities that they boast of.
Why does it matter? Makes your fixed cost into a variable one, that's why.
If someone can take care of all the logistical nightmares for you, you are happy to pay him a small premium.
Why does it matter? Makes your fixed cost into a variable one, that's why.
If someone can take care of all the logistical nightmares for you, you are happy to pay him a small premium.
4/ Next imp thing is technological architecture: reducing inefficiencies for all.
Using a mix of in-house capabilities & 3rd part software to control the whole supply chain for one's customers: from suppliers to customers & beyond.
Using a mix of in-house capabilities & 3rd part software to control the whole supply chain for one's customers: from suppliers to customers & beyond.
5/ The C3 framework.
Increasing wallet share (by developing more capabilities & cross deploying in all markets)
Acquiring new customers (in adjacent industries to existing customers)
Additionally through Acquisitions: 20 in last 15 years.
Increasing wallet share (by developing more capabilities & cross deploying in all markets)
Acquiring new customers (in adjacent industries to existing customers)
Additionally through Acquisitions: 20 in last 15 years.
6/ The Indian business: 25% of rev
The outsourced supply chain business is a $6B markets growing at 25% cagr.
Majorly catering to auto & industrial companies; mostly multi-year contracts.
The outsourced supply chain business is a $6B markets growing at 25% cagr.
Majorly catering to auto & industrial companies; mostly multi-year contracts.
7/ The rest of the world business: 75% of rev
Key geographies include the UK, Europe, Asia Pacific & North America.
3rd party logistics market is ~$1T opportunity growing at 15%.
Key geographies include the UK, Europe, Asia Pacific & North America.
3rd party logistics market is ~$1T opportunity growing at 15%.
8/ The point to note is that the Logistics market is highly fragmented (top players have 1-2% share) which has the potential to consolidate.
The asset-light model helps differentiate TVS 👇
The asset-light model helps differentiate TVS 👇
9/ Revenue by Industry: Majority from Industrial, Automotive, Tech & Infra.
New growth plans.
Case Studies on how the company helped its customers.
New growth plans.
Case Studies on how the company helped its customers.
10/ Financials:
- Still, not reached enough scale (already at 8Kcrs rev run rate) to become profitable+ Extreme competition
- Operating cashflows +ve (stable working capital): However, not enough to meet capex investments, lease payments & interest costs
- Stressed balance sheet
- Still, not reached enough scale (already at 8Kcrs rev run rate) to become profitable+ Extreme competition
- Operating cashflows +ve (stable working capital): However, not enough to meet capex investments, lease payments & interest costs
- Stressed balance sheet
11/ Risks:
- Complex global operations are subject to innumerable risks
- Macroeconomic & few customer-specific factors have led to wiping out years of profit in past.
- highly competitive and fragmented industry (investments required to keep one updated is huge)
- Complex global operations are subject to innumerable risks
- Macroeconomic & few customer-specific factors have led to wiping out years of profit in past.
- highly competitive and fragmented industry (investments required to keep one updated is huge)
12/
- Will continue to acquire companies to grow
- little ability to pass on increased costs to customers: wafer-thin margins
- Industry-specific slowdown could affect adversely.
- Subsidiaries making losses.
- Will continue to acquire companies to grow
- little ability to pass on increased costs to customers: wafer-thin margins
- Industry-specific slowdown could affect adversely.
- Subsidiaries making losses.
13/
Given the company is planning to raise 2000crs; the IPO is coming at a towering valuation; given the business performance & industry dynamics, be prudent before jumping the gun. We will be tracking the developments.
End.
Given the company is planning to raise 2000crs; the IPO is coming at a towering valuation; given the business performance & industry dynamics, be prudent before jumping the gun. We will be tracking the developments.
End.
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