Delhivery's IPO will be second biggest this year after LIC

Logistics services provider Delhivery is likely to launch its downsized initial public offering (IPO) this week, said people in the know.

The Softbank-backed firm may trim its issue size from Rs 7,460 crore to Rs 5,500 crore to align with the volatile market conditions, sources said.

Sources added the fresh issue component of the IPO could be reduced to Rs 4,500 crore and the OFS component to Rs 1,000 crore.

The company intends to wrap its IPO before May 15, failing which it will have to update its offer document with the latest financial numbers.

In a similar move, state-owned insurance giant LIC downsized its IPO size to just Rs 21,000 crore from an estimated Rs 60,000 crore earlier.

Industry players said the recent IPOs of Campus Activewear and Rainbow Children's Medicare were well-received by investors, which has given investment bankers the confidence to Delhivery’s IPO close on heels with LIC.

According to its draft red herring prospectus (DRHP) filed with market regulator Sebi in November, Delhivery intended to raise Rs 5,000 crore in fresh capital — half of which was to fund organic growth initiatives and about Rs 1,250 crore was earmarked for inorganic growth opportunities.

The IPO also had an offer for sale (OFS) component of Rs 2,460 crore.

Delhivery’s IPO will be second biggest this year after LIC and among the top-five since 2021.

According to its DRHP, the company is India’s largest and fastest growing fully integrated logistics player by revenue as on FY21.

In the run-up to its IPO, Delhivery had strengthened its board by appointing industry veterans such as Kalpana Morparia, previously the chairman of JP Morgan, Romesh Sobti, former CEO and managing director of Indusind Bank, and Saugata Gupta, CEO and managing director of Marico, as independent directors.

The Gurugram-based firm is seen as a proxy to play the fast-growing e-commerce theme.

It provides a full-stack range of logistics services including warehousing and supply chain software.

The firm also provides value-added services such as e-commerce return services, payment collections, installation services.

Delhivery is also India’s fastest growing third-party express parcel delivery player in India.

Delhivery’s shipment volume stood at 289.2 million orders in FY21.

The firm’s revenues have grown from Rs 1,654 crore in FY19 to Rs 3,646 crore in FY21 at a compounded annual growth rate of 48.5 per cent.

Delhivery’s financials for the full year FY22 are still not available.

In a pre-IPO note, Motilal Oswal had said the domestic logistics sector offers a large addressable opportunity as it is pegged to grow at an annualised rate of 9 per cent to $365 billion between FY20 and FY26.

The domestic brokerage expects organised players to clock higher growth due to their focus on technology and automation.