The logistics company’s IPO with a technology-based model was launched on Wednesday at a price range of Rs 462-487 per share. It has reduced the size of its bid to Rs 5,235 crore from Rs 7,460 crore as expected earlier. In the IPO, Delhivery will issue new shares worth Rs 4,000 crore. Existing shareholders and promoters will offload shares worth Rs 1,235 crore.
Based on FY22 annualized numbers, the IPO is priced at EV/sales of 4.8x and price to book at 5.2x in the upper IPO price range. scholarship, said Yash Gupta of Angel One. For 9MFY22, the company reported an EBITDA loss of Rs 232 crore and a net loss of Rs 891 crore.
The company delivered good revenue growth of 82% in FY9MF22 and is expected to turn EBITDA positive by the end of FY22.” Considering of expensive valuation, we give a neutral recommendation to the Delhivery IPO,” Gupta said.
Gurugram-based Delhivery is India’s largest fully integrated logistics services player by revenue. It has built a national network in every state, serving 17,045 PINs or 88.3% of the 19,300 PINs in India.
Along with this, it has a proprietary technology stack and capabilities, a large amount of data intelligence and R&D, an experienced professional management team, and strong relationships with a diverse customer base.
This makes Viral Shah of YES Securities recommend investing with a long-term perspective. He said that Delhivery is a leading player in the field of third party logistics (3PL).
“In FY 2019-21, through the combination of integrated solutions, proprietary logistics operating system, automation and an entrepreneurial team, Delhivery was able to generate a CAGR of 48.5 %, with losses continuing at the operational level,” he said.
“We believe that increased market share, increased usage and synergy benefits from Spoton will help the business become profitable. Considering the strong market sentiment and good market share in 3PL, we recommend the stock to investors with a long-term perspective.At the high end of the price range, this issue trades at 9.6 times earnings.
According to analysts, the main risks for the company are:
- Operating in an industry with a low barrier to entry,
- Dependence on network partners and third parties for fleet operations and labor
- Dependence on certain major customers who contribute a significant share of revenue
The issue can be subscribed until Friday, May 13. Investors can bid for a minimum of 30 shares and further in its multiple thereafter.
The company has allocated a share quota amounting to Rs 20 crore for its eligible employees, who will receive a discount of Rs 25 crore per share during the bidding process.