Shares of logistics player Delhivery rose on Tuesday, marking a one-day high of Rs 568.90 on BSE, a jump of 16% over the issue price of Rs 487. Delhivery had listed at Rs 493 on BSE, a premium of 1.2% compared to the issue price. On the NSE, the stock is listed at Rs 495.2, an increase of 1.7% from the issue price. At the close on Tuesday, the stock had risen 10.3% to Rs 537.25 and the company’s market value stood at Rs 38,923.93 crore.
Investors slammed shares of the logistics player in the secondary market, leading to a jump in the stock price on Tuesday, experts said. They added that the weak sentiment in the markets during the share sale and the absence of liquidity due to LIC’s mega public offerings resulted in lower subscriptions to Delhivery’s offers, primarily from individual investors.
The three-day share sale between 11 and 13 May was drawn 1.63 times in total, with most of the bids coming from qualified institutional buyers (QIBs). Demand from retail investors and non-institutional investors remained subdued as the quota reserved for them was subscribed for only 57% and 30% respectively. Higher valuations of the company and negative cash flows weighed on investors, analysts said.
Sahil Barua, CEO, Delhivery, said at a pre-listing event on Tuesday: “There have been many conversations that the markets are choppy. But the way I look at it is 10 o’clock when the bell rings, post it, the logistics market will still be a $ 200 billion market and Delhivery will still have nearly a billion dollars in revenue and we are still going to be break-even and better every year. “
However, Delhivery’s listing size was reduced from Rs 7,436 crore previously planned to Rs 5,235 crore due to market volatility. Of the total issue size, Rs 1,235 crore was an offer-to-sell from existing investors, including Softbank and Carlyle. The new issue covered 4,000 billion. Rs that the company plans to use to finance organic growth initiatives, inorganic growth through acquisitions and other strategic initiatives and for general business purposes.
Delhivery was incorporated in 2011 and is the largest and fastest growing fully integrated logistics service provider in India in terms of revenue from FY21. The company has a pan-India presence serving 17,488 PINs or 90.61% of the 19,300 PINs in India per. December 31, 2021. The company has so far failed to become profitable. However, revenues continued to grow significantly. Delhivery reported revenue of Rs 4,911 crs in the nine months ending December, against Rs 3,838 crs in FY21. The brokerage firm Yes Securities said in a stock exchange listing: “We believe that increased market share, increasing utilization and synergy benefits from Spoton will help the company become profitable.”
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