Everything you need to know about the Delhivery IPO!

Delhivery, India's fastest growing logistics company is coming with an IPO. The company plans to raise Rs. 5235 crores with the IPO of which 4000 crores is a fresh issue and the rest Rs.1235 cr in an offer for sale by the shareholders.

The price band of the issue has been fixed at Rs 462 to Rs 487 per equity share. IPO opening date is May 11, 2022, and it will be closing on May 13, 2022. The issue will be listed on the exchange on May 24, 2022, while the IPO market lot size is 30 shares. A retail-individual investor can apply up to a maximum of 13 lots (390 shares or Rs 189,930).   

Here a bit about the company!

Delhivery is the fastest growing integrated logistics company with a market share of 20% in the e-commerce delivery market. It also provides 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. The company also offers value-added services such as e-commerce return services, payment collection and processing, installation & assembly services, and fraud detection.

Key Strengths

1. Its technology is what gives it an edge over its competitors, the company has developed 80+ applications to aid its operations.

2. It’s mesh network helps it deliver in the shortest possible time duration

3. The company has some major tie ups with global giants like Fedex and Aramex.

4. An integrated portfolio of logistics services

5. Asset light model, since most of its infrastructure and delivery fleet is leased/contracted.

How does it plan to use the proceeds of the IPO?

To fund acquisitions: As per the company’s management, they are now more of Data science company and they want to make certain acquisitions to strengthen their IT infrastructure.
To fund organic and inorganic growth of the company.

At the upper end of the price band, the company is valued at a market cap of ₹35,284 crore.

If we talk about the enterprise value, it will be around 29000 crores. Thus the issue values the company at an EV/Revenue (annualized nine month FY22 revenue) of 4.5 times. 

The long term prospects of the company appear to be good, as the company is growing its topline at a robust rate. From the year FY19-21, revenue of the company had grown at a CAGR of 45 percent. Although the company is EBITDA negative just like other blooming startups.

Logistics industry in India is bound to grow in the coming years, Delhivery will surely benefit from this growth. The margins would improve in the coming years as the operating leverage plays out. But considering the current market conditions, investors should look upon the growth prospects, its valuation as well as its margins. As the market has been skeptical about the loss-making startups.