Delhivery IPO Review – Should you Subscribe or Avoid?

Delhivery IPO – Dates, Strenghts, Analysis and ReviewDelhivery IPO (Delhivery Limited IPO) Details

Delhivery is coming up with IPO, which would open for subscription on 11th May, 2022. Company provides a complete range of logistics services in India. Company generated strong revenue growth in the last 3 years and 9 months. However, the company has incurred losses in the past. Would this be like another PayTM for investors?  Should you subscribe to Delhivery IPO or Avoid? What are the risk factors in this IPO? Is Delhivery IPO Valuation justified? Let me do this IPO review and provide complete analysis.

Also Read: LIC IPO Analysis – Good, Bad and Ugly part of this IPO

About Delhivery Limited

Company is the largest and fastest growing fully-integrated logistics services player in India by revenue as of Fiscal 2021.

Company aims to build the operating system for commerce. Its business is guided by three operating principles:

1) People-Centricity: Its infrastructure, network and technology enables them to solve supply-chain problems that affect millions of people every day.

2) Growth through partnership: They believe that systemic change requires cooperation and collaboration. Its infrastructure and technology capabilities are designed to be accessible to its partners in India and around the world.

3) Efficiency, always: Saving money for its customers allows them to do more with what they have. Company strive relentlessly for efficiency and for new ways to reduce costs throughout the supply chain.

Delhivery IPO – Dates, issue details, Size and Price Band

IPO Opening Date 11-May-22
IPO Closing Date 13-May-22
Issue Type Book Built Issue IPO
Face Value Rs 1 per equity share
IPO Price band Rs 462 to Rs 487 per equity share
Lot Size 30 Shares
Listing at BSE and NSE
Total Issue Size Rs. 5,235 Crores
    Fresh issue     Rs. 4,000 Crores
    OFS     Rs. 1,235 Crores
Employee Discount Rs. 30 Per Share

What are the competitive strengths of Delhivery Limited?

1) Rapid growth, extensive scale and improvement in unit economics

2) Its proprietary logistics operating system

3) Vast data intelligence capabilities

4) Its network design and engineering

5) Its integrated portfolio of logistics services

6) Strong relationships with a diverse customer base

7) Highly qualified and professional team

What are the Objects of the IPO Offer?

Delhivery IPO Size is Rs 5,235 Crores which contains both fresh issue and Offer for Sale (OFS).

1) Offer for Sale (OFS) Rs 1,235 Crores – Under OFS, selling shareholders would get entire money and the company would not get any funds.

2) Fresh Issue Rs 4,000 Crores: Fresh issue would be used for the following:

  • Funding organic growth.
  • Funding inorganic growth through acquisition and strategic initiatives.
  • General corporate purposes.

Who are the promoters of Delhivery Limited?

Delhivery Limited is a professionally managed company with no identifiable promoters.

How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 3 years and 9 months.

Financial Year ending / Period ending (Amt in Mns)
Particulars FY19 FY20 FY21 *Dec-21
Total Assets 40,625 43,573 45,978 84,295
Revenues 16,948.7 29,886.3 38,382.9 49,114.1
Profit After Tax -17,833.0 -2,689.3 -4,157.4 -8,911.4
Profit % -105.22% -9.00% -10.83% -18.14%

*9months ending Dec-21

Positive Factors in Delhivery IPO

Here are the key reasons to invest in this IPO.

1) Company provides a full range of Logistics services which includes delivery of express parcel and heavy goods, PTL freight, TL freight, warehousing, supply chain solutions etc.

2) Company has seen rapid growth, scale and synergies across lines of business in the last few years.

3) Company has generated strong revenue growth in the last 3 years and 9 months.

Risk Factors of investing in Delhivery IPO

1) Company has been incurring losses in the last 3 years and 9 months. Company indicated in the RHP that such losses might continue in future too.

2) It has negative cash flows in the recent past.

3) Company relies on a scaled, automated and unified network infrastructure, largely comprising its logistics and transportation facilities for its business operations. If they cannot maintain or expand its network infrastructure, the company may not be able to manage the growth.

4) Disruptions to its logistics and transportation facilities could have a material impact on company business.

5) Investors should read complete risk factors indicated in the RHP before investing in this IPO.

Delhivery IPO valuation

Delhivery IPO price band is Rs 462 to 487 per share.

Company has been incurring losses in the last 3 years and 9 months hence one cannot compute P/E and cannot ascertain whether the Share price is underpriced or overpriced.

Delhivery IPO Dates – Subscription, Allotment and Listing Dates

Offer Open 11-May-22
Offer close 13-May-22
Finalization of Allotment 19-May-22
Initiation of Refunds 20-May-22
Credit to Demat Account 23-May-22
IPO Shares Listing Date 24-May-22

How to buy Delhivery IPO online through Zerodha?

You can login to your demat account, visit the IPO section and apply for this IPO during the subscription dates.

You can also apply this IPO on Zerodha. If you do not have Zerodha account, sign-up here and proceed to the next step.

Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.

Follow below steps to apply this IPO in Zerodha platform:

1) Visit the Zerodha portal and login to Console.

2) Go to Portfolio and click the IPOs link.

3) Visit ‘Delhivery Limited IPO’ row and click the ‘Bid’ button.

4) Enter your UPI ID, Qty and the Price which you want to bid.

5) Click on ‘Submit’ IPO application form.

6) Visit the UPI App (net banking or BHIM) to approve the mandate.

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Delhivery IPO – Should you Subscribe or Avoid?

Delhivery Limited provides a full range of logistic services in India.

Company has been showing rapid growth, scale and synergies across various lines of business. Such growth is depicted in the revenues in the last 3 years and 9 months.

However, company has been incurring losses in the past.

Since it is incurring losses, we cannot ascertain whether Delhivery IPO Share Price is underpriced or overpriced.

While the company has shown significant growth, considering some of these major risk factors, investors should stay away from such IPOs. If such company shares are available at discounted price post listing, one can re-assess and purchase at that time.

Source: Delhivery IPO Prospectus (RHP on SEBI Website)

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Suresh KP

5 comments

  • Kamal Garg

    Thank you very much for your clear-cut and crisp advice as “stay away”.

  • Raj A

    I have decided not to invest in loss making companies. Never invest
    When company itself not making any profit how come it will give any value to shareholders.
    How come sebi allows such companies for list and make investors to lose money. Very bad from sebi

    • Hello Raj, I echo with you. Paytm, Nykaa, Zomato etc., all were loss making companies, some performed well, some were disasters. Its riskier bet to invest in loss making companies.

    • zubin baisiwala

      Hi Suresh

      Considering rate hike by rbi, could you please write one article covering strategy we should follow for debt funds. Like now people should park money in ultra short/ liquid and short term debt fund and then later after 6 months to one year shift money to longest duration debt fund to reap benefits of rate increase. I just thought of one way to benefit out of this. May be you could suggest different ways to capitalise on this opportunity with rate hike now likely to be a regular norm being followed by rbi.

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