InvestorQ : Do you suggest that I consider investing in the Delhivery IPO and what factors should I look at?
swati Bakhda made post

Do you suggest that I consider investing in the Delhivery IPO and what factors should I look at?

Sam Eswaran answered.
10 months ago

That is a tough call on a generic basis, so it is best to consult with your financial advisor or broker and then take a call. However, let me share some pros and cons that can perhaps be of some help to you. You can take a look at these points, but you must still consult your financial advisor before making the IPO investment.

a) Delhivery has reported compounded annual growth rate (CAGR) in revenue of 48.5% over the last 2 years. That trend has built further strength if you annualize the 9 month figures for the period ended December 2021.

b) One of the biggest value additions of the company is the proprietary technology and enablement platform that is the IP of the company. This backbone is entirely developed in-house with state of the art expertise and multiple simulations and iterations.

c) As mentioned earlier, Delhivery relies on vast amounts of data and relatively sophisticated algorithms to serve supply chain logistics. Apart from this being a high growth segment, this also opens up new vistas for business expansion.

d) Th business model of Delhivery is extremely asset-light. The model is more of a SAAS model that only owns and operates the technology for the logistics backbone. This is designed to operate with multiple partners in a distributed manner, making it high ROE.

Let me finally consider some peer group comparison, In terms of top line, Delhivery is larger than Blue Dart and Mahindra Logistics. However, Delhivery is still loss making logistics play as much of its investments are front-ended. Price/sales ratio for Delhivery is twice that of Blue Dart, although there is an IP factor you cannot ignore. Investors must invest cautiously and only with a long term perspective, especially the recent money run on digital stocks.