Panther Tyres Limited has applied to be listed on the Pakistan Stock Exchange (PSX).
According to the notification issued by the PSX, the company has planned to issue 40 million ordinary shares using the 100 percent Book Building Method at a floor price of Rs. 47 per share. The issue comprises 40 million ordinary shares of face value worth Rs. 10 each.
Thirty million (21.42 percent of the total post-IPO paid-up capital) ordinary shares are being issued by Panther Tyres Limited, and ten million (7.14 percent of the total post-IPO paid-up capital) are being offered by Panther Tyres Limited’s sponsor, Mian Iftikhar Ahmed.
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Initially, 75 percent of the issue size (30 million ordinary shares) will be allotted to successful bidders, and 25 percent of the issue (10 million ordinary shares) will be offered to retail investors. Unsubscribed shares of the general subscription portion, if any, will be allocated to the successful bidders of the Book Building portion on a pro-rata basis.
The company wanted to raise funds for the expansion of its operations and businesses in the local market and the export segments. The total expansion cost was estimated to be Rs. 3.066 billion and was to be financed by a mixture of Debt and Equity in the Debt to Equity proportion of 37.5 to 62.5.
Panther Tyres Limited was the first to introduce the local manufacturing of tyres for two and three-wheelers in Pakistan and currently has a stronghold in the two and three-wheeler tyre market. Over time, the company expanded into other segments of the auto industry, including tyres for tractors, light commercial vehicles, trucks, buses, and earthmovers.
The company had claimed to be a market leader of motorcycle tyres in Pakistan for both the Original Equipment Manufacturer (OEM) and replacement markets. Due to quality certifications, Panther tyres are regularly exported to Asian, Middle Eastern, African, and European markets.
The company caters to the replacement market through its 500 direct business partners in the capacity of distributors and dealers, and 40,000 indirect business partners.
The contribution of replacement market sales, in the total sales of the company, is 75 percent. The growth of the replacement market depends on the growth of registered vehicles, which includes CBU imports and the sale of used vehicles. After sales from the OEM, the vehicles became part of the replacement market, thereby increasing its size every year.
Over the last four years (CY 2015 to CY 2019), the number of registered vehicles in Pakistan has grown at a Compound Annual Growth Rate (CAGR) of 12.0 percent from 18,502,109 to 29,051,874.
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The company exports motorcycles, tractors, rickshaws, LCVs, and truck & bus bias tyres and tubes to around twelve countries, and its proportion of export sales in the total sales has increased from 5.0 percent in FY 2017 to 7.6 percent in FY 2020. It was awarded the EU E-8 marked certification in 2018 for its exports to European countries.
The recent 38 percent devaluation of the Pakistani rupee against the American dollar over the last two years (FY 2019 and FY 2020) has made Panther Tyre Limited’s product pricing competitive in the international market, and its management believes that its growth momentum in export sales will continue in foreseeable future.
The company’s competitors – General Tyre Limited and Servis Industries – have already been listed at the PSX.
The PSX’s performance in 2020 has been impressive despite the COVID-19 challenges and lockdown. So far, Agha Steel Industries Limited, TPL Trakker, and The Organic Meat Company have been listed at the PSX whereas, Servis Global Footwear Company, Octopus Digital, and Panther Tyres Limited are in the queue to get listed.
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