Shares in logistics unicorn Delhivery tumbled over 15% to Rs 473.50 on Thursday after it followed its latest forecast of modest growth in shipping volume for the remainder of the fiscal year.
The company’s share price surpassed the initial public offering (IPO) price of Rs.487 per share for the second time since the Gurugram-based startup’s IPO.
In its quarterly business update to its shareholders, Delhivery shared its concerns about “high inflation, with average user spend and total number of active shoppers flat or lower during the ongoing festive period”.
It further added that volumes at our supply chain services and truckload (TL) businesses decreased sequentially for the three months ended September 30, 2022, due to “anticipated seasonal effects” in its customers’ businesses.
Delhivery, the largest fully integrated logistics service provider in India, had raised Rs 5,235 crore in its IPO in May. The issue was 1.63 times oversubscribed. It is listed on the National Stock Exchange at a premium of 2% at a price of Rs.495.2.
Since then, the company’s shares have fallen 11.8%. It said it remains vigilant on market sentiment.
Other tech stocks — including Paytm, Zomato, Nykaa, PB Fintech — that went public last year have also had a rough week so far in the stock market. Shares in most of these companies fell even as benchmark indices, the Nifty and Sensex, rose.
While Paytm, Zomato and PB Fintech shares have already fallen below the issue price, Nykaa is trading dangerously closer to the issue price.
The share price of FSN E-Commerce Ventures Ltd., which operates beauty and fashion marketplace Nykaa, hit its lowest level since the start of trading in November at Rs 1130.85. Its shares traded slightly higher than the issue price of Rs 1,125 before the one-year lockup period for its shareholders before the IPO expired on November 10.
On Thursday, however, the stock rose 0.85% to end the day at Rs 1,162.10 a share, giving investors a sigh of relief.
Overall, Nykaa’s share price is down more than 36% over the past six months and 4.8% over the past five trading days. The stock is down 54.8% from its all-time high of Rs 2,573.70.
Nykaa made a strong market debut in October last year when the company’s shares traded at Rs at a 79% premium to the issue price. 2,001 per share on the Bombay Stock Exchange (BSE).
For the first quarter of fiscal 2023, Nykaa reported net profit of Rs.4.5 billion, up 32.4% from the same period last year. On the other hand, the company’s revenue increased 40.6% year-on-year to Rs.1,148.4 billion.
“…we believe that success will not be easy as Nykaa is not the cheapest place for beauty and personal care products, nor is Nykaa solving an authenticity problem here,” ICICI Securities said in its August 2022 note.
He also cited potential risks as “the pursuit of high-level growth can dilute gross margin and success in the fashion business can be difficult given the increased competition in the category.”
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