Ahead of IPO, Delhivery shares nosedive in unlisted market

New Delhi: Shares of logistics player Delhivery plunged 35 per cent in less than a day in the unlisted market after the company announced the price band for its upcoming IPO. The stock price fall from its all-time peak is even steeper.

Shares of the company were exchanging hands in the range of Rs 700-750 in the unlisted market just a few hours ahead of the announcement of the price band of Rs 462-487 apiece. From the peak price of Rs 950 per equity share, the scrip has eroded about half of the investor wealth.

Dealers active in the unlisted market said buyers are not willing to buy shares as the price band for stake sale is quite low, and existing investors are not willing to take a hairline cut of 30 per cent.

Dinesh Gupta, co-founder, UnlistedZone said those who bought at higher levels are trapped now as there is a mandatory lock-in of six months.

"Investors should understand that shares in the unlisted market generally trade at astronomical valuations and one should not make a blind bet in this space," he added.

Trading of unlisted shares of Delhivery has remained thin even earlier following a rout in the recently listed tech stocks, which had turned investors cautious.

Sandip Ginodia, CEO, Altius Investech, said that startup stocks neither justify their valuations in the unlisted space nor in the listed market. None among CarTrade Tech, Paytm, Zomato and PolicyBazaar are trading over the issue price.

"We have always been cautious over loss-making companies which lack sound fundamentals. We don't believe in businesses that burn cash. Investors should focus on free cash flow, instead," he said.

The initial public offering Delhivery will open for subscription between May 11-13. The company has trimmed its issue size from Rs 7,460 earlier, and now will be raising Rs 5,235 crore from its initial stake sale.

Gurugram-based Delhivery is the largest fully integrated logistics services player in India by revenue. It has built a nationwide network in every state, servicing 17,045 PIN codes or 88.3 per cent of the 19,300 PIN codes in India.

It became a unicorn in 2019 when it raised $413 million in a Series F round led by SoftBank Vision Fund. Delhivery provides a full range of logistics services, along with various value-added services.