Delhivery IPO coming soon: Everything you need to know!

The Gurugram headquartered Delhivery had filed its draft IPO papers for a Rs 7,640 crore IPO. They received approval from market regulator Securities and Exchange Board of India (SEBI) on Monday morning. 

It will include the issue of fresh shares worth Rs 5,000 crore and an offer for sale of up to Rs 2,460 crore from promoters. As per sources, the IPO is expected to come by January end.

About Delhivery

• Delhivery is one of the largest and fastest-growing fully integrated logistics services players in India for FY21 - RedSeer Report.
• It provides a full range of logistics services, including express parcel delivery, heavy goods delivery, PTL (partial truckload) freight, TL (truckload) freight, warehousing, supply chain solutions, cross-border express and freight services, and supply chain software, besides offering value-added services such as eCommerce return services, payment collection, and processing, etc.
• They have a nationwide network with a presence in every state of India with servicing in 17000 pin code.

Delhivery IPO: Industry Outlook

• Indian logistics players have evolved differently compared to their global counterparts in other large economies. 
• New-age, tech-enabled players in India have built asset-light models with full control over network partners and leased mid-mile and fleet assets, enabled by proprietary technology systems.
• 70-80% of freight movements in India are short-to-medium haulage, where road transportation is the quickest and cheapest alternative. 

The total road transportation market was estimated at US$124 billion in FY20 and is expected to grow at a CAGR of ~8% to reach US$200 billion in FY26.

Delhivery Financials

• For the same period, the company reported a loss of Rs 1784 crore, Rs 2680 crore, Rs 4155 crore, respectively.
• The Adjusted EBITDA for the same period was Rs (187.64) crore, Rs (253.19) crore, and Rs (253.28) crore, respectively.

Delhivery IPO: Listed Peers

• The company provides a full range of logistics services, and it differentiates them from other listed logistics companies in India whose business may be considered to be similar to some of their service offerings. 
• The listed peers include Blue Dart Express Ltd, TCI Express Ltd, Mahindra Logistics Ltd.
• Delivery has the highest revenue in terms of revenue among all the listed peers. However, in terms of RoNW and EPS, it is the only one with negative numbers.

USP

• They provide a full range of logistics services.
• Their in-house logistics technology stack is built to meet the dynamic needs of modern supply chains.
• They operate 20 fully and semi-automated sortation centers and 86 gateways across India.
• Delivery operates a pan-India network and provides services in 17,045 postal index number codes.

Delhivery Risks

• They may not be able to manage their growth if they are not able to maintain or expand their network infrastructure.
• Any disruptions to logistics and transportation facilities could have a material adverse effect on the business.
• They rely on network partners and other third parties for certain aspects of their business, which poses additional risks.
• Its long-term growth and competitiveness are highly dependent on its ability to control costs and pass on any increase in operating expenses to customers while continuing to offer competitive pricing.

Delhivery IPO valuation

According to media reports, Delhivery IPO is seeking a valuation of about $5 billion (~ Rs 37,000 crore). The company had recorded a robust 28% rise in revenues to Rs 3,838 crore. However, the company’s loss had also expanded to Rs 4,155 crore. In 2021, Delhivery had closed a $277 million funding round led by US-based Fidelity with Singapore’s sovereign wealth fund GIC also participating. It was valued at $3 billion after that round. We will share our detailed view on the IPO, once the price band and other details are revealed. Stay tuned!