Delhivery has Outlier Growth Prospectswith Profit Round the Corner: Ventura Securities
May 13, 2022: Calling Delhivery as the proxy for eCommerce growth in India, leading brokerage firm Ventura Securities has said in its report that the logistics firm has outlier growth prospects with profits being just round the corner.
Citing the highly fragmented nature of the Indian logistics markets, the report adds that Delhivery is uniquely positioned to emerge as the sustainable business leader in an essential vertical having a total addressable market size of $316 billion.
The company’s IPO comes at a time when the Indian government is focusing its investments on infrastructure-led growth through a slew of measures including its flagship initiative- the PM Gatishakti Program. The move will likely benefit the company in long term.
Some of the company strengths highlighted by VenturaSecurities include that Delhivery’s revenues will grow at a CAGR of 56.7%, touching an amount of Rs 14026 crore by FY 2024. The integrated portfolio of logistics services allows Delhivery to deliver services which other competitors cannot do. The logistics major is being valued at 2.4 times the FY24 EV/Sales. This is attractive when compared to BlueDart and TCI Express that trade at the ratio of 3.1X and 4.1X their FY24 revenues.
Delhivery’s revenue base is well diversified into major segments like express parcel, supply chain, Part truck load and cross borderservices forming a large part of the total revenue. A few trends like shift in trends from unorganized to organized players, evolving customer trends and emergence of new markets will be helpful for Delhivery, the report says.
To recap, Delhivery, India’s largest fully integrated logistics company has filed RHP with SEBI for its INR 5,235 crore IPO. The issue will close for subscription on May 13. The anchor investment was received from top long only funds comprising of foreign and local funds. Out of INR 5,235 crore fund raise, INR 4,000 crore comprises of fresh issuance while the rest is for offer for sale.
Delhivery will utilise INR 2,000 crore for funding organic growth initiatives such as building scale in existing business lines and developing new adjacent business lines, expanding network infrastructure, and upgrading and improving our proprietary logistics operating system and around INR 1,000 crore for funding inorganic growth opportunities through acquisitions and other strategic initiatives.