Delhivery stock plunges below IPO price in grey market ahead of listing
By MYBRANDBOOK
The shares of Delhivery have slipped below the IPO price in the grey market ahead of listing on May 24. Delhivery is a logistics and supply chain startup.
The company received a dull response for its IPO from retail and high net worth investors, the stock price also plunged in the grey market. The stock hit peak premium of Rs 7-8 on May 1. The premium fell to Rs 3-4 on Wednesday. On Thursday, it turned minus Rs 3-6, a dealer said.
The company gets a lukewarm response from the grey market due to continued losses reported by the firm with weak cash flows. Its IPO price band was set at Rs 462-487 a share.
The company made a loss of Rs 891.14 crore for the nine months ended December 2021 and in FY21 it posted Rs 416 crore loss. Revenue in the nine months ended December was Rs 4,911 crore; FY21 revenue was Rs 3,838 crore.
In FY21, it reported a negative free cash flow of Rs 246 crore versus Rs 848 crore in FY20. At the same time, freight, handling and servicing cost has gone up from Rs 2,026 crore in FY21 to Rs 3,480 crore in the first nine months of FY22 (Rs 4,000 crore in FY22A).
"The firm is demanding 5.5x price to sales. All other logistics players are making profits. Given fuel cost increases, supply chain and logistics issues, the costs for fulfilment will keep pinching them more. There are better players in the listed space already making profits and as an investor one can look at them," analysts said.
The IPO got lukewarm response from retail and high net worth investors with their categories subscribed just 0.57 and 0.3 percent respectively. The institutional buyers booked 2.66 percent of their quota.
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