Shares of logistics player Delhivery surged on Tuesday, marking a day’s high of Rs 568.90 on the BSE, a jump of 16% against its issue price of Rs 487. Delhivery had listed at Rs 493 on the BSE, a premium of 1.2% against the issue price. On the NSE, the stock listed at Rs 495.2, up 1.7% from its issue price. At close on Tuesday, the stock was up 10.3% to Rs 537.25, and the company’s market capitalisation stood at Rs 38,923.93 crore.
Investors lapped up shares of the logistics player in the secondary market, leading to a jump in the stock price on Tuesday, said experts. They added that the weak sentiment in markets during the share sale, and the absence of liquidity due to LIC’s mega public offer resulted in lower subscription for the Delhivery’s offer, primarily from individual investors.
The three-day share sale between May 11 and 13 was overall subscribed 1.63 times, with most of the bids coming from qualified institutional buyers (QIBs). Demand from retail investors and non-institutional investors remained muted as the quota reserved for them were subscribed only 57% and 30%, respectively. Higher valuations of the company and negative cash flows weighed on investors, said analysts.
Sahil Barua, CEO, Delhivery, in a pre-listing event on Tuesday, said, “There has been a lot of talks about the markets being choppy. But the way I look at it is at 10 am when the bell rings, post that, the logistics market is still going to be a $200-billion market and Delhivery is still going to be nearly a billion dollars in revenue and we’re still going to be breaking even and better every year.”
Delhivery’s IPO size was, however, reduced from Rs 7,436 crore planned earlier to Rs 5,235 crore due to volatility in the markets. Of the overall issue size, Rs 1,235 crore was an offer-for-sale by existing investors, including Softbank and Carlyle. The fresh issue comprised Rs 4,000 crore, which the company plans to utilise towards funding organic growth initiatives, inorganic growth through acquisitions and other strategic initiatives, and for general corporate purposes.
Incorporated in 2011, Delhivery is the largest and fastest-growing fully integrated logistics services player in India in terms of revenue as of FY21. The company has a pan-India presence serving 17,488 PIN codes or 90.61% of the 19,300 PIN codes in India as of December 31, 2021. The company has so far failed to turn profitable. However, revenues continued to grow significantly. Delhivery reported revenues of Rs 4,911 crore in the nine months ended December against Rs 3,838 crore posted in FY21. Brokerage firm Yes Securities, in an IPO note, said, “We believe increasing market share, rising utilisations and synergy benefits arising from Spoton will help the company turn profitable.”