Should You Consider Investing in Delta Autocorp IPO?

Delta Autocorp Limited is set to launch its Initial Public Offering (IPO), presenting a book-built issue aggregating to ₹54.60 crore. The IPO combines a fresh issue of 38.88 lakh shares (₹50.54 crore) and an offer for sale of 3.12 lakh shares (₹4.06 crore). The IPO opens for subscription on January 7, 2025, and closes on January 9, 2025. Allotments will be finalised by January 10, 2025, and listing is planned for January 14, 2025, on the NSE SME platform.
 

Delta Autocorp Limited, established in 2016, has evolved into a pioneering force in India's electric vehicle (EV) sector. The company's journey began with the development of electric three-wheeler prototypes, achieving a significant milestone in 2017 with their first E-Rickshaw launch, featuring an impressive 150 km range. Understanding the growing demand for personal mobility solutions, they expanded into the two-wheeler segment in 2019, focusing on affordable and durable electric scooters tailored for tier-2 and tier-3 markets. Today, their extensive dealer network spans across 24 states and Union Territories, serving as a testament to their market penetration and growth strategy.

Why Invest in Delta Autocorp IPO?

If you are evaluating "why I should invest in Delta Autocorp IPO?", consider the following key points:

• First-Mover Advantage – The company's early entry into the EV sector, particularly in the three-wheeler segment, has allowed them to build strong brand recognition and market understanding. Their successful expansion from three-wheelers to two-wheelers demonstrates their ability to evolve with market demands.
• Strategic Market Focus – By targeting tier-2 and tier-3 towns with affordable and practical EVs, Delta Autocorp addresses a crucial market segment where the need for cost-effective transportation solutions is highest. This approach aligns perfectly with India's growing mobility needs.
• Comprehensive Product Portfolio – The company offers a well-rounded range of products including electric scooters (Deltic Drixx, Deltic Trento), electric rickshaws (Deltic Star, Deltic Vayu), loaders, and garbage carts. This diversification ensures multiple revenue streams and caters to both personal and commercial transportation needs.
• Innovation Leadership – With a dedicated R&D team of 11 professionals in Uttar Pradesh, the company maintains a strong focus on product innovation. This team's understanding of local market needs helps create products that specifically address Indian consumer preferences.
• Extensive Distribution Network – Their network of over 250 dealers across 24 states enables efficient market penetration and provides strong after-sales support, crucial for building customer trust in the EV segment.
   

Delta Autocorp IPO: Key Dates to Know

Delta Autocorp IPO Details

Financials of Delta Autocorp Limited

Competitive Strengths and Advantages of Delta Autocorp IPO

• Technology Leadership: The company's focus on in-house R&D has resulted in innovative products like their 150 km range E-Rickshaw, setting new industry standards.
• Market Understanding: Their strategic focus on tier-2 and tier-3 markets demonstrates deep insight into India's mobility needs and purchasing patterns.
• Strong Financial Growth: The company has shown remarkable growth, with revenue increasing from ₹1,674.28 lakhs in FY21 to ₹8,055.86 lakhs in FY23, representing a CAGR of 119%.
• Operational Efficiency: Reduction in total borrowings from ₹733.57 lakhs in FY22 to ₹413.60 lakhs in FY23 indicates improved operational efficiency and working capital management.
• Quality Assurance: Adherence to stringent quality standards ensures product reliability, crucial for building trust in the EV segment.
   

Risks & Challenges of Delta Autocorp IPO

• Technology Evolution: The rapidly evolving EV technology landscape requires continuous R&D investment to remain competitive.
• Supply Chain Dependencies: Reliance on key components like batteries and motors could expose the company to supply chain disruptions.
• Market Competition: Entry of established automotive players and new startups in the EV space could intensify competition.
• Policy Changes: Government policies regarding EV subsidies and regulations can significantly impact market dynamics.
• Working Capital Management: A significant portion of IPO proceeds allocated to working capital indicates ongoing operational funding needs.

Delta Autocorp IPO - Industry Landscape and Growth Potential

The Indian EV market is experiencing transformative growth, driven by multiple factors. The government's ambitious target of 30% EV penetration by 2030, coupled with initiatives like the FAME II scheme, creates a favourable environment for EV manufacturers. The two-wheeler and three-wheeler segments, Delta Autocorp's focus areas, are expected to lead this transformation due to their affordability and utility in last-mile connectivity.

India's EV market is projected to grow at a CAGR of 26.4% from 2023 to 2030. This growth is supported by factors such as rising fuel costs, increasing environmental awareness, and improving charging infrastructure. The company's planned expansion, including a new fabrication and painting plant, positions it well to capitalise on this growth opportunity.

The focus on tier-2 and tier-3 markets is particularly strategic, as these regions are experiencing rapid urbanisation and increasing demand for affordable mobility solutions. Delta Autocorp's product portfolio and price positioning make it well-suited to address this market need.

Conclusion - Should You Invest in Delta Autocorp IPO?

Delta Autocorp Limited presents a compelling investment opportunity in India's growing EV sector. The company's strong financial performance, with revenue growing nearly five-fold from FY21 to FY23, demonstrates its execution capabilities and market acceptance. The strategic focus on affordable EVs for tier-2 and tier-3 markets, coupled with a strong distribution network, creates a solid foundation for future growth.

The price band of ₹123-130 per share, translating to a P/E ratio of 38.74x (post-IPO), while appearing high, could be justified by the company's growth trajectory and the overall EV sector potential. The planned utilisation of IPO proceeds for facility expansion and new product development indicates a clear growth strategy.

However, investors should consider risks such as rapid technological changes and intense competition in the EV space. For investors seeking exposure to India's EV revolution, particularly in the high-growth two-wheeler and three-wheeler segments, Delta Autocorp IPO offers an interesting proposition for medium to long-term investment horizons. The company's focus on practical, affordable solutions for mass-market adoption positions it well to benefit from India's transition to electric mobility.
 

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Please consult a financial advisor before making investment decisions.