Delhivery IPO opens today — Check out essential details related to the IPO
On May 11, logistics and supply chain business Delhivery is slated to launch its $5.235 million initial public offerings (IPO).
The IPO includes a fresh issue of 4,000 crore and an offer for sale of 1,235 crore. Carlyle, Japanese Softbank, Fosun group-owned China Momentum Fund, and Times Internet are among the investors selling shares in the IPO.
The company’s acquisitions and expansion plans will be funded with the net profits from the new IPO.
The following are some key aspects of the IPO: Express parcel delivery, heavy products delivery, PTL freight, TL freight, warehousing, supply chain solutions, and cross-border services are just a few of the services offered by Delhivery.
The company’s express parcel delivery network covers 17,500 PIN numbers in India, accounting for 90.6 per cent of the country’s 19,300 PIN codes.
Despite some significant increases in service offerings and sales, the company continues to lose money.
Delhivery is a Gurgaon-based Indian logistics and supply chain startup. Sahil Barua, Mohit Tandon, Bhavesh Manglani, Suraj Saharan, and Kapil Bharati created it in 2011. As of 2021, Delhivery operates more than 85 fulfilment facilities, 24 automated sort centres, 70 hubs, 7,500+ partner centres, and 3,000+ direct delivery centres. Providing third-party logistics and delivery services to e-commerce enterprises accounts for almost two-thirds of its income.
SSN Logistics Ltd, a Delhivery subsidiary, was established in May 2011. It was planned as a hyperlocal express delivery service provider for offline businesses, delivering flowers and food locally in the city of Gurgaon for the first few months after its inception. India’s internet retailing and e-commerce businesses were booming at the time, with international investors showing a significant interest in the sector.
Founders Barua and Tandon were attracted by the industry’s scale and potential while working as consultants for management consulting firm Bain & Company at the time. They chose to focus on it. Urban Touch, an online fashion and beauty retailer, became Delhivery’s first e-commerce client in June 2011. By August 2011, Delhivery had totally shifted its focus to providing logistics services to a number of e-commerce firms.
Delhivery raised its largest round of funding in March 2019, with a $413 million investment from SoftBank. Delhivery announced in May 2021 that it had raised an additional $277 million in a fundraising round headed by Fidelity, bringing its market capitalisation to roughly $3 billion.
In August 2021, Delhivery paid 1,600 crore (US$210 million) for Spoton Logistics, a B2B logistics company. Transition Robotics Inc., a California-based unmanned aircraft system firm, was bought in December 2021. Before its initial public offering in May 2022, Delhivery raised 2,347 crore (US$310 million) in capital from 64 anchor investors at a price of 487 (US$6.40) per share.
Delhivery announced the commencement of its initial public offering (IPO) in May 2022 for a total of 5,235 crore at a valuation of 35,283 crore.
Sahil Barua, the organisation’s founder, is the CEO, while Kapil Bharati, a co-founder, is the CTO. In December 2018, Managing Director Sandeep Barasia was named Chief Business Officer. He is in charge of the parcel, warehousing, and freight divisions’ profit and loss statements. At the same time, Ajith Pai, the company’s CFO, assumed the post of COO, overseeing the company’s operations, engineering, HR, and finance. Meanwhile, Amit Agarwal, an IIT-Kanpur alumnus who was previously the vice president of finance at Delhivery, has taken over as CFO. On March 30, 2021, two of the firm’s founders left the company.
SoftBank Group (22.78 per cent) and Nexus Venture Partners are the company’s major shareholders as of November 2021. (9.23 per cent ). The Carlyle Group, CPP Investment Board, Tiger Global, and Times Internet are among the other investors with a stake of over 5%. Until December 2021, Delhivery has raised approximately US$1.4 billion from investors in 13 financing rounds.
- ET Startup of the Year Award 2019
- Mahindra Transport Excellence Award 2018
- Young Turk Start-up of the Year 2016
The Success Story of Delhivery
The COVID19 pandemic pushed a lot of industries into the spotlight around the world, including logistics, especially in India. We’ve come a long way from when logistics was an afterthought; today’s industry stands out.
For entrepreneurs, the outbreak of the pandemic has brought both obstacles and opportunities to the fore. The most intriguing aspect is that logistics are involved in both the prospect and the opportunity. The pandemic presents an opportunity for everyday services such as e-grocery, food delivery, and e-commerce platforms to demonstrate their proficiency and interact in their customers’ daily lives, with logistics at the forefront.
Customers nowadays prioritise elements such as convenience and faultless service across all platforms, whether online or offline. Being able to provide these services gives these businesses a positive image in the minds of their clients and helps them establish their place in the market.
In the last few years, numerous firms have made their route to becoming unicorns by prioritising these traits and focusing on exclusive offerings. Delhivery is one such platform that has played a significant part in transforming delivery services in the country.
When it comes to e-commerce, logistics is one of the most important difficulties that the business encounters, and Delhivery has emerged, claiming to provide solutions to these issues. We’ll go over the rest of its voyage afterwards.
Last-mile delivery, third-party and transit warehousing, reverse logistics, payment gathering, vendor-to-warehouse and vendor-to-consumer shipping, and other services are all available through Delhivery. Times Internet is a supporter of the platform. In 2012, the digital product company acquired a minority investment in the site.
Fulfilment (warehousing), storage management, Omni-channel, and data services are among the services offered by Delhivery. The firm’s principal goal is to provide the best service possible while reducing the chances of being unable to resolve the customer’s difficulties.
You can watch this video in which Sahil Barua, the founder of Delhivery, talks about his journey and the platform.
Customers, small businesses, enterprises, and their rampant array of employees and partners benefit from the platform’s goods and services designed to establish trust and improve their lives. With elements such as network design, infrastructure, engineering, and technology capabilities, the company has shaken the nation’s logistics business.
Delhivery emphasises outstanding cost-effectiveness as well as a nationwide network of over 10,000 clients. The platform is driven by the desire to reduce time and distance, making the globe seem smaller to its users.
When it comes to e-commerce, the company wants to be the largest and most advantageous fulfilment platform in India. Delhivery strives to provide high-quality things to its customers and to keep them updated on a regular basis.
Delhivery faces stiff competition in the market. Flexport, Ecom Express, Blackbuck, DotZot, FSC, and Delex are some of its competitors.
Founders of Delhivery
Sahil Barua, Mohit Tandon, Bhavesh Manglani, Suraj Saharan, and Kapil Bharati are among the engineers who founded Delhivery.
The platform’s originator, Sahil Barua, is an IIM Bangalore graduate. He also worked at Bain & Company with Mohit Tandon, a graduate of the Indian Institute of Technology Kanpur.
Bhavesh Manglani, the COO of Delhivery, holds a B.Tech degree from Dhirubhai Ambani – ICT and an IIM degree from Calcutta.
Suraj Saharan, a Mechanical Engineering graduate of IIT Bombay, is a co-founder of Delhivery.
Kapil Bharati, who has a mechanical engineering degree from IIT Delhi, is another co-founder of Delhivery.
Business Model for Delivery
Delhivery’s primary business model is B2B (Business to Business), in which the platform supports services primarily for enterprises. The charges are extended to the businesses in this approach, while the customers are not charged.
The platform’s services can be separated into three main categories: warehousing, transportation, and commerce. The majority of the platform’s revenue comes from the transportation industry. The platform stresses a “plug and play” paradigm and provides a solution for all consumers who want to deliver their items to their customers.
The platform focuses on the distribution model, in which each organisation’s branch functions as a hub. This permits the parcels to be delivered to the customers without any problems.
When an item is ordered online, it is collected from the manufacturer and moved to a processing unit, where it is placed to be shipped to the destination. A first-mile operation is a name given to this procedure. Following that, a line haul is used to convey the commodities from the processing area to their final destinations. Meanwhile, the item is delivered from the delivery system to the consumer’s home in the final mile operation.
Origin of Delhivery
“It was 11.30 p.m., and we took our bikes and rode over to see the owner, Anuj Bajaj, who was surprised still there. He stated that he was closing the restaurant. He was thrilled that we had arrived since he needed to shift his personnel. “Bring it on, we’ll recruit everyone,” we said.
Sahil Barua and Suraj Saharan had ordered a meal from a nearby restaurant late one night. They ended up having a conversation with the delivery boy, after which they went to the restaurant and spoke with the owner. When they learned that the restaurant was closing, they took on the task of employing all of the existing employees. As a result, Delhivery was created.
The company began by seeking to provide a solution to restaurants and their problems in delivering food within an hour. This was primarily due to their perception of a need for a restaurant delivery network. That’s how they got started with hyperlocal.
Over the course of a half-hour, Sahil and Suraj steadily carried out and completed the orders for delivery orders for the eateries. Later, Mohit Tandon, Bhavesh Manglani, and Kapil Bharati joined the pair.
The founders recognised a vital component that many other competitors in the market had overlooked: the sharp difference between traditional and e-commerce delivery, as well as the vast possibilities that delivery within the e-commerce sector provides. As a result, they moved their business from e-commerce to hyperlocal.
Despite the long-term pandemic, Delhivery is one of the few startups maintaining its popularity.
“The reality is that there is a growing trend among businesses to collaborate with more organised logistics operators. The industry used to be more disorganised. As a result, organisations like Delhivery have expanded their businesses during this time due to increased demand.”
– Sahil Barua, Delhivery Chief Executive Officer & Co-Founder
What began as a small business with only five employees to carry out all operations such as delivery hookups, product service, and so on has grown to over 15,00 employees to carry out these operations and assure customer satisfaction.
According to Financial Express, the platform is now looking to invest Rs 300 crore in 18-24 months on development, which includes boosting fleet size and building trucking hubs, in order to fulfil the increased demand for more organised participants in the sector in the wake of the COVID-19 outbreak.
According to a recent Business Today article, the platform plans to add about 150 trucks to its fleet, as well as open trucking terminals in Delhi, Mumbai, and Bengaluru, as it aims to generate revenue of around Rs 7,000 crore in the next 24 months, up from Rs 2,800 crore the previous year.
The platform claims to have generated a revenue of Rs 2800 crore in FY2020, with a target of Rs 6000-7000 crore in the next two years.
According to a Mint report from 2020, Delhivery currently serves around 1.5 million orders per day, with nearly 3,000 tonnes of freight, in more than 17,500 pin codes spanning 2,300 towns, cities, and villages in India. Around 7,000 drivers and over 5,000 trucks are part of the platform’s network.
It all started in April 2012, when Delhivery announced its first round of funding, a $1.5 million Series A round, through Times Internet Limited. This was the catalyst for the platform’s growth and development.
Delhivery has raised a total of $934.5 million in investment via nine stages.
The platform’s most recent three funding rounds occurred in 2019, when Delhivery raised $413 million in a Series F funding round, making it a unicorn. SoftBank, Fosun International, and Carlyle Group were the lead investors in the round.
The platform received $150 million in June and $115 million in September of the same year, both from the Canada Pension Plan Investment Board (CPPIB). As a result, the platform’s most recent funds were raised in a Secondary Market round.
“Every 20 minutes, I get up and talk to someone on the squad.” Because of this, I know everyone’s first name in our office. We have that kind of transparency in our office where people can tell us what they believe. That is what motivates us.”
– Sahil Barua, Co-Founder and Chief Executive Officer of Delhivery
In its early months, what started as a simple hyperlocal rapid delivery service for offline retailers delivering from boutiques and restaurant cuisine restricted in the city of Gurgaon has grown into a major platform in e-commerce logistics. With the current demand for more efficient and well-organised logistics players expanding, the platform holds enormous promise for future growth and expansion.
The Best Startups: Supply-chain facilitator Delhivery is on the rise
Sahil Barua, Mohit Tandon, Bhavesh Manglani, Suraj Saharan, and Kapil Bharati decided to create a business in 2011. Although they were late to the e-commerce retailing game, they recognised a market need in logistics.
At the time, e-commerce companies either had their own delivery divisions, such as Flipkart, or employed courier companies specialising in document delivery or bulk goods. Neither was built to transport packages quickly or to accept payments.
“It was the most exciting Internet challenge we could think of,” says Barua, Delhivery’s Co-Founder and CEO. Delhivery began as a third-party last-mile logistics delivery company in Delhi, mostly serving e-commerce enterprises.
Barua, a tall, slender 29-year-old with stubble, graduated from IIM Bangalore and went on to work for Bain & Company as a management consultant. Saharan and Tandon, two additional founders, came from Bain, while Manglani and Bharati came from different companies. “In 2009, Bhavesh and I met at the Hard Rock Cafe in Mumbai. We were both drunk, and he was presented to me as a tech stud by a mutual buddy, “Barua thinks back. So when he wanted to start the business, he called Bhavesh, who agreed to join him.
“We bootstrapped for the first six months with our own money,” Barua says. “We spread throughout Delhi, with Chennai being the first city outside of the capital. At the time, we were averaging roughly 600 orders each day.”
On the other hand, the founders were dissatisfied with their status as a delivery service. Times Internet, one of its customers, invested Rs 6.6 crore in 2012. This led to the company entering the adjacent fulfilment centre market, which consists of warehouses where businesses can store goods and where Delhivery would test, package, and label them before shipment. The company already operates warehouses in Delhi, Bangalore, and Mumbai, with more ones set to open in Surat and Kolkata in the near future.
Customers used to have to wait four to seven days for their orders until Delhivery’s fulfilment centres opened. Barua states that after stocking with Delhivery, it can be as little as 24 hours. “The front end, which is the website, and the order management system are both available to retailers. This isn’t always the case for a competent warehouse management system. As a result, there were delays, “He clarifies.
Even in its delivery operation, the corporation has invested in a digital framework that has permitted differentiation. It delivers packages faster by employing numerous aircraft throughout the day and multiple forms of transportation – anytime a package needs to be delivered, the backend system automatically designs the quickest path, including which flight it should take.
In addition, the company does not use the typical hub-and-spoke strategy for parcel delivery. Products ordered within a city are always routed through the hub before reaching the spoke under this arrangement, causing delays. “We employ a distributed paradigm in which each branch can act as a processing centre in its own right. They can send products directly to customers rather than parking them in the hub. Barua explains how Delhivery can deliver goods faster than other logistics firms.
In 2013, Delhivery launched a new business unit that sells technology that helps online retailers manage their supply chains, such as order management systems. “We’ve evolved from a logistics company to a supply-chain enabler,” Barua explains.
Delhivery appears to have positioned itself well in terms of pricing. “We are less expensive than Blue Dart and FedEx, but more costly than some of the smaller players,” adds the CEO. Delhivery, like other courier services, charges a set fee based on weight, volume, and distance. Furthermore, there is a storage fee and an additional fee if cash-on-delivery is used.
However, Delhivery is not the only player in this field. Ecom Express and DotZot, a DTDC subsidiary, are two more e-commerce logistics players, signaling that traditional logistics firms are also gearing up to suit the specialised needs of e-retailers.
As a result, the market is not an easy ride. Last year, the e-commerce logistics startup Chhotu.in was forced to close due to a lack of funding. Rajesh Sawhney, the founder of Global Super Angels and a Chhotu.in investor, has a word of caution: “It’s a difficult industry. E-commerce and logistics are both capital intensive. It necessitates a large amount of capital as well as patience.”
Sawhney explains why Chhotu.in failed: “Last year, the market saw a lot of consolidation, and logistics outsourcing decreased. VC money was also a no-show.”
On the finance front, Delhivery appears to be doing well right now. Nexus Venture Partners and Times Internet contributed Rs 35 crore to the start-second up’s round of funding in August 2013. In three months, it may close the third round. Investors are counting on the company’s enormous growth potential, which it has previously proved.
It now delivers 40,000 to 50,000 orders every day, with clients including Flipkart, Snapdeal, eBay, Amazon, Myntra, Jabong, and Healthkart. It has 3,000 employees and operates in 135 cities. Around June of this year, Delhivery will begin international operations in Dubai and Sri Lanka.
Revenues have also increased dramatically, rising from Rs 17 crore in 2012/13 to Rs 62 crore this year. The company’s current monthly revenue run rate is between Rs 8 and Rs 8.5 crore. By September of this year, the company aims to be profitable.
Delhivery distributes deliveries to almost 90% of India, but can its initial public offering (IPO) provide investors with a profit? Here’s what the experts have to say.
From May 11 to 13, logistics and supply chain business Delhivery will undertake its $5.235 crore initial public offering (IPO).
Because of unpredictable market conditions and the 21,000 crore LIC IPO, which could suck liquidity from the market, the company has lowered the issue size to 5,235 crore from 7,460 crore.
The public offering by Delhivery, which wants to raise INR 5,235 crore from the market, includes 4,000 crore in new equity shares and 1,235 crore in existing investor sales via the offer for sale (OFS) mechanism. Carlyle, Japanese Softbank, Fosun group-owned China Momentum Fund, and Times Internet are among the investors selling shares in the IPO.
Express parcel delivery, heavy products delivery, PTL freight, TL freight, warehousing, supply chain solutions, and cross-border services are just some of the services offered by Delhivery.
Delhivery is soliciting funding to help it expand in the future.
With an eye on future growth, the company expects to use the net funds from the IPO to fund acquisitions and expansion ambitions.
Delhivery purchased Spoton in August 2021 in order to expand their PTL freight services company.
The company’s rapid parcel delivery network covers 17,500 pin codes, accounting for 90.6 per cent of India’s total 19,300.
In the last three financial years, the no. of active consumers has increased fourfold, with good development in Pincode reach and delivery places.
What are the analysts saying – should you subscribe to the Delhivery IPO or not?
Despite significant increases in service offerings and income, Delhivery continues to lose money. One of the reasons some analysts have advised investors to avoid the IPO is because of this.
According to BP Equities analysts, investors should avoid the IPO because it is similar to new generation enterprises like Zomato and PayTM, which have disappointed investors and wiped off a significant amount of their money.
According to a study by BP Equities, the issue is aggressively priced at the upper end of the pricing band.
“Despite an increase in revenue, the corporation continues to lose money. According to the research, we advise investors to “Avoid” this issue because of the negative market attitude against similar category stocks (Zomato, PayTM).
It’s worth noting that, while the corporation is still not profitable, its losses in FY 2021-22 were four times lower than in FY 2019-20.
Despite the company’s revenue rise, Angel One analysts are cautiously optimistic.
“No other peer group in the Indian marketplaces has a similar business model as Delhivery.” It has achieved strong revenue growth of 82 per cent in the first nine months of FY2022, and it is expected to turn EBITDA positive by the end of the year. According to a report by brokerage Angel One, “we are providing a NEUTRAL rating to the Delhivery IPO because of the costly valuation.”
Choice Broking analysts agree and have awarded the issue a “Subscribe with Caution” rating due to the company’s loss-making operations.