Delhivery aims for Q1 IPO as market sentiment improves for big offerings

Investment bankers who know about the plans said the logistics firm Delhivery aims to launch its initial public offering (IPO) in the June quarter of 2022.

The Gurugram-based company in November submitted its draft prospectus with the Securities and Exchange Commission of India (Sebi), the market regulator. SEBI received approval for its IPO in January.

Challenging market conditions due to the hard-line pivot of the US Federal Reserve and the Russian attack on Ukraine disrupted the IPO market after setting a record in 2021.

“The market improved in the last week amid talks on a ceasefire between Russia and Ukraine. If market conditions continue to improve, we could see big issues like Delhivery launch their stake sale,” a banker said. Four initial public offerings were launched in the past week compared to just three between January and February.

The Delhivery IPO was pegged at around Rs 7,000 crore. It is the largest fully integrated multimodal logistics and supply chain company in India by revenue (based on fiscal year 21).

Brokerage firm Motilal Oswal said in a recent note that the local logistics sector presents a significant opportunity to approach as it is linked to growth at an annual rate of 9 per cent to $365 billion between fiscal year 2020 and fiscal year 26. It expects growth to be higher for regulated players due to “ Their continued focus is on technology and automation.”

At present, the logistics market is highly fragmented with organized players accounting for less than 4 percent of the market share. Motilal Oswal said the shift from the informal to the formal sector is already underway.

“This shift has coincided with the introduction of the Goods and Services Tax, which has increased demand for national and integrated supply chain service providers through integrated warehousing and transportation models, which allow customers to scale operations at lower fixed costs, while creating opportunities to improve footprint and capacity utilization,” he said. Alok Deora and Dhirendra Patro, analysts at Motilal Oswal, in a note: “Less inventory, faster and cheaper execution.”

According to the brokerage, some of the main pluses of Delhivery are asset-light business model, diversified client base, and advanced network infrastructure.

Motilal Oswal said Delhivery has proprietary technology systems in place that enable it to provide integrated logistics services to a wide range of clients. Its portfolio of technologies consists of more than 80 applications that cover all supply chain processes.

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