The price band for Delhivery’s initial public offering (IPO) has been set at Rs 462-487 per share, valuing the firm at Rs 35,283 crore at the higher end. This is a 19% decrease from the current unlisted market price.
Shares of logistics and supply-chain startup Delhivery Ltd have dropped nearly 40% in the unlisted market since reaching a high of Rs 950 per share in January ahead of its first public offering (IPO).
According to a dealer, the stock is now selling between Rs 550-600 per share on light trading volume.
In its IPO, Delhivery has set the price band at Rs 462-487 per share, valuing the firm at Rs 35,283 crore at the high end. This is a 19% decrease from the current unlisted price. According to the business, the IPO will go on sale on May 11 and end on May 13.
According to experts, the sudden drop, as well as the price band, has unnerved investors who purchased stock on the unlisted market. Delhivery’s trading volume The number of shares in the unlisted market has been minimal from the start due to its high value, which has kept investors away.
Investors expected the IPO to be valued lower than the unlisted market and opted to wait for the share sale rather than purchase the shares in the unlisted market. Analysts said that sentiment about new-age firms has shifted dramatically as a result of the failure of several start-up IPOs last year.
“There was robust demand for Delhivery’s unlisted shares last year, when they were not available, and now when the shares are trading in the unlisted space, the demand is completely lacking,” said Manan Doshi, co-founder, UnlistedArena.com, which deals in unlisted and pre-IPO shares.
Delhivery is not the only firm that has established a price band that is significantly lower than the current stock price in the unlisted market.
The IPO price bands for AGS Transact Technologies Ltd, UTI Asset Management Co Ltd, and PB Fintech were also lower than unlisted market levels.
AGS Transact debuted in January 2022, with a price band of Rs 185-195 per share; prior to the IPO, its unlisted shares were trading at Rs 550 per share. UTI AMC went public in September 2020, with a price band of Rs 552-554 per share; its unlisted market price right before the IPO was Rs1,100. PB Fintech, Paisabazaar’s parent company, announced an IPO price range of Rs 940-980; its shares were trading at roughly Rs 1,900 per immediately before the IPO.
The financials of Delhivery aren’t terrific. According to its share-sale prospectus, it has never made a profit.
The firm lost Rs 891.14 crore in the nine months ending December 2021, while it lost Rs 416 crore in FY21. Revenue for the nine months ending December was Rs 4,911 crore, while revenue for FY21 was Rs 3,838 crore.
It had a negative free cash flow of Rs 246 crore in FY21, compared to Rs 848 crore in FY20. Simultaneously, freight, handling, and servicing costs have risen from Rs. 2,026 crore in FY21 to Rs. 3,480 crore in 9MFY22.
“The firm is demanding 5.5x price to sales. All other logistics players are making profits. Given fuel cost increases, supply chain and logistic issues, the costs for fulfilment will keep pinching them more. There are better players in the listed space already making profits and as an investor , one can look at them,” said Aditya Kondawar, IPO expert at JST Investments.
On May 24, the company will go public on the stock markets. The basis for allotment is May 19, and the shares will be credited to investors’ demat accounts on May 23. The company has reduced the amount of its overall offer to Rs 5,235 crore, down from Rs 7,460 crore previously intended. It will now raise Rs 4,000 crore through a new issuance and Rs 1,235 crore through a tender offer.