Logistics and supply chain company, Delhivery saw a last-minute influx of demands from qualified institutional buyers, which pushed through 5,235 crore IPO on the last day. The Delhi IPO has shown a slow response till the second day of the public offering, however, by the third day – the issue took a narrow run and was fully subscribed.
The data given on the exchanges showed that delhivery ipo Cumulative bids of approximately 101.6 million shares were received against the proposed size of 62 million – 1.6 times the subscription as a whole.
Despite the highly volatile market conditions, the IPO received huge demand from Qualified Institutional Buyers (QIBs) as the category was oversubscribed by 2.6 times on the third day.
The QIB category includes foreign institutional investors, domestic financial institutions (banks, financial institutions, insurance companies), mutual funds and others.
However, unlike QIBs, the portion reserved for retail individuals, non-institutional investors and employees remained under-subscribed even during the last day of bidding with membership of only 57%, 30% and 27%.
On the second day, the IPO got a subscription of just 23% against the total proposed size. On this day, quotas for retail individual investors (RIIs) subscribed to 40%, while QIBs got 29% membership and non-institutional investors subscribed 1%.
Delhivery’s IPO is open for public subscription from May 11 to May 13. IPO size of 5,235 crore – includes a new issue of 4,000 crore and an offer for sale 1,235 crore made by the shareholders.
75% of the total size was allocated to QIBs, while 15% was earmarked for non-institutional and 10% for retail investors.
The price band for the IPO was fixed by: 462 per equity share at the lower end and 487 per equity share at the upper end. had an employee discount 25 offered on the issue as well.
Bharat Chhota and Harshal Mehta, Research Analysts, ICICI Direct said in their IPO note for the company, Delhivery has shown strong growth and created a recognizable brand in a segment affected by intense competition and low barriers to entry. With a pan-India presence and diversification into other regions (LTL, omnichannel etc.), the management is looking to further optimize its network, crossutilize its network and use scale to reduce costs. However, we look forward to continuing on the path of achieving positive cash flow.
Both highlighted the major risks and concerns for the company. This:
1. The Asset Light business of the Company is largely dependent on the Asset Partners and any inefficiency or disruption with the Asset Partners may affect the Company’s operations and brand image.
2. The company continues to suffer operating losses.
3. The company has acquired assets (Aramex, Fedex, Primaseller, etc.) and companies (spot-on) as a part of its growth strategy. Failing to integrate new acquisitions could affect profitability.
However, it also needs to be noted that Delhivery’s IPO hit the market at a time when the indices witnessed overselling due to inflationary pressures and fear of a hike in interest rates, which weighed on the sentiment. At the same time, there is a possibility of recession like bears in the markets.
In this week’s trading session, Vinod Nair, Head of Research, Geojit Financial Services, said, “Weak rupee, rising global interest rates, rising inflation numbers and concerns over the lockdown in China kept the markets on edge this week.”