Logistics unicorn ’s initial public offering (IPO) saw a dull response from investors on the second day of bidding as well.
The Gurugram-based startup’s offering was subscribed 0.23X at the end of the second day on May 12, implying a 23 percent subscription of the total allotment so far, according to data from BSE. This follows a 0.21X subscription on day one.
The weak reaction follows a global bearish market sentiment.
Over Wednesday and Thursday, equity markets across the globe as well as India took a bashing. The 30-stock S&P BSE Sensex, on Thursday, dived over 1,386 points — or 2.56 percent — to touch the day’s low of 52,702.3 points. At the end of the trading day, the Sensex closed over 1,158 points, or 2.14 percent lower at 52,930.31 points.
The tepid subscription numbers of Delhivery need to be seen in context of the varied challenges that the IPO has been facing. It followed the mammoth IPO of the Life Insurance Corporation (LIC) of India, which saw an oversubscription of 2.83X, and closed on May 9.
The weak reaction to Delhivery’s IPO follows a weak sentiment in the global bearish market
Also, in an unprecedented move on May 4, the Reserve Bank of India (RBI) hiked the repo rate – the rate at which banks borrow from the central bank — by 40 basis points, or 0.40 percent, in an attempt to tame rising inflation. This had a signalling effect on the equity markets as rising inflation pushed the central bank to move towards tightening of liquidity.
While the subscription numbers may look lacklustre, investors should ideally be taking respite in the fact that Delhivery has already got anchor investors’ subscription worth Rs 2,347 crore a day before its IPO opened for subscription.
Speaking of the fundamentals, as of December 31, 2021, Delhivery’s balance sheet carries cash and cash equivalents worth Rs 360.9 crore and financial invests with a market value of Rs 2,144.8 crore, spilt between debt instruments worth Rs 407.3 crore and investments in mutual funds worth Rs 1,737.4 crore, which should collectively be the second reason for respite.
Delhivery, which opened its IPO on May 11, set a price range of Rs 462-487 for its shares. It is aiming to raise Rs 5,235 crore through the IPO, which closes for subscription on Friday, May 13.
The company had reduced its IPO allotment size to Rs 5,235 crore from Rs 7,460 crore it had filed earlier.
By the end of second day, the company’s retail portion of the offering was subscribed 40 percent, followed by the QIB (Qualified Institutional Buyer) portion which was subscribed 29 percent. Non-institutional investors’ portion was subscribed 1 percent.
The employee portion was subscribed by 12 percent. About 457,665 are allotted for the employees,
Of the total 62.5 million shares offered, investors bid for 14.5 million shares at the end of day 2 of its IPO.
A day before its IPO, on May 10, Delhivery had raised Rs 2,347 crore from 64 anchor investors including Tiger Global, Bay Capital, Steadview, Fidelity, Baillie Gifford, Schroders, and Aberdeen Standard Life.
Sahil Barua is the Co-founder and CEO of Delhivery
Founded in May 2011, Delhivery started as a transportation services provider by Sahil Barua, Mohit Tandon, Bhavesh Manglani, Suraj Saharan, and Kapil Bharati. It is a third-party logistics service provider offering a range of supply chain services including last-mile delivery, third-party and transit warehousing, reverse logistics, payment collection, vendor-to-warehouse, and vendor-to-customer shipping.
