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Delhivery IPO opens today: Should you invest in the share sale?

Delhivery IPO opens today: Should you invest in the share sale?

The IPO consists of a fresh issue of Rs 4,000 crore, and an offer for sale of Rs 1,235 crore. The company raised over Rs 2,347 crore from 64 anchor investors on May 10.

Aseem Thapliyal
Aseem Thapliyal
  • Updated May 11, 2022 10:40 AM IST
Delhivery IPO opens today: Should you invest in the share sale?The share sale will close on May 13. The issue size has been reduced from Rs 7,460 crore planned earlier due to volatile market conditions. The company is offering its shares in a price band of Rs 462 to Rs 487.

The initial public offer (IPO) of logistics services provider Delhivery has opened today. The issue size of the IPO is Rs 5,235 crore. The IPO consists of a fresh issue of Rs 4,000 crore, and an offer for sale of Rs 1,235 crore. The company raised over Rs 2,347 crore from 64 anchor investors on May 10.

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The company said 48,187,860 equity shares were allocated to anchor investors at the 'anchor investor allocation price' of Rs 487 per equity share.

SBI Focused Equity Fund, HDFC Large and Mid-Cap Fund, ICICI Prudential Flexicap, Baillie Gifford Pacific Fund, Schroder International, AIA Singapore Pvt Ltd, Goldman Sachs Fund, Mirae Asset Midcap Fund, Monetary Authority of Singapore, Invesco India Contra Fund, Bay Capital India Fund, Tiger Global Investments Fund, Steadview Capital Master Fund are some of the investors who participated in the anchor share allotment.

Anchor investors are institutional investors who subscribe to an IPO before the issue opens to public. Usually, anchor investors invest in an issue a day before the opening of the IPO. They are required to bid for the shares within the price band for the IPO. Each anchor investor is required to invest a minimum of Rs 10 crore during the issue.

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The share sale will close on May 13. The issue size has been reduced from Rs 7,460 crore planned earlier due to volatile market conditions. The company is offering its shares in a price band of Rs 462 to Rs 487.

The lot size of the IPO is 30 shares for which one will have to spend Rs 14,610.  A retail individual investor can submit bids for up to 13 lots or 390 shares by spending Rs 1,89,930.

Delhivery IPO: Firm raises Rs 2,347 cr from 64 anchor investors ahead of public issue

The company is offering a discount of Rs 25 per share to its employees. Kotak Mahindra Capital Company Limited, Morgan Stanley India Company Pvt Ltd, BofA Securities India Limited, and Citigroup Global Markets India Private Limited are the book running lead managers for the issue.

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The allotment of shares will be done on May 19 and they are likely to be listed on BSE and NSE on May 24.

Link Intime India Private Ltd is the registrar for the IPO.

The company plans to utilise proceeds of the public issue toward funding organic growth, funding inorganic growth through acquisition and strategic initiatives, and general corporate purposes. The company allocated 10 per cent of the issue for retail individual investors (RII). Around 75 per cent of the total offer has been reserved for qualified institutional buyers (QIB). The company has set aside For 15 per cent for non-institutional investors (NII).

 Here's a look at what brokerages and analysts said about the IPO. Hem Securities is positive on the prospects of the IPO in the long term only

"The company has been showing rapid growth and extensive scale with its proprietary logistics operating system and vast data intelligence capabilities. Company's network design and engineering with integrated portfolio of logistics services &. strong relationships with a diverse customer base is looking strong. Also, its extensive ecosystem of partners, enables an asset-light business model and extended reach. Looking after the current financials, we recommend 'Avoid' for short term while only long term investors can 'Subscribe' issue," the brokerage said.

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Marwadi Financial Services has advised investors to skip the share sale. "Considering the trailing twelve months sales of Rs 5813.2 crore on a post issue basis, the company is going to list at a MCap/Sales of 6.07 times with a market cap of Rs 35,283.2 crore whereas its peers namely BlueDart and Mahindra Logistics are trading at MCap/Sales of 3.66x and 0.84x. We assign 'Avoid' rating to this IPO as the company is loss making with negative operating cash flows. Also, it is available at expensive valuation as compared to its peers."

Yash Gupta- Equity Research Analyst, Angel One Ltd said, "Based on annualized FY22 numbers, the IPO is priced at EV/Sales of 5.1 times and Price to Book value of 5.2 times at the upper price band of the IPO. For 9MFY22 the company has reported an EBITDA loss of Rs 232 crore and a Net loss of Rs 891 crore. In the Indian market, 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."

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YES Securities has given a SUBSCRIBE call to the IPO for a long-term perspective. The brokerage said the firm is the largest and fastest-growing 3PL express parcel delivery player and has a unified infrastructure network. The company has a proprietary technology stack and capabilities and houses a vast amount of data intelligence and R&D. It has an experienced professional management team and a strong relationship with a diversified customer base.

Delhivery is engaged in providing a full range of logistics services, including delivery of express parcel and heavy goods, PTL freight, TL freight, warehousing, supply chain solutions, cross-border Express, freight services, and supply chain software. Delhivery is the largest and fastest-growing fully integrated logistics services player in India by revenue as of FY21.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: May 11, 2022 10:38 AM IST
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