The Rs 5,235 crore initial public offering (IPO) of logistics and supply chain solution startup Delhivery finally managed to sail through, thanks to decent institutional interest. However, the quota for retail, employees, and HNIs remained undersubscribed.
The company is selling its shares in the range of Rs 462-487 apiece. The issue, which opened for subscription on Wednesday, May 11, can be subscribed till 5 PM today.
The offer size was reduced to 6.25 crore from 10.75 crore shares as the company raised Rs 2,346.7 crore from 64 anchor investors, including Baillie Gifford Pacific Fund, Schroder International, AIA Singapore, Amansa Holdings, Aberdeen, Goldman Sachs, and Singapore.
Retail investors bid for 57 percent of the shares reserved for them, while employees booked 27 percent of their portion.
The company has reserved shares worth Rs 20 crore for employees who will get shares at a Rs 25 discount on the final offer price. The price band for the offer, which closes on May 13, has been fixed at Rs 462-487 per share.
Non-institutional investors bid for 30 percent shares of the allotted quota, while qualified institutional buyers have subscribed 2.66 times.
Of the total issue size, 75 percent is reserved for qualified institutional buyers, 15 percent for non-institutional investors, and the remaining 10 percent for retail investors.
The majority of the brokerages have recommended to skip the issue following its pricey valuations, mounting losses, rising fuel prices, and the latest rout in listed startup counters. However, a few have recommended it for a longer-term.
Securities said Delhivery has an integrated platform with a full range of supply chain services, vast amounts of data intelligence, and rapid growth at scale.
“The continued losses and aggressively priced IPO hardly leaves anything meaningful on the table for investors with a medium-term perspective,” it added without rating the issue.
Another brokerage firm Hem Securities has recommended ‘avoid’ for the short term but is positive for the long term.
The company has been showing rapid growth and extensive scale with its proprietary logistics operating system & vast data intelligence capabilities said the brokerage.
“We recommend Subscribe rating from a long term perspective given it being largest and fastest-growing 3PL express parcel delivery player, having unified infrastructure network, a vast amount of data intelligence and R&D, experienced professional management team and strong relationship with the diversified customer base,” said Yes Securities.
“Delhivery has shown strong growth and built a recognizable brand in a segment marred by intense competition and low barriers to entry.”
“With a pan-India presence and diversification into other segments (LTL, omnichannel, etc), the management seeks to utilize the scale to further optimize, cross utilize its network, and lower costs. However, we await further progression on the path of achievement of positive cash flows,” said ICICI Securities.