The initial public offering (IPO) of logistics service provider Delhivery opened today. The issue size of the IPO is Rs 5,235 crore. The IPO consists of a new issue of Rs 4,000 crore and a sell offer of Rs 1,235 crore. The company raised over Rs 2,347 crore from 64 core investors on May 10.

The company said 48,187,860 shares were allotted to core investors at the “core investor allotment price” of Rs 487 per share.

SBI Focused Equity Fund, HDFC Large and Mid-Cap Fund, ICICI Prudential Flexicap, Baillie Gifford Pacific Fund, Schroder International, AIA Singapore Pvt Ltd, Goldman Sachs Fund, Mirae Asset Midcap Fund, Monetary Authority of Singapore, Invesco India Contra Fund, Bay Capital India Fund, Tiger Global Investments Fund, Steadview Capital Master Fund are some of the investors who participated in the anchor stock allotment.

Anchor investors are institutional investors who subscribe to an IPO prior to the issuance’s opening to the public. Typically, referral investors invest in an issue a day before the IPO opens. They are required to bid for the shares within the IPO price range. Each lead investor is required to invest a minimum of Rs 10 crore upon issuance.

The sale of shares will close on May 13. The issue size was reduced from the Rs 7,460 crore expected earlier due to volatile market conditions. The company offers its shares in a price range of Rs 462 to Rs 487.

The lot size of the IPO is 30 shares for which it will cost Rs 14,610. An individual retail investor can submit bids for up to 13 lots or 390 shares by spending Rs 1,89,930.

Delhivery IPO: Company raises Rs 2,347 cr from 64 anchor investors ahead of public offering

The company is offering a rebate of Rs 25 per share to its employees. Kotak Mahindra Capital Company Limited, Morgan Stanley India Company Pvt Ltd, BofA Securities India Limited and Citigroup Global Markets India Private Limited are the lead managers of the issue.

The shares will be allotted on May 19 and are expected to list on the BSE and NSE on May 24.

Link Intime India Private Ltd is the Registrar of the IPO.

The company plans to use the proceeds from the public offering to fund organic growth, fund inorganic growth through acquisitions and strategic initiatives, and for general corporate purposes. The company has allocated 10 percent of the issue to retail individual investors (RIIs). About 75 percent of the total supply was reserved for qualified institutional buyers (QIBs). The company has reserved 15% for non-institutional investors (NII).

Here’s a look at what brokerages and analysts have been saying about the IPO. Hem Securities Positive on Long-Term IPO Prospects Only

“The company has grown rapidly and at scale thanks to its proprietary logistics operating system and extensive data intelligence capabilities. The company’s network design and engineering with an integrated portfolio of logistics services and strong relationships with a diverse customer base look solid. In addition, its large ecosystem of partners, enables an asset-light business model and extensive reach. Keeping an eye on current finances, we recommend “Avoid” in the short term, while only long-term investors can “subscribe,” the brokerage said.

Marwadi Financial Services advised investors not to proceed with the sale of shares. “Given the last twelve months sales of Rs 5813.2 crore on a post issuance basis, the company will list at an MCap/Sales of 6.07 times with a market capitalization of Rs 35,283.2 crore then than its peers, namely BlueDart and Mahindra Logistics are trading at MCap/Sales of 3.66x and 0.84x We are giving this IPO an “Avoid” rating as the company is loss making with operating cash flow moreover, it is available at an expensive valuation relative to its peers.”

Yash Gupta, Equity Research Analyst, Angel One Ltd, said: “Based on FY22 annualized numbers, the IPO is set at a price EV/sales of 5.1x and at a book value of 5.2 times in the upper IPO price range.For 9MFY22, the company recorded an EBITDA loss of Rs 232 crore and a net loss of Rs 891 crore. India, no other peer group has the same business model as Delhivery.The company saw good revenue growth of 82% as of 9MFY2022 and the company is expected to turn EBITDA positive by the end of FY2022. Considering the costly valuation, we assign a NEUTRAL recommendation to the Delhivery IPO.

YES Securities has launched a SUBSCRIBE call for the IPO for a long-term perspective. The brokerage said the company is the largest and fastest growing 3PL express parcel delivery player and has a unified infrastructure network. The company has a proprietary technology stack and capabilities and houses a large amount of data intelligence and R&D. It has an experienced professional management team and a strong relationship with a diverse client base.

Delhivery is committed to providing a full range of logistics services including express parcel and heavy cargo delivery, PTL freight, TL freight, warehousing, supply chain solutions, cross-border express, freight services and supply chain software. Delhivery is India’s largest and fastest growing fully integrated logistics services player by revenue as of FY21.