Delhivery Limited is coming up with its Initial Public Offering. The IPO will open for subscription on May 11th, 2022, and close on May 13th, 2022. It is looking to raise Rs 5,235 Crores out of which Rs 4,000 Cr will be a fresh issue and the rest Rs 1,235 Cr will be an offer for sale. In this article, we will look at the Delhivery Limited IPO Review 2022 and analyse its strengths and weaknesses. Keep reading to find out!
Table of Contents
Delhivery Limited IPO Review – About The Company
Delhivery is a provider of a full range of Logistics services. It is into the delivery of the express parcels and heavy goods, PTL freight, TL freight, warehousing, supply chain solutions, cross-border Express, freight services, and supply chain software.
The company has a PAN-India presence servicing more than 17,045 PIN codes. Apart from this their self-delivery network has more than 1,162 partners. It also has a technology stack which consists of over 80 applications for all supply chain processes.
Their network infrastructure includes 124 gateways, 20 automated sort centres, 83 fulfilment centres, 35 collection points, 24 returns processing centres, 249 service centres, 120 intermediate processing centres and 2,235 direct delivery centres as of June 30, 2021.
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Financial Highlights of Delhivery Limited
Delhivery Limited – Major competitors
Other listed competitors include:
- VRL Logistics Ltd
- Gati Ltd
- Transport Corporation of India Limited
Delhivery Limited – Industry Overview
As per the RedSeer Report, the Indian logistics market presents a large addressable opportunity, with direct spending on logistics of US$216.0 billion in Fiscal 2020 and is expected to grow to approximately US$365.0 billion by Fiscal 2026 at a CAGR of 9.1%
With a national highway network of 150,000 km, India has the second-largest road network in the world. The total road transportation market was estimated at US$124 billion in Fiscal 2020 and is expected to grow at a CAGR of 8% to reach US$200 billion in Fiscal 2026.
India has the 4th largest railway network globally and is also the 4th largest rail freight market in the world. The domestic rail transportation market stood at a size of ~US$21 billion in Fiscal 2020, which is expected to reach US$47 billion by Fiscal 2026 at a CAGR of 17%.
The domestic air-express transportation market was estimated to be US$0.8 billion in Fiscal 2020 and is expected to touch US$1.2 billion in Fiscal 2026.
Cross-border transportation is done primarily through air and ocean shipping. The cross-border air transport market stood at US$5.4 billion in Fiscal 2020 and is expected to reach US$8.2 billion by Fiscal 2026.
The warehousing space use fell by 11% YoY in Fiscal 2020. However, the overall warehousing market growth has been robust, at 44% CAGR during Fiscal 2017- 2020. Demand for warehousing is being driven by rapid growth in e-commerce, organised retail, manufacturing and international trade.
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Strengths of the Company
- It is the largest integrated and fastest growing fully integrated logistics services player in India by revenue as of Fiscal 2021.
- The company uses its proprietary logistics operating system to cater to its wide range of customers
- The company uses cutting edge technologies such as machine learning, artificial intelligence and operations research to solve several complex operational problems
- It operates in an asset-light business model that enables them to scale up volumes rapidly, with lower fixed costs and greater flexibility.
- The company has an extensive and diverse base of customers with more than 21,342 Active Customers across various e-commerce segments
Weaknesses of the Company
- Any disruptions in their logistics and transportation facilities could have an adverse effect on their business.
- The operations of the company are labour-intensive. Any change in the availability of skilled labour will affect the business.
- The company is dependent on its network partners and other third parties. Any change in their relationship can hamper their profitability.
- The operations are technology-driven. Any failure or disruption can negatively impact the business.
- The company operated in a largely fragmented environment and thus faces intense competition in the market
Delhivery Limited IPO – Grey Market Information
The shares of Delhivery traded at a premium of 2.87% in the grey market on May 6th. The shares traded at Rs 501. This gives it a premium of Rs 14 per share over the cap price of Rs 487.
Delhivery Limited – Key IPO Information
Promoters: The company is a Professionally Managed Company and does not have an identifiable promoter.
Book Running Lead Managers: Kotak Mahindra Capital Company Limited, Morgan Stanley India Company Private Limited, BofA Securities India Limited and Citigroup Global Markets India Private Limited.
Registrar To The Offer: Link Intime India Private Limited
| Particulars | Details |
|---|---|
| IPO Size | ₹5,235.00 Cr |
| Fresh Issue | ₹4,000.00 Cr |
| Offer for Sale (OFS) | ₹1,235.00 Cr |
| Opening date | May 11, 2022 |
| Closing date | May 13, 2022 |
| Face Value | ₹1 per share |
| Price Band | ₹462 to ₹487 per share |
| Lot Size | 30 Shares |
| Minimum Lot Size | 1 (30 shares) |
| Maximum Lot Size | 13 (390 shares) |
| Listing Date | May 24, 2022 |
The Objective of the Issue
The net proceeds from the issue will be utilised to:
- Fund organic growth initiatives
- Fund inorganic growth through acquisitions and other strategic initiatives
- General corporate purposes
In Closing
In this article, we looked at the details of Delhivery Limited IPO Review 2022. Analysts remain divided on the IPO and its potential gains. This is a good opportunity for the investors to look into the company’ and analyse its strengths and weaknesses. That’s it for this post.
Are you applying for the IPO? Let us know in the comments below.
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