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While some IPOs have delivered superb returns to investors in the recent past, some like TVS Supply Chain Solutions Limited were among the big laggards. It provides integrated supply chain solutions in India, having a market capitalization of INR 6,532 crore.
1. TVS Supply Chain Solutions, with a market capitalization of INR 6,532 crore, faced a disappointing IPO debut, sliding from its peak of INR 258 to INR 145 amidst oversold conditions.
2. Despite its poor financial health score of 1 out of 5, InvestingPro indicates a potential upside of 28% to INR 199, with some analysts forecasting even higher targets, signaling a possible trend reversal amid consolidation.
3. While the stock presents a mean reversion opportunity, investors should remain cautious due to weak financial health, considering booking long positions near technical resistance at INR 180 and implementing stop losses below INR 145 for risk management.
The stock has disappointed investors big time. It marked its debut on 23 August 2023, at INR 207, and soon made a high of INR 258. However, that was the end of the momentum, and from there, a steep slide to INR 145 followed.
Now, after getting oversold, the stock is consolidating in a narrow range. This kind of price action generally leads to a trend reversal, for that, some bullish signs need to be present on the chart before making any long decision.
Image Source: InvestingPro
Apart from the good technical pattern, the stock is also delivering a good valuation gap at the present levels. Looking at InvestingPro’s fair value for the counter, there is a healthy upside potential of 28% to INR 199. In fact, one analyst covering this stock is even estimating a target of NR 300 which is more than a 100% return.
However, as the financial health score is quite poor, with a 1 out of 5 rating, it is not ideal to hold this counter for long. In this case, the stock can only be held for a bounceback, like a mean reversion trade.
While the fair value is still a good INR 199, because of weak financial health, holding on to this level might not be suitable for many investors. There is a technical resistance at INR 180 which could be looked upon as a good level to book long positions. On the lower side, a fall below INR 145 should trigger stop losses for risk management.
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X (formerly, Twitter) - Aayush Khanna