Logistics services player Delhivery has pruned its initial public offering (IPO) by about 30% to Rs 5,235 crore from the earlier Rs 7,460 crore, opting to play it safe in a market that will see a large Rs 21,000-crore issuance from Life Insurance Corporation (LIC) this week.
According to the red herring prospectus (RHP), the fresh issuance of shares will now be made for an amount of Rs 4,000 crore. The offer for sale (OFS) portion has been reduced to Rs 1,235 crore from Rs 2,460 crore.
While global private equity investor Carlyle will sell shares worth Rs 454 crore compared with Rs 920 crore planned earlier, SoftBank will now sell a stake worth Rs 365 crore, down from Rs 750 crore.
While the secondary markets have been volatile ever since the outbreak of hostilities between Russia and Ukraine and in anticipation of rate hikes by the US Fed, some of the recent IPOs, albeit of a smaller size, have fared reasonably well. The LIC issue, could, however, attract good interest.
Delhivery reported a loss of Rs 891.1 crore for the nine months to December 2021, bigger than the loss of Rs 297.5 crore posted in the corresponding period of 2020. The company had posted a loss of Rs 415.7 crore in FY21.
The company’s total income for the nine months to December 2021 was Rs 4,911.4 crore compared with Rs 2,806.5 crore in the comparable period in 2020. Total expenses rose to Rs 5810.2 crore from Rs 3062.7 crore with freight handling and servicing costs shooting up.
With several of the IPOs of startups faring poorly, after listing, the capital market regulator had in mid-February initiated a discussion on disclosures put out by them to explain the basis of the pricing. The regulator proposed that in addition to the financial parameters, new-age technology companies should disclose some details of the KPIs (key performance indicators). To ensure the data is authentic, Securities and Exchange Board of India (Sebi) wants it should be audited.
Gurugram-based Delhivery provides an end-to-end logistics solution, including warehousing services and a range of value-add services. The company’s shipment volumes in FY21 were 289.2 million.
Analysts at Motilal Oswal believe the domestic logistics space is a large addressable opportunity and tipped to grow at an annualised rate of 9% to $365 billion between FY20 and FY26.
With a 22.78% stake, SoftBank is the largest shareholder in Delhivery, while Nexus Ventures and Carlyle hold stakes of 9.23% and 7.42%, respectively. The company’s three founders hold relatively small stakes. While Kapil Bharati holds 1.11%, Mohit Tandon owns 1.88% and Suraj Saharan has a 1.79% stake.
Delhivery will utilise Rs 2,000 crore to finance growth in the existing lines of business and also to develop adjacent business lines. It proposes to expand the network infrastructure and upgrade the proprietary logistics operating system. The company has plans to use around Rs 1,000 crore to fund inorganic growth opportunities through acquisitions and other strategic initiatives.
Anchor investors for Delhivery’s IPO will bid for shares on May 10 and the issue will be open for subscription to others on May 11. Kotak Mahindra Capital, Morgan Stanley, BofA Securities, and Citigroup are the lead managers to the issue.