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New Delhi: Amid desolate market sentiments, the initial public offering (IPO) of Delhivery is likely to be the litmus test for other startup stocks, said market experts.

Dalal Street analysts believe that after the recent rout in IPO or platform-based stocks, Delhivery IPO will test the relish for other upcoming startup IPOs, pipelined to hit primary markets to raise funds with initial stake sales.

Ajit Mishra, VP- Research, Religare Broking said that Delhivery IPO will be a litmus test for new-age companies as investors did not have a nice experience with a recently listed platform or startup stocks.

“Investors, particularly the new and retailers, have burnt their hands in the new age companies and this will keep them off from going gung ho over the IPO,” he added.

“Investors must have learnt their lessons to avoid loss-making and highly valued issues.”

The brokerage has recommended avoiding Delhivery IPO in its report citing expensive valuations, loss-making business and negative cash flow of the company.

Fintech firm, One97 Communication, the parent company of Paytm has tanked more than 75 per cent from its issue price of Rs 2,108 to Rs 520.30 on May 12, 20221. The scrip never topped even its issue price.

Another recently listed startup stock, Zomato, dropped 70 per cent from its peak to Rs 51.55 on Thursday, falling below its issue price of Rs 76.

Yesha Shah, Head- Equity Research, Samco Securities, said that while the response for Delhivery IPO will certainly help to gauge investor appetite in startup IPOs, more so the valuation reset that may deter such companies from going public for some time.

“Market participants have learned the hard way that growth at any valuation is unacceptable, and decent participation in LIC IPO received can also be attributed to the fact that the valuation was extremely attractive,” she added.

Other startup stocks such as PB Fintech (63 per cent down), CarTrade Technologies (63 per cent down), and FSN E-Commerce Ventures or Nykaa (53 per cent down) have been among the top wealth eroders on Dalal Street.

Technology-based stocks have taken a big hit in the current market correction as an environment of high-interest rates does not bode well for the so-called ‘growth’ stocks, said market experts.

Kanika Agarrwal, Co-founder, Upside AI, said that Delhivery is a logistics company, with a real-world business that either uses tech-enabled services and provides solutions.

“Interest for the IPO could be muted especially given its financials are not the most healthy in the industry and market sentiments are quite bleak,” she added. “In the long run, Delhivery’s financial and operational performance will dictate its share price.”

Other startup counters, including Le Travenues Technology (Ixigo), OYO Rooms, One MobiKwik Systems, Droom Technologies and API Holdings (Pharmeasy) have filed their DRHP with Sebi.

According to media reports, Navi, Snapdeal, Tracxn Technologies, ANI Technologies (Ola), Byju’s, Pine Labs, Swiggy and Flipkart are also rumoured to hit the primary markets in the near term.


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