Delhivery Limited

Delhivery Limited provides a full range of logistics services, including express parcel delivery, heavy goods delivery, PTL freight, TL freight, warehousing, supply chain solutions, cross-border express and freight services and supply chain software, along with value added services such as e-commerce return services, payment collection and processing, installation and assembly services and fraud detection. Delhivery is the largest and fastest-growing fully integrated Logistics services player in India by revenue as of FY21. They provided supply chain solutions to a diverse base of 23,113 Active Customers (excluding those serviced by Spoton) such as e-commerce marketplaces, direct-to-consumer e-tailers and enterprises and SMEs across several verticals such as FMCG, consumer durables, consumer electronics, lifestyle, retail, automotive and manufacturing. The key features of the business: (1) Integrated Solutions (2) Proprietary logistics operating system (3) Data Intelligence (4) Automation (5) Unified Infrastructure and Network (6) Asset-light operations. Company has built a nation-wide network with presence in every state, servicing 17,488 PIN codes during the nine months period ended December 31, 2021, or 90.61% of the 19,300 PIN codes in India as of December 31, 2021 (per India Post). The network infrastructure includes 122 gateways, 21 automated sort centres, 93 fulfilment centres, 35 collection points, 31 returns processing centres, 244 service centres, 132 intermediate processing centres and 2,521 direct delivery centres as of December 31, 2021, including Spoton's 40 gateways and 138 service centres. The self-delivery network is augmented by 1,209 partner locations that expand the reach, provide critical flexible capacity and redundancy and Spoton's service centres are augmented by 205 additional locations operated by business associates. As per financial performance, Delhivery Limited has posted total income/net profits (loss) of Rs 1,694.87 cr. / Rs (1,738.30) cr. (FY19), Rs 2,988.63 cr. / Rs (268.80) cr. (FY20), Rs 3,838.29 Cr. / Rs (415.74) Cr. (FY21) and Rs 4,911.41 Cr. / Rs (898.74) Cr. (9M FY22). So company has posted consistent high sales growth, over last couple of years, but not able to generate profits. Issue is priced at a P/BV of 5.23 as per NAV of Rs 93.19 on 31.12.21. As company is making losses, so there is no point in calculating PE. As per RHP, Comparison between listed peers are shown in above table. On BRLM's front, four BRLMs are associated with this IPO, and have handled around 49 IPO in last three fiscals. From last 10 IPOs, 4 are opened below issue price and remaining are opened above issue on the day of listing. As of now, 5 are trading below and other are trading above issue price. ( As on 03.05.22) As per financials, Delhivery Limited has shown good sales growth, RoNW is (14.66)% and P/E is negative as company is making losses consistently, so IPO looks aggressively priced. Company is in logistics business and with aggressive growth plans, it may do well in long term. Performance of BRLM is poor. So, we are giving AVOID rating to this IPO.