You are here: Home » Markets » News
Business Standard

Delhivery IPO's 3-day offer opens today: All you need to know

Delhivery provides supply chain solutions to a diverse base of 23,113 active customers such as e-commerce marketplace, direct-to-consumers e-tailers, and enterprises across several verticals.

Topics
Delhivery | logistics stocks | IPO market

Lovisha Darad  |  New Delhi 

Delhivery was, till recently, planning to launch an IPO, but experts believe those plans would be put on the backburner

Logistics player Delhivery’s initial public offering (IPO) opened for subscription today with a price band of Rs 462-487 per share. The three-day issue will close on Friday, May 13. The Gurugram-based firm has raised Rs 2,347 crore from 64 anchor investors ahead of its IPO. Some of the anchor investors who participated in the allotment include Tiger Global, Bay Capital, Amansa, GIC, and Baillie Gifford.

While the company plans to raise Rs 4,000 crore of fresh capital through issuance of shares, the offer of sale (OFS) portion was reduced to Rs 1,235 crore from Rs 2,460 crore. The logistics major aims to utilize the Rs 2,000 crore in funding growth initiatives, Rs 1,000 crore towards inorganic growth through acquisitions or strategic alliances and the remaining Rs 1,000 crore in general corporate purposes. The company’s market value on a post-dilution basis is expected to be Rs 35,284 crore in the upper end.

According to IPO Watch, shares of commanded Rs 7 premium in the grey market. However, investors witnessed a decline in premium ahead of its IPO, after commanding Rs 25 over the weekend. Upon listing, will join peers like Blue Dart Express, TCI Express, and Mahindra Logistics.

Besides this, Kotak Mahindra Bank, Morgan Stanley, BofA Securities, and Citigroup Global India are managing the share sale of the issue.

Investors’ checklist before applying for Delhivery’s IPO:

Bidding dates: The three-day issue of Delhivery is open from Wednesday, May 11 and closes on Friday, May 17.

Minimum investment: Investors can bid for a minimum of 30 shares that translates to Rs 14,610 and multiples thereafter.

Price range: The company has fixed a price band of Rs 462-487 per share for its 5,235 crore IPO. It has allocated shares worth Rs 20 crore to eligible employees who can get a discount of Rs 25 per share.

Issue size: Delhivery’s IPO size is Rs 5,235 crore, the second-biggest after LIC this year. While Rs 4,000 crore comprises fresh issue of equity shares, Rs 1,235 crore is a part of OFS of equity shares. Besides that, 75 per cent of the issue size belongs to qualified institutional buyers (QIB), 15 per cent for non-institutional investors (NII), and 10 per cent is reserved for retail investors.

Business model: provides supply chain solutions to a diverse base of 23,113 active customers such as e-commerce marketplace, direct-to-consumers e-tailers, and enterprises across several verticals. The company operates pan-India and provides their services in 17,488 PIN codes. Their logistics platform, data intelligence, and automation enable their network to be seamlessly interoperable. As of December 31, 2021, Delhivery had over 5,000 active customers and PIN code accessibility to over 13,000 regions.

Risk factor: According to the red herring prospectus, the company’s net loss widened to Rs 891 crore for the nine months ended December 2021 from Rs 297 crore posted a year ago. Delhivery has a total addressable market of over $300 billion; however its market share is only half a per cent, looming over the untapped opportunity. Analysts anticipate valuations to be expensive due to rising fuel costs, supply chain, and logistics issues. The heavy dependency on e-commerce, network partners, reliance on other third parties for transportation vehicles, lower barriers to entry are some of the key risks to the operating model of the logistics player. Brokerage firms remain mixed and see the valuation to be aggressively priced in a rising interest rate environment.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, May 11 2022. 09:59 IST
RECOMMENDED FOR YOU
.