Delhivery Makes It Official: Delays IPO Amid Market Correction And Volatility

Amid an ongoing uncertainty over delayed IPOs, it looks like another Indian new age tech startup has deferred plans for its public listing.

A report by ET states that delivery giant, Delhivery, has postponed its IPO.

Speaking at the sidelines of an event, CEO Sahil Barua said, “Our view was that there was no point in taking our investors through a bumpy ride in this quarter (considering market conditions) and having to answer questions which aren’t related to the business. So we decided to wait it out.”

While murmurs of delaying the IPO made several rounds earlier, this is for the first time that a senior executive from Delhivery has confirmed the news.Delhivery had planned to list on the Indian bourses in the first quarter of 2022, but, it seems now that the plan has hit a major roadblock.

Barua was also quoted as saying that, “We want to go public when our company is well understood. While valuation is one of the factors (for the delay), it is not a critical factor – since we do not require the capital, and market conditions currently are bumpy.”

He further added that the right time for the company to look at public markets will be when the focus is on the company’s performance and not on geopolitical and other macro factors, plaguing the public markets.

The Backdrop

The startup was founded in 2011 by Mohit Tandon, Sahil Barua, Bhavesh Manglani, Kapil Bharati and Suraj Saharan. 

Delhivery provides a full suite of logistics services such as parcel transportation, FTL (Full Truckload) and LTL (Less than truckload) freight, reverse logistics, cross-border, B2B & B2C warehousing, end-to-end supply chain services and technology services.

The startup had last raised $125M in its Series I funding round led by VC firm, Addition, in September last year. It had previously also raised $275 Mn in its Series H funding round in May of 2021. In total, the startup has raised a cumulative amount of $1.4 Bn till date.

Interestingly, the startup continues to burn cash. This could also have spooked the investors amid an ongoing market correction. During the first quarter of FY22, the startup had recorded a consolidated net loss of INR 129.58 Cr, against a revenue of INR 1,317.72 Cr.

The startup has been bogged down by increasing costs especially in freight handling and servicing and employee benefits. Freight servicing expenses stood at INR 867.9 Cr while employee benefit expenses were around INR 206.45 Cr. 

The IPO That Was To Be

The SoftBank-backed startup had earlier filed its DRHP late last November. Later in January this year, market regulator SEBI had approved the logistics unicorn’s plan to file INR 7,640 Cr Initial Public Offering. 

Delhivery had planned to raise INR 7,640 Cr through the listing including a fresh issue of shares worth INR 5,000 Cr and an offer-for-sale (OFS) of INR 2,460 Cr. 

SoftBank was supposed to be offloading shares worth INR 750 Cr while Carlyle Group was likely to sell shares worth INR 920 Cr. Another investor, Times Internet, was also to liquidate almost INR 330 Cr of its holdings in the IPO.

In addition, the three founders—Kapil Bharati, Mohit Tandon, and Suraj Sahara— were to offload shares worth INR 14 Cr, INR 40 Cr and INR 6 Cr respectively.

Marred By Market Volatility

The decision to postpone its IPO plans amidst the ongoing market volatility, which has testified investors and has made senior executives of many big startups jittery.

This also comes amidst a widespread panic in the startup world. Media has been agog with reports of hospitality startup, OYO, mulling slashing its IPO size by as much as 50%. Even epharmacy, PharmEasy, has also reportedly slashed its IPO valuation amid prevailing conditions.

Add to this, Indian tech stocks have been taking a beating left, right and centre owing to ongoing tensions between the US and Russia over Ukraine.This has also been attributed to a major correction in the U.S public markets as well as prospects of interest-rate hikes and increased volatility.

It has been evident as new-age listed startups including Zomato, Nykaa, Paytm have tumbled on public bourses. Shares of One97 Communication, Paytm’s parent company, are down in the dumps, plunging from INR 1,335 to INR 538.90 on Wednesday. In total, as much as INR 1 Lakh Cr worth of startup’s market cap has eroded in the past few months.

Continuing the trend, delivery giant Zomato has fallen nearly 41% since the beginning of this year. PolicyBazaar has fallen from an all-time high of INR 1332 to INR 721.35, nearly halving in value. In addition, etailer Nykaa too has tumbled from an all time high of INR 2437.10 to a paltry INR 1,695, since its debut. 

According to Statista, the Indian logistics market stood at around $ 250 Bn in FY21. This was estimated to grow to $380 Bn by 2025, at a CAGR of 10-12%.