Delhivery’s IPO opened for subscriptions today as the company seeks to raise Rs 5,235 crore through the public offering. Ahead of the IPO, the logistics major attracted strong interest from institutional investors with as many as 64 senior investors taking a stake in the company worth Rs 2,346 crore. Major investors in the Delhivery IPO include renowned names such as Goldman Sachs, Morgan Stanley, Singapore Government, Fidelity Investment Trust, Tiger Global, Invesco, SBI, ICICI Prudential and HDFC. The Delhivery IPO will close for subscription on Friday, May 13.
After almost an hour of opening for subscription, Delhivery IPO was subscribed 0.03 times by investors. The retail portion of the show was the most subscribed at 0.16 times.
Marquee names in the anchor book
Through the anchor book part, Delhivery has allocated 4.8 crores of shares to investors at the upper end of the price range of Rs 462-487 per share. SBI Focused Equity Fund acquired over 30 lakh shares, ICICI Prudential bought 31 lakh shares while Goldman Sachs acquired over 23 lakh shares via the anchor part. Morgan Stanley took over 1.95% of the anchor share while Societe Generale bought 0.5% of the same.
The part of the anchor book has 64 investors in total, picking up more than 4.8 crores of shares in the company. Of these, more than 1.45 crore shares were allocated to domestic mutual funds. Delhivery said a total of 7 domestic mutual funds participated in the anchor book part through 17 schemes. Domestic funds included SBI, HDFC, ICICI prudential, Mirae Asset, Franklin India, Invesco and Nippon Life India.
Delhivery shares will be available to investors at a fixed price range of Rs 462-487 per share. The IPO is a mixture of new issuances of shares and an SFO by the existing shareholders of the company. Out of the total issue size, Rs 4,000 crore is a new equity issue while the remaining Rs 1,235 crore is the OFS part. Delhivery will only get the new 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 I subscribe?
Arihant Capital and Marwadi Financial Services are advising investors to “avoid” Delhivery’s IPO due to its expensive valuations and loss-making business. “Given TTM Sales of Rs.58,132m on a post issuance basis, the company will list at an MCap/Sales of 6.07x with a Market Cap of Rs.352,832m while its peers namely BlueDart and Mahindra Logistics are trading at MCap/Sales of 3.66x and 0.84x,” analysts at Marwadi Financial Services said. negative operating cash. Also, it is available at an expensive valuation compared to its peers,” they added.
Delhivery recorded a loss on a consolidated basis of 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 9.7 x P/sales, which is higher than other logistics services companies. We recommend investors ‘steer clear’ of this issue,” said Arihant Capital.
Yes Securities, however, has a bullish outlook with a “Subscribe” rating on the issue. Analysts at Yes Securities said they had a long-term view on the stock and were optimistic as Delhivery is the largest and fastest growing 3PL express parcel delivery player, having a unified infrastructure network and a proprietary technology stack and capabilities.
