Logistics and supply chain startup Delhivery Limited (Delhivery) saw its shares rising nearly 10 percent in late morning trade after making a muted listing on May 24.
Delhivery’s shares were listed at ₹493, higher by just 1.23%, while the price band was fixed at ₹462 – ₹487 per share.
Shares of the Gurugram-based logistics and supply chain company Delhivery made a tepid listing mainly due to weak market sentiment and poor financials for the company.
The IPO had struggled too as only 24% of the issue was subscribed in the first two days of subscription. The lack of demand was due to volatile market conditions that spooked investors.
On the last day, the issue was subscribed 163% mainly because of oversubscription in the qualified institutional buyer category.
The issue got a weak response as it was overall subscribed 1.63 times. The portion reserved for qualified institutional buyers was subscribed 2.66 times, whereas the HNI quota was subscribed 30 percent. The retail portion was booked 57 percent.
A tepid listing of Delhivery
The unofficial grey market indicated a negative listing for the stock as they were being traded at a ₹10 discount to the issue a price of ₹487.
“We expect the listing to be tepid and damaging as the current market hates high-growth tech stocks with negative earnings,” Sonam Srivastava, Founder at Wright Research had said about the listing of the issue.
Samir Bahl, CEO, Investment Banking at Anand Rathi Advisors concurred with Sonam and said, “Though not comparable to recently listed new-age firms like Paytm and Zomato, we believe investors are pegging Delhivery to these firms that are trading well below their IPO price.”
About Firm
The Gurgaon-based supply chain operates a pan-India network and provides services in 17,488 postal index number codes. It provides a full range of logistics services, including express parcel delivery, heavy goods delivery, truckload freight, warehousing, and supply chain solutions across business lines.
From a financial perspective, the company reported around 31 percent growth in net sales in fiscal 2020-21 (FY21) to Rs 3,646.5 crore from Rs 2,780.6 crore, a year ago. However, profit after tax declined nearly 54 percent in FY21 to Rs 415.7 crore from Rs 268.9 crore.
Meanwhile, analysts at YES Securities believe the company will turn profitable over the long run due to its rising market share. “We believe increasing market share, rising utilization, and synergy benefits arising from Spoton will help the company turn profitable.
Given strong market sentiment and healthy market share in third-party, last-mile logistics delivery, we recommend the stock to the investors from a long‐term perspective,” the report said.
Post-listing, Delhivery joined its league of logistics peers like Blue Dart Express, TCI Express, and Mahindra Logistics. Apart from Blue Dart Express which gained over 7 percent this year at bourses, TCI Express and Mahindra Logistics bled over 25 percent and 32 percent, respectively. In comparison, the S&P BSE Sensex declined over 8 percent during the same period.
