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

According to investment bankers familiar with the arrangements, logistics operator Delhivery expects to undertake its initial public offering (IPO) in the June 2022 quarter.

The Gurugram-based firm submitted its draught red herring prospectus with the Securities and Exchange Board of India in November (Sebi). The IPO was approved by Sebi in January.

After a record-breaking 2021, the IPO market has been roiled by difficult market circumstances caused by the US Federal Reserve's hawkish turn and Russia's invasion on Ukraine.

In the last week, the market has improved as discussions of a ceasefire between Russia and Ukraine have progressed. If market circumstances improve, we may see huge issuances like Delhivery begin their share sale "opined a banker”, in the last week, four initial public offerings (IPOs) have been announced, compared to only three in January and February.

The IPO for Delhivery is expected to be worth roughly Rs 7,000 crore. In terms of revenue, it is India's largest multimodal, fully integrated logistics and supply-chain company (FY21 basis).

In a recent statement, brokerage Motilal Oswal stated that the domestic logistics industry provides a substantial addressable potential, with yearly growth of 9% to $365 billion expected between FY20 and FY26. The organised players are expected to develop faster because to their "unwavering concentration on technology and automation," according to the report.

The logistics market is now highly fragmented, with structured firms accounting for less than 4% of the market. According to Motilal Oswal, the transition from the unorganised to the organised sector is already begun.

"With the implementation of GST, demand for national, integrated supply chain service providers with integrated warehousing and transportation models has increased, allowing customers to scale operations at lower fixed costs, while creating opportunities for optimising footprints and capacity utilisation, lesser inventory, and faster and cheaper fulfilment," wrote Motilal Oswal analysts Alok Deora and Dhirendra Patro in a note.

Delhivery has an asset-light business strategy, a wide client base, and advanced network infrastructure, according to the brokerage.

Delhivery, according to Motilal Oswal, has patented technological solutions that allow it to provide integrated logistics services to a wide range of customers. Its technological stack comprises of more than 80 apps that cover all aspects of the supply chain.

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