Delhivery Ltd. IPO (May Subscribe)

Delhivery provides a full range of Logistics services, including delivery of the express parcels and heavy goods, PTL freight, TL freight, warehousing, supply chain solutions, cross-border Express, freight services, and supply chain software.

The company also offers value-added services such as e-commerce return services, payment collection and processing, installation & assembly services, and fraud detection. Delhivery is the largest and fastest-growing fully integrated Logistics services player in India by revenue as of FY21.

The company has proprietary technology systems that enable it to offer integrated Logistics services to a wide variety of customers. Its technology stack consists of over 80 applications for all supply chain processes. The company has built a nationwide network, servicing 17,045 PIN codes in the six months ended June 30, 2021, or 88.3% of the 19,300 PIN codes in India.

Its 164-network infrastructure includes 124 gateways, 20 automated sort centers, 83 fulfillment centers, 35 collection points, 24 returns processing centers, 249 service centers, 120 intermediate processing centers, and 2,235 direct delivery centers as of June 30, 2021.

The company has an engineering, data sciences, and product team of 474 professionals. The company served a diverse base of 21,342 active Customers across e-commerce, consumer durables, electronics, lifestyle, FMCG, industrial goods, automotive, healthcare, and retail.

The company acquired Spoton, an express PTL freight service provider in India, in August 2021.

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Key Highlights

• Network – Delhivery has built a nationwide network with a presence in every state, servicing 17,488 PIN codes during the 9 months ended December 31, 2021, or 90.61% of the 19,300 PIN codes in India as of December 31, 2021 (per India Post).

Their network infrastructure includes 122 gateways, 21 automated sort centers, 93 fulfillment centers, 35 collection points, 31 returns processing centers, 244 service centers, 132 intermediate processing centers, and 2,521 direct delivery centers as of December 31, 2021, including Spoton’s 40 gateways and 138 service centers.

• Company’s team of 505 engineering, data sciences, and product professionals, as of December 31, 2021, has built proprietary technology systems that enable them to offer integrated logistics services to a wide variety of customers.

• Vast data intelligence capabilities – Delhivery collect, store, process, structure, and analyze vast quantities of transaction data such as location data, product information, shipper and consignee information, data from operational facilities, activities, and devices, performance data for their field teams, data on traffic and weather from several internal and environmental sources.

• Company’s aim is to meet their customers’ requirements for overall, rather than mono-line, supply chain reliability, and efficiency. They provide a full range of logistics services, including express parcel delivery, heavy goods delivery, PTL freight, TL freight, warehousing, supply chain solutions, cross-border express and freight services, and supply chain software, along with value-added services such as e-commerce return services, payment collection and processing, installation and assembly services and fraud detection.

• Delhivery has built an asset-light business model that has enabled them to scale up volumes rapidly, with lower fixed costs and greater flexibility. While they design, operate, and control their most critical network nodes (fulfilment centre and gateways), partners play a significant role in all their other operations – pickup, mid-mile (trucking and air), and last-mile delivery. This enables them to maintain control over operational quality metrics and improve overall network performance.

Valuation

Due to negative earnings so far, its P/E cannot be measured. According to management, due to the new accounting system, it kept providing certain costs that kept its bottom lines in red despite growth in top lines.

However, it is now on the verge of turning profitable. Considering all this, we feel the IPO is expensive but considering its growth plans and bright prospects ahead, only high-risk, long-term investors may Subscribe from a long-term perspective.

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