Delhivery IPO: Institutional buyers push ₹5,235 cr issue through on final day

Logistics and supply chain companies, Delhivery witnessed a last-minute flood of claims from qualified institutional buyers who pushed through its 5,235 crore IPO on the last day. Delhivery IPO has shown a lukewarm response until the second day of the public offering, but on the third day – the issue made a narrow flight and fully subscribed.

Data from stock exchanges showed that Delhivery IPO received cumulative bids for approximately 101.6 million shares against the offered size of 62 million – fully subscribed by 1.6 times.

Despite extremely volatile markets, the IPO received massive demand from qualified institutional buyers (QIB) as the category was oversubscribed by 2.6 times on the third day.

QIB’s category includes foreign institutional investors, domestic financial institutions (banks, financial institutions, insurance companies), mutual funds and others.

However, unlike QIBs, the reserved portion for private individuals, non-institutional investors and employees remained signed even on the last day of bidding with subscriptions of only 57%, 30% and 27%.

On day 2, the IPO received a subscription of only 23% against the total offered size. On this day, the quota for private investors (RII) subscribed by 40%, while QIBs received 29% subscriptions and non-institutional investors subscribed by 1%.

Delhivery IPO opened from May 11 to May 13 for public subscription. The IPO size of 5,235 crore – included a new issue of 4,000 crore and an offer for sale up to SEK 1,223 is borne by shareholders.

Of the total size, 75% of the share was allocated to QIBs, while 15% was set for non-institutional and 10% for private investors.

For the IPO, the price range was set at 462 per share in the lower part and 487 per share in the upper part. There was a staff discount on 25 is also offered in the question.

Bharat Chhoda and Harshal Mehta, research analysts at ICICI Direct, said in their listing for the company’s IPO, Delhivery has shown strong growth and built a recognizable brand in a segment characterized by intense competition and low entry barriers. With a pan-India presence and diversification to other segments (LTL, omnichannel, etc.), management is trying to leverage the scale to further optimize, cross-use its network and reduce costs. However, we are waiting for further progress on the way to achieving positive cash flows.

The duo highlighted important risks and concerns for the company. These are:

1. The company’s asset light operations are highly dependent on asset partners and any inefficiency or disruption with asset partners can 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 part of its growth strategy. Failure to integrate newer acquisitions can affect profitability.

However, it must also be noted that the Delhivery IPO hit the market during a time when the index witnessed overselling, as fears of inflationary pressures and interest rate hikes in the future dampened emotions. An opportunity for recession also struck like bears through the markets.

At this week’s trading session, Vinod Nair, head of research at Geojit Financial Services, said, “Delayed concerns about the weakening rupee, global interest rate hikes, rising inflation figures and downturns in China kept markets on edge this week.”

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