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Delhivery IPO opens 11 May: Should you subscribe to Rs 5,235-crore public issue?


Upon successful listing on BSE and NSE, Delhivery will join the likes of other listed companies Blue Dart Express, TCI Express, and Mahindra Logistics

Delhivery IPO will open on 11 May for subscription and close on 13 May. The Rs 5,235-crore issue will be sold at a price band of Rs 462-487 per share. Upon successful listing on BSE and NSE, Delhivery will join the likes of other listed companies Blue Dart Express, TCI Express, and Mahindra Logistics. The book running lead managers to Delhivery IPO are Kotak Mahindra Capital Company, Morgan Stanley India Company Private Limited, BofA Securities India Limited, and Citigroup Global Markets India Private Limited. The registrar to the issue is Link Intime India Private Limited. The shares were seen trading flat in the grey market on Tuesday, according to the people who deal in unlisted shares of the companies.

Delhivery IPO: Should you subscribe?

Axis Capital: Not Rated

Analysts at Axis Capital said that Delhivery will seek strategic alliances with global and domestic leaders in various segments of the logistics industry that bring synergies to their business. They will also continue to look for high-quality acquisition and investment opportunities within and outside India that are complementary to their business. The company will continue to develop large, new growth adjacencies that enhance their interlocking flywheel strategy, leveraging their operational scale, rapid growth, large ecosystem of engaged partners, network design, sophisticated technology systems and access to vast amounts of data. 

Yash Gupta, Equity Research Analyst, Angel One: Neutral

The company offers five types of transportation services- Express Parcel services, Part Truck Load services, Truck Load services, Supply chain services, and Cross Border services. The company has a total client base of 23,113 majorities which includes e-commerce marketplaces, and direct-to-consumer e-tailers. The company focuses on the B2C business model but recently the company has also launched C2C services. Based on annualised FY22 numbers, the IPO is priced at EV/Sales of 4.8x and Price to Book value of 5.2x at the upper price band of the IPO. For 9MFY22 the company has reported an EBITDA loss of ₹232 crores and a Net loss of ₹891 crores.  In the Indian markets, no other peer group has the same business model as Delhivery. The company has reported good revenue growth of 82% in 9MFY2022 and it is expected that the company may turn EBITDA positive by the FY2022 end. Given the expensive valuation, Yash Gupta has assigned a neutral rating to the Delhivery IPO.

Yes Securities: Subscribe

Yes Securities has given a subscribe rating to Delhivery IPO from a long term perspective. The company is the largest and fastest growing 3PL express parcel delivery player. It has a unified infrastructure network; proprietary technology stack and capabilities; vast amounts of data intelligence and R&D, and an experienced professional management team. The company has a strong relationship with a diversified customer base. Analysts at the research firm believe Delhivery’s asset light business model and its cutting‐edge engineering and automation capabilities along with its new age technologies will help the company leverage its operating efficiencies and improve the profitability in the coming years.

Abhay Doshi, Founder, UnlistedArena: Not Rated

Delhivery is the largest and fastest growing fully-integrated logistic services player in India by revenue as of FY21 covering 17,488 pincodes. Digital native business models like E-commerce, Social commerce are major drivers of growth for express parcel delivery segment where Delhivery holds almost 22% market share. The revenue growth has been robust with 49% CAGR from FY19-21. However, losses have risen in similar fashion. The offer is priced at almost 5.5x Mcap-to-Revenue based on post fresh issue and annualised metrics of 9MFY22. The valuations seems to be in-line with peers but the company being loss-making makes the issue look expensive. Dicey market sentiments and concern of investors towards loss-making start-ups may dampen the interest.

The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.

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