Delhivery IPO oversubscribed 1.63x on day 3 on QIB support

Mumbai: The ₹5,235-crore initial public offering (IPO) of logistics and supply chain solution startup Delhivery received bids for 1.63 times the shares on offer on the third and final day of the sale. However, all categories, barring qualified institutional buyers (QIBs), were undersubscribed.

The issue received bids for 101.7 million shares, or 1.63 times the 62.5 million on offer.

The QIB category was subscribed 2.66 times, while the portion reserved for retail bidders was subscribed to the tune of 57%.

The part reserved for high networth individuals saw bids for just 30% of shares. The employee quota saw bids to the extent of 27%. The issue, which opened for subscription on May 11, was priced at Rs 462-487 per share. The company reserved 75% of the net offer for QIBs and 15% for non-institutional buyers (NIIs). The remaining 10% of shares were for retail bidders.
"A sharp decline in the secondary market in the last few weeks, and poor performance of new-age tech companies post listing, had an impact on the subscription of Delhivery IPO," said one of the bankers to the issue.

The Rs 18,300-crore issue of One 97 Communications, owner of Paytm, was subscribed 1.9 times in November, while the Rs 9,375-crore Zomato IPO got bids at 38 times what was on offer. The Rs 5,352-crore FSN E-Commerce (Nykaa) issue and Rs 5,265-crore PB Fintech (Policybazaar) IPO were subscribed 82 times and 17 times, respectively. However, the five stocks have declined between 50% and 70% from their high after listing. The broader markets have been sliding amid geopolitical tensions, inflation concerns and worries about tighter monetary policy stalling global growth.

Smaller Offering
The Delhivery offer comprises a fresh issue of shares for Rs 4,000 crore and an offer for sale by some existing shareholders aggregating Rs 1,235 crore. The company cut the issue size to Rs 5,235 crore from the Rs 7,460 crore it had planned earlier due to challenging market conditions.

On Tuesday, Delhivery raised Rs 2,400 crore from 64 anchor investors by allotting 48 million shares at Rs 487 each - the upper end of the price band for the IPO. Some foreign investors who participated in the anchor share allotment were Tiger Global, Bay Capital, Steadview, Fidelity, Baillie Gifford, Schroders, Amansa, Aberdeen Standard Life, GIC, Government Pension Fund Global and Invesco HK.

Some brokerages had advised investors to avoid the issue due to expensive valuations.

"Considering the trailing 12 months sales of Rs 5,813 crore on a post-issue basis, the company is going to list at a market cap to sales of 6.07 times, with a market cap of Rs 35,283 crore, whereas its peers BlueDart and Mahindra Logistics are trading at the market cap to sales of 3.66 times and 0.84 times, respectively," said Marwadi Financial Services.