Key Points:
- Shadowfax shares are listed ~9% below the IPO price despite full subscription.
- IPO raised ₹1,907 crore, with Flipkart and others selling stakes.
- Analysts cite rich valuation, competition, and client concentration as long-term risks.
Shares of Shadowfax Technologies Ltd. made a weak stock market debut on Tuesday, listing at nearly a nine percent discount to the IPO price on NSE and BSE despite moderate investor demand during the public offering.
Weak Listing Undercuts Subscription Momentum
Shadowfax Technologies shares debuted at Rs 112.60 apiece on the National Stock Exchange, a discount of 9.19 percent to the IPO price of Rs 124. On the Bombay Stock Exchange, the stock listed at Rs 113, down 8.87 percent from the issue price.
The Bengaluru-based logistics firm entered the market with a valuation of Rs 6,509.78 crore. The subdued listing contrasted with the IPO’s 1.68-times overall subscription during the three-day bidding period from Jan. 20 to Jan. 22.
Retail individual investors and qualified institutional buyers each subscribed more than twice their allotted portions, while non-institutional investors subscribed 54 percent of their quota, according to exchange data.
Market expectations had pointed to a narrower discount. Ahead of listing, unlisted Shadowfax shares traded at a grey market discount of about 2.8 percent to the IPO price. Earlier in January, grey market estimates had suggested a premium of nearly 13 percent, which later eroded.
IPO Structure and Use of Proceeds
Shadowfax raised Rs 1,907.2 crore through the IPO, which included a fresh issue of Rs 1,000 crore and an offer for sale worth Rs 907.2 crore by existing investors. Sellers in the OFS included Flipkart, Eight Roads Investments, Qualcomm, and NewQuest Asia Fund.
The IPO was priced in a band of Rs 118 to Rs 124 per share. Investors were required to apply for a minimum of 120 shares, translating to an investment of Rs 14,160 at the upper end of the band.
Proceeds from the fresh issue are earmarked for expanding network infrastructure, funding lease payments for new first-mile, last-mile, and sorting centers, and supporting branding and marketing initiatives. The company also plans to use part of the funds for potential inorganic acquisitions and general corporate purposes.
A day before the IPO opened, Shadowfax Technologies raised Rs 856.02 crore from 39 anchor investors. Domestic mutual funds accounted for a significant portion of the allocation, with ICICI Prudential Asset Management emerging as the largest anchor investor at Rs 190 crore across four schemes, the company said in a regulatory filing.
Analysts Flag Valuation and Long-Term Risks
Analysts said the muted listing reflects valuation concerns rather than a lack of confidence in the sector. Mahesh M. Ojha, vice president of research and business development at Kantilal Chhaganlal Securities, described shadowfax technology-driven, asset-light logistics company with a strong presence in last-mile delivery and quick commerce.
“The IPO valuation appears relatively rich compared with peers such as Delhivery,” Ojha said. He added that intense competition and revenue concentration among a few large clients pose risks.
Gaurav Garg, research analyst at Lemonn Markets Desk, said the company offers exposure to India’s fast-growing e-commerce and hyperlocal delivery market, supported by operations in more than 2,300 cities and 14,700 PIN codes.
“Strong revenue growth and EBITDA-positive performance since FY24 indicate improving profitability,” Garg said. However, he cautioned that margins remain thin and valuations at the upper price band already factor in high growth expectations.
Analysts said the stock may suit long-term, high-risk investors willing to track execution and client diversification, while short-term listing gains appear limited after the weak debut.
Visit Business Viewpoint Magazine for the latest information.
