DTDC – one of the oldest and largest players in India’s express delivery logistics market – is preparing to launch its initial public offer (IPO). According to the Times of India, the company plans to raise as much as INR600 crore through its maiden issue. The newspaper said the offer will value the company at nearly INR3,000 crore on the basis of a 20% stake sale.
“We are infusing INR200 crore to expand our business by FY16-17 but that’s not enough. So, we are ready to go public to tap funds for future growth. A 20% dilution will fetch us INR600 crore and help us become India’s largest logistics firm by 2020 in terms of market share,” Abhishek Chakraborty, executive director DTDC Express, told the newspaper.
There are no more details to be shared right now but if the report is indeed true, this would mark the listing of yet another logistics company following Snowman Logistics and VRL Logistics in recent months. Incidentally, the IPOs of both companies received strong market reception. Although DTDC is not a pure logistics play, positive industry dynamics mean the market is offering rich valuations to all players of reasonable competence and national footprint.
Once listed, DTDC will be benchmarked against direct competitors which includes Blue Dart and Gati. Blue Dart has a market capitalization of more than INR16,300 crore while Gati’s current valuation is around INR1700 crore.
DTDC was established by first generation entrepreneur Subhasish Chakraborty in 1990. The company received a massive profile boost in 2006 when Anil Ambani – led Reliance Capital bought a 42% stake in the company. Reliance Capital eventually sold its stake in July 2013 for INR158 crore to GeoPost – a subsidiary of French postal division La Poste. DTDC promoters have around 56% stake in the company. At DTDC’s current valuation of INR3000 crore, GeoPost’s investment in the company has grown to INR1,260 crore, nearly 8 times of its original investment in less than two years. Both promoters are likely to offload their shareholding proportionately through the IPO.