Peter Warren Automotive (ASX:PWR) share price jumps 20% after IPO

The Peter Warren Automotive Holdings Limited (ASX:PWR) share price is racing higher on Tuesday after completing its IPO…

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The Peter Warren Automotive Holdings Limited (ASX: PWR) share price has hit the ground running this afternoon following the completion of its initial public offering (IPO).

The automotive retailer’s shares are currently changing hands for $3.50.

This is up 20% from the Peter Warren Automotive listing price of $2.90.

The Peter Warren Automotive IPO

The Peter Warren Automotive share price landed on the Australian share market today after raising approximately $260 million at $2.90 per share.

The proceeds from the offering will allow the company to pursue its growth strategy and provide capital flexibility for further opportunities and acquisitions in addition to strengthening its balance sheet.

Based on a total of 166.6 million shares outstanding, this gave the company a market capitalisation of $483.0 million at listing. However, with the Peter Warren Automotive share price now fetching $3.50, its market capitalisation has ballooned to $585 million.

In FY 2021, the company is forecasting pro forma revenue of $1,565.6 million, gross profit of $257.8 million, and net profit after tax of $31.4 million. This represents year on year increases of 10.8%, 16.7%, and 168%, respectively.

It also means its shares are changing hands for approximately 18.6x FY 2021 forecast earnings.

What is Peter Warren Automotive?

Peter Warren Automotive was founded in 1958 and operates 17 dealerships across Sydney, Northern New South Wales, and Southern Queensland.

The company offers 27 vehicle brands and operates 70 franchises, providing a diversified range of new and used vehicles over the Volume, Prestige and Luxury segments of the automotive market.

From these dealerships, it operates an integrated new and used car retailing business providing the full range of sales and support. This includes parts, service, finance and insurance, and aftermarket products.

The company notes that this full-service offering creates a one-stop holistic offering and provides a strong value proposition for customers. Furthermore, these complementary services contribute to a higher customer retention rate by attracting customers to Peter Warren Automotive at all stages in the life cycle of vehicle ownership.

Judging by the performance of the Peter Warren Automotive share price today, the market appears to believe its full-service offering leaves it well-positioned for growth in the future.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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