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Delhivery raises Rs 2,346 cr from anchor investors including Goldman Sachs, Morgan Stanley; IPO opens today

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The anchor investors in Delhivery’s IPO includes marquee names such as Goldman Sachs, Morgan Stanley, the Government of Singapore, Fidelity Investment Trust, Tiger Global, Invesco, SBI, ICICI Prudential, and HDFC.

Delhivery’s IPO will open for subscription today as the company looks to raise Rs 5,235 crore through the public issue. Ahead of the IPO, the logistics major has garnered strong interest from institutional investors with as many as 64 anchor investors picking up a stake in the company worth Rs 2,346 crore. The anchor investors in Delhivery’s IPO includes marquee names such as Goldman Sachs, Morgan Stanley, the Government of Singapore, Fidelity Investment Trust, Tiger Global, Invesco, SBI, ICICI Prudential, and HDFC. Delhivery’s IPO will close for subscription on Friday, May 13.

Marquee names in anchor book

Through the anchor book portion, Delhivery has allocated 4.8 crore equity shares to investors at the upper end of the price band of Rs 462-487 per share. SBI Focused Equity Fund picked up more than 30 lakh equity shares, ICICI Prudential bought 31 lakh shares while Goldman Sachs picked up more than 23 lakh shares through the anchor portion. Morgan Stanley has picked up 1.95% of the anchor portion while Societe Generale has bought 0.5% of the same.

Anchor book portion has 64 investors in total, picking up more than 4.8 crore equity shares of the company. Out of these, more than 1.45 crore equity shares have been allocated to domestic mutual funds. Delhivery said that a total of 7 domestic mutual funds participated in the anchor book portion through 17 schemes. Domestic funds included SBI, HDFC, ICICI prudential, Mirae Asset, Franklin India, Invesco, and Nippon Life India.

Shares of Delhivery will be available for investors to bid for in a fixed price band of Rs 462-487 per share. The IPO is a mix of fresh issue of equity shares and an OFS by existing shareholders of the company. Of the total issue size, Rs 4,000 crore is a fresh issue of equity while the remaining Rs 1,235 crore is the OFS part. Delhivery will only get the fresh issue part of the funds raised, which it plans to use to fund organic growth initiatives and inorganic growth through acquisitions and other strategic initiatives. 

Should you subscribe?

Arihant Capital and Marwadi Financial Services are advising investors to ‘Avoid’ the Delhivery IPO looking at its expensive valuations and loss-making business. “Considering the TTM Sales of Rs.58,132 mn on a post-issue basis, the company is going to list at an MCap/Sales of 6.07x with a market cap of Rs.352,832 mn whereas its peers namely BlueDart and Mahindra Logistics are trading at MCap/Sales of 3.66x and 0.84x,” analysts at Marwadi Financial Services said. “We assign an “Avoid” rating to this IPO as the company is loss-making with negative operating cash flows. Also, it is available at an expensive valuation as compared to its peers,” they added.

Delhivery has posted a loss on a consolidated basis to Rs 1,783 crore/ RS 269 crore/ Rs 416 crore in the last three financial years respectively. “Based on its FY21 revenue, the company has been valued at 9.7x P/sales which is higher than the other logistics services companies. We recommend investors to “Avoid’ this issue,” Arihant Capital said. 

Yes Securities has, however, a bullish outlook with a ‘Subscribe’ rating on the issue. Analysts at Yes Securities said they have a long-term view on the stock and are bullish as Delhivery is the largest and fastest-growing 3PL express parcel delivery player, having a unified infrastructure network, and proprietary technology stack and capabilities. 

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