Delhivery slides below IPO price in grey market ahead of Tuesday listing

Delhivery shares have fallen below the IPO price in the grey market ahead of the listing.

The stock hit its peak premium on May 1 after seeing a dull response from retail and high net worth investors. The premium fell to Rs 3-4 on Wednesday. The dealer said it turned minus 3-6 on Thursday.

The firm with weak cash flows reported continued losses in the grey market. The IPO price was set at Rs 487 a share.

The company had a loss of Rs 891.14 crores for the nine months ended December 2021, and a loss of Rs 416 crores for the fiscal year of FY 21. In the nine months ended December, revenue was $4,911.

In FY21, it had a negative free cash flow of Rs 246 crore. In the first nine months of FY22, the freight, handling and servicing cost has gone up from Rs 4,000 to Rs 8,500.

The firm is asking for a lot of money. The other players are making money. Fuel cost increases, supply chain and logistics issues will keep pinching them more. Analysts said that there are better players in the listed space that are already making profits.

According to analysts, the combined market cap of peers is less than the market cap of Delhivery, which is around Rs 35000 cr.

Future equity dilutions are an overhang as the company may need to keep diluting to keep doing their capex. They need to invest in physical infrastructure to fulfill those incremental orders that will add to the cost.

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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