Delhivery IPO: Should retail investors apply, all you need to know 

Delhivery IPO is set to open tomorrow with a total issue size of Rs 5,235 crores. The price band for the company’s shares has been set at Rs 462 to Rs 487

Delhivery IPO to open tomorrow

After becoming a unicorn in 2019, the logistics giant, Delhivery is all set to go public on the stock exchange by launching the initial public offering (IPO) on 11th May 2022. The delivery startup is aiming to raise Rs 5,235 crore with this IPO. 

All you need to know

Delhivery is inviting the investors to subscribe to the IPO from May 11, 2022, till May 13, 2022. It aims for a total issue size of Rs 5,235 crores, of which Rs 4,000 crores is a fresh issue and Rs 1,235 crores is available for sale to investors. However, the initial issue size was Rs 7,460 crore, which was later reduced. The price band for the company’s shares has been set at Rs 462 to Rs 487.

According to the information, employees of the company will be eligible for a discount of Rs 25 per equity share. But other investors may bid for a minimum of 30 equity shares. Furthermore, at Rs 16, its shares are available at a grey market premium (GMP), according to market experts.

Company insights

With an investment of US$ 100 million in July 2021 from the American delivery behemoth, FedEx Express, Delhivery has a reach of 17,488 pin codes and an infrastructure of 14.2 million square feet with more than 3836 delivery points.

The company, which was founded in May 2011, provides five types of transportation services: Express Parcel, Part Truck Load, Truck Load, Supply Chain, and Cross Border. Express Parcel services account for more than 62 per cent of FY2021 revenue, while Part Truck Load services account for 11.5 per cent.

The company has 23,113 majorities as clients, which includes e-commerce marketplaces and direct-to-consumer e-tailers. The company focuses on the B2C business model, but it has recently launched C2C services.

Based on annualised FY22 figures, the IPO is priced at 4.8x EV/Sales and 5.2x Price to Book value at the IPO’s upper price band. The company reported an EBITDA loss of Rs 232 crores and a net loss of Rs 891 crores for the nine months ending September 2021 (9MFY22).

Should you subscribe Delhivery IPO?

Potential investors will be able to subscribe to the Delhivery IPO for the next two days. Stock market experts Experts watching the scenario, have varied perspectives on whether the investors should go for this IPO.

Yash Gupta, Equity Research Analyst at Angel One Ltd assigns it a neutral stand. According to him, in the Indian markets, no other peer group has the same business model as Delhivery.

“The company has reported good revenue growth of 82 per cent in 9MFY2022 and it is expected that the company may turn EBITDA positive by the FY2022 end. Given the expensive valuation, we are assigning a NEUTRAL recommendation to the Delhivery IPO,”

However, others differ and say, it could be a dicey to negative investment.

Dinesh Gupta, co-founder of UnlistedZone—a firm dealing in unlisted shares told CNBCTV18 interview that seeing the recent unicorn listings, investors might not be feeling positive about a loss-making company. Similarly, Abhay Doshi, co-founder of Unlisted Arena also told the media house that dicey market sentiments and investors’ concerns about loss-making startups may dampen the interest.