- Date : 11/05/2022
- Read: 3 mins
The Offer For Sale (OFS) has been revised from Rs 7,460 crore to Rs 5,235 crore.
Supply chain intermediary and logistics service provider Delhivery is slated to go public with its IPO opening for subscription between May 11 and 13, 2022. In a short span of 10 years, the Gurugram based company has become India’s fastest growing fully integrated logistics brand in terms of revenue. It has a pan India network that services 88.3% or 17,045 of the 19,300 PIN codes across the country.
Delhivery became a unicorn (US$ 1 billion valuation) in 2019 after a successful Series F round of funding led by Softbank, where it raised $413 million.
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What are the details of the Delhivery IPO?
The Offer For Sale (OFS) has been revised from Rs 7,460 crore to Rs 5,235 crore. Of this, stocks worth Rs 1,235 crore will be offloaded by promoters and existing shareholders, while shares worth Rs 4,000 crore will be raised via subscription.
About 75% of the net offer has been reserved for Qualified Institutional Buyers (QIB), 15% for Non-Institutional Investors (NII), and the remaining 10% for retail investors.
- Delhivery Price band: Rs 462 - Rs 487 per share
- IPO opening date: Wednesday, May 11, 2022
- IPO closing date: Friday, May 13, 2022
- Allotment date: Monday, May 23, 2022
- Listing date: Tuesday, May 24, 2022
Investors can bid for a minimum of 30 shares in a single lot up to a maximum of 13 lots. Stocks worth Rs 20 crore have been earmarked for eligible employees, who can avail of a discount of Rs 25 per share during the bidding process.
How will the Delhivery IPO funds be utilised?
Of the capital raised through the secondary market, Delhivery will deploy around Rs 1,000 crores to fund inorganic growth through acquisition opportunities and other strategic initiatives, while Rs 2,000 crore will be used to finance existing and ancillary lines of business. The company is looking to enhance its network infrastructure and upgrade its proprietary logistics operating system.
Should you invest in Delhivery IPO?
With digital native and e-commerce businesses on the rise, the prospects for logistics service providers look promising. Delhivery currently holds 22% of the market share, and the revenue growth has been strong, with a CAGR of 49% for the last two years, from 2019 to 2021. The Delhivery GMP or Grey Market Price is being quoted at a 3.5% premium or Rs 504 per share.
Delhivery’s valuation is in line with its peers; however, it is still a loss-making startup. Volatility in the market and concerns about loss-making startups may impact investor interest.
Angel One is ‘NEUTRAL’ towards the IPO citing expensive valuation, which is at 5.2x of book value and with an EBDITA loss of Rs 232 crore and a net loss of Rs 891 crore during the nine-month period of FY 21-22. The business is also heavily dependent on select relationships, with its top five customers accounting for 41% of the total revenue.
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Yes Securities has given the IPO a ‘BUY’ rating based on the asset light business model and superior automation and engineering capabilities that can improve efficiency and profitability going forward.