Delhivery expects to raise around $500 million via IPO: Listing in the next 5-7 months

One of India’s technologically advanced new-age supply-chain and logistics start-ups, Delhivery is gearing up for its IPO between December 2021 and March 2022. Even though the details of its IPO are yet to be finalised, it is expected to be around $400 million to $500 million.

Delhivery is on course to join a series of indigenous technology start-ups that are on course to become public. According to a company executive, since Delhivery is an Indian organisation with the lion’s share of its business in this country, they will list locally.

The ongoing Covid-19 crisis has delayed its IPO process, as it has affected the market significantly. However, the company is hopeful if there are no significant effects of the third wave that can shift market sentiment, they are unlikely to postpone this IPO further.

As confirmed by company executives, they are working out the final details of this issue, including the IPO size. Delhivery has also created a board sub-committee to navigate this IPO and any merger and acquisitions.

Currently, the company has a valuation of $3 billion, after their latest round of funding of $277 million.

Historically, it has been a strong performer, but they are planning to spread their wings in other areas with this IPO.

Objectives with the IPO

Talking to a leading media house, MD and chief business officer of Delhivery, Mr. Sandeep Barasia, has mentioned that the company is planning to use the proceeds from this IPO to improve their cross-border operations and technological advancement.

But why should investors consider this IPO?

Having clarity about the objectives of an IPO helps investors to understand the investment of funds. Based on that, they can take a call on whether to subscribe to this IPO or not.

What are the reasons to subscribe to Delhivery IPO?

It has been a decade since Delhivery has started its operations, and this Gurugram-based logistics start-up has been a success story ever since!

It has steadily improved in every business segment and is currently the country’s largest supply chain company by revenue.

Here are some highlights on why Delhivery IPO can be a safe bet for you –

Strong funding base

Over the years, Delhivery has amassed more than $900 million in funding. Recently they have secured $277 million from Fidelity and $100 million from FedEx. This provides enough cash for the organisation to invest in different business verticals and expand its portfolio.

Steadily increasing revenue

Studying the revenue-wise progression of Delhivery will reflect that it is on the upward trajectory. In FY2019, it registered a revenue of Rs. 1700 crores, which increased to Rs. 2988.6 crores in FY2020. Finally, in FY2021, it managed to cross the Rs. 3000 crores mark in terms of revenue generation.

The final revenue figure for FY2021 is Rs. 3700 crores. Whereas its closest competitor Blue Dart has a revenue of Rs. 3280 crores in the preceding financial year.

Cross border business

In the coming years, Delhivery has plans to expand its operations beyond India, and its primary targets are Sri Lanka and Bangladesh. Successful penetration in these markets will open up a huge opportunity for the company.

Technological advancement

As one of the founders mentioned, they have plans to move beyond the traditional logistics and supply chain. They are planning to infuse the latest technology to streamline this process even further.

They will also lend this tech to other companies, which will diversify their revenue stream. This will put Delhivery in a position that is quite unique.

 

Lack of burning cash

Mergers and Acquisitions have not been the forte of Delhivery. They have taken a measured and not a very aggressive approach regarding this.

The company has completed various takeovers such as Primaseller, Gharpay, etc., but these are not high profile multi-million dollar takeovers that have created news.

Commenting on this, one company executive mentioned their change of approach and how they plan to be more acquisitive about it. However, they will still refrain from spending, for instance, $100 million on a takeover if it does not meet their valuation.

Besides these aforementioned pointers, a strong employee base paired with a robust business plan are two more reasons to be excited about this Delhivery IPO.

Nevertheless, it is always vital to look through the details of a company and its financials to make a knowledgeable decision.

Delhivery – a business beyond logistics

Delhivery is essentially a logistics firm, but they have other plans as well. These include –

• Setting up a technology centre in Seattle, which will work as a Software as a Service (SaaS) model. Hence, other firms can also use the technology without bearing initial development costs.
• Delhivery’s B2B vertical is now expanding, and their supply chain services which are only 1.5 years old, now contributing 10% of the total revenue. This section will eventually work to optimise the supply chain process of larger companies.

Bottom line

One of the founders, Sahil Barua, has said that the company has plans to become an operating system for logistics, something like an Android, but for this segment. Considering the business plan and investments, it is quite safe to say that Mr. Barua is not far from his evaluation.

Delhivery is a promising company that holds immense potential, as online shopping and e-commerce business will only increase in the coming days.

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Frequently Asked Questions

1. Who are the investment bankers for this Delhivery IPO?

No information regarding this question is available yet.

2. Who is the registrar of this Delhivery IPO?

The company has not disclosed this information yet.

3. When will Delhivery IPO be open for subscription?

No final dates regarding subscription have been announced yet by Delhivery.