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Tuesday, May 17, 2022

Delhivery IPO opens today: Here’s everything you need to know

Delhivery IPO Latest News Updates: The Rs 5,235 crore initial public offering (IPO) of supply chain firm Delhivery is available from May 11-13, 2022. It has a price band of Rs 462-487 per share.

Written by Debashish Pachal | New Delhi |
Updated: May 11, 2022 10:24:05 am
(Image: Delhivery website)

Delhivery IPO: The initial public offering (IPO) of supply chain firm Delhivery will open for subscription today, May 11, 2022. The Rs 5,235 crore Delhivery IPO will be available for public subscription till Friday, May 13, 2022, and the price band of the company has been fixed at Rs 462-487 per share with a face value of Re 1 per share.

The IPO size of Delhivery has been reduced from Rs 7,460 crore to Rs 5,235 crore. The company had filed its draft prospectus in November last year.

Delhivery is a Gurugram-based company that provides a full range of logistics services including express parcel delivery, heavy goods delivery, warehousing, supply chain solutions, cross-border express and freight services and supply chain software, along with value added services such as e-commerce return services, payment collection and processing, installation and assembly services. It operates a pan-India network and according to the information given in the red herring prospectus (RHP), it provides services in 17,488 PIN codes in the country as of the quarter ended December 2021.

The Delhivery IPO comprises a fresh issue of equity shares worth Rs 4,000 crore and an offer-for-sale (OFS) of Rs 1,235 crore by the existing shareholders.

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Under the OFS, investors Carlyle Group and SoftBank as well as the company’s co-founders will divest their shareholding.
CA Swift Investments, an entity of Carlyle Group, will sell shares amounting up to Rs 454 crore, SVF Doorbell (Cayman) Ltd, an arm of Softbank Group, will offload shares worth Rs 365 crore, Deli CMF Pte Ltd, a wholly owned subsidiary of private equity fund China Momentum Fund, will sell shares worth Rs 200 crore and Times Internet will sell shares worth Rs 165 crore.

Apart from the investors, the company’s co-founders – Kapil Bharati, Mohit Tandon and Suraj Saharan – will be selling their shares amounting up to Rs 5 crore, Rs 40 crore and Rs 6 crore respectively.

The proceeds from the fresh issue will be used for funding organic growth initiatives – building scale in existing business lines and developing new adjacent business lines, expanding network infrastructure, upgrading and improving its proprietary logistics operating system. Apart from this, the proceeds will also be used for funding inorganic growth through acquisitions and other strategic initiatives and for general corporate purposes, according to the RHP.

In the offer, 75 per cent has been reserved for qualified institutional investors, 15 per cent for non-institutional investors and the remaining 10 per cent is available for the retail investors. Additionally, Delhivery has set aside shares worth Rs 20 crore for its employees, who will get a discount of Rs 25 per share during the public offering.

Investors who wish to subscribe to Delhivery IPO can bid in a lot of 30 equity shares and multiples thereafter. At the upper price band, they will be shelling out Rs 14,610 to get a single lot of Delhivery. The shares will be listed on both BSE as well as the National Stock Exchange (NSE).

The applicants also must note that the cut-off time for UPI mandate confirmation is Tuesday, May 17, 2022, upto 12:00 pm. If they fail to do so then their application may not be considered.

Morgan Stanley India, Kotak Mahindra Capital, BofA Securities India and Citigroup Global Markets India are the book running lead managers to the offer while Link Intime India is the registrar of the issue.

Before heading into the IPO, Delhivery on Tuesday raised nearly Rs 2,347 crore (Rs 23,46,74,87,820) from 64 anchor investors in lieu of 4,81,87,860 equity shares at Rs 487 each, data from the stock exchanges showed.

The anchor investors include the likes of AIA Singapore, Amansa Holdings, Aberdeen New India Investment Trust Plc, Goldman Sachs, The Master Trust Bank of Japan, Government of Singapore, Monetary Authority of Singapore, Fidelity, Tiger Global Investments Fund, Steadview Capital Master Fund, Morgan Stanley Asia (Singapore) Pte, Societe Generale and Segantii India Mauritius among others.

Speaking about the Delhivery IPO, Ravi Singh, Vice President and Head of Research at Share India Securities told, “Delhivery has posted continuous losses and its IPO is priced with a negative P/E. Even if we consider its improving adjusted EBITDA margins, Delhivery will take time to turn the corner. The IPO is also priced very aggressively and we recommend investors to stay away from this IPO.”

Amit Pamnani, Chief Investment Officer at Swastika Investmart said, “We at Swastika Investmart provide moderate rating of 3-star to Delhivery IPO, since listing gain may not be much, investors’ amount is also blocked in LIC IPO and overall market sentiments are feeble. Hence, high risk bearing investors can bet for long term.”

He explained that the brokerage provides a star-based rating on a scale of 1-5 (where 1 being poor and 5 means excellent). So a 3-star rating means an average IPO. “Company’s business prospects looks bright however due to non-profitability and asset light model there are high risk factors.”

Speaking on what a new investor should do, Pamnani said “A newbie or common retail investors can avoid for now, they can follow wait and watch strategy until one month of listing.” He further noted that only well-informed and high-risk appetite investors should bet for a long-term perspective.

The share allotment is likely to take place on Thursday, May 19, 2022, and the shares are expected to be listed on Tuesday, May 24, 2022, according to the timeline given in the RHP.

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