Shadowfax Technologies IPO Day 2 Highlights: Issue booked 60% so far — GMP slumps amid market selloff. Should you bid?

QIB portion: 0.38 times

NII portion: 0.33 times

Retail Individual Investors portion: 1.64 times

Employee Reserved: 1.45 times

Total subscription: 0.60 times

• The company has incurred losses of ₹11.88 crore in FY2024 and ₹142.64 crore in FY2023 and has experienced negative cash flows in certain periods, which may continue due to rising expenses.

• Operations are highly dependent on a unified nationwide logistics network comprising 4,299 touchpoints, over 3.50 msf of operational space, and coverage of 14,758 PIN codes as of September 30, 2025, making it vulnerable to network disruptions.

• Revenue concentration risk exists, as the largest client contributed between 48.00% and 59.52% of operating revenue across FY2023–FY2025 and the six months ended September 30, 2024 and 2025.

• Despite revenue growth from ₹1,415.12 crore in FY2023 to ₹2,485.13 crore in FY2025, past growth may not be indicative of future performance and execution risks remain. Inability to scale network infrastructure in a balanced manner could adversely impact growth, operations, financial condition, and cash flows.

• The business relies on a non-exclusive crowdsourced delivery partner base of 205,864 average quarterly unique transacting partners as of September 30, 2025, and any supply disruption could affect operations and profitability.

• Operational risks arise from potential mishandling of shipments by delivery partners, which could lead to inefficiencies and customer dissatisfaction.

• Dependence on third-party franchisees for portions of last-mile delivery exposes the company to performance, relationship, and service-quality risks.

• Cash-on-delivery transactions create operational complexities and expose the company to risks of cash handling losses.

• All logistics facilities are leased as of September 30, 2025, and any lease non-renewal, irregularity, or inability to secure alternative facilities could materially harm the business.

In FY2025, the platform handled a total of 43.64 crore shipments, recording a compound annual growth rate (CAGR) of 29.77% since FY2023. During the six-month period ended September 30, 2025, order volumes reached 29.45 crore, translating into a CAGR of 50.11% compared with the corresponding six-month period ended September 30, 2024.

To deepen digital commerce penetration in India and deliver scalable solutions to its customers, Shadowfax relies on three key pillars: (i) a pan-India logistics infrastructure, (ii) a dense intra-city last-mile delivery network powered by gig-based delivery partners, and (iii) a proprietary technology platform that incorporates an intelligent supply-demand allocation engine.

At the upper price band of ₹124, the IPO is valued at EV/Sales and EV/EBITDA multiple of 2.4x and 106.5x, respectively. The company has exhibited strong revenue growth of 32.5% CAGR during the FY23-25 period and has been EBITDA positive since FY24. It operates an efficient and scalable asset-light business model, having an asset turnover of over 4x. The company does not own any delivery vehicles while touchpoints and last-mile facilities are managed through a leasing model. Considering the low per capita shipment (3-5 in India) compared to 60-70 in the USA and 75-85 in China, the growth prospects appear promising. When comparing the issue with its closest peers, the IPO seemsto be valued slightly at a premium. We maintain a NEUTRAL view on the IPO and intend to observe its performance post-listing.

— SBI Securities

With a wide network of touchpoints covering a large number of pin codes, the company has built a strong logistics backbone across India. Its asset-light and leased infrastructure model, combined with automated sort centres, supports high capital efficiency. This network strength allows faster service expansion, improved delivery speed, and operating leverage as volumes increase.

The company’s proprietary technology platform, supported by AI and machine learning, optimizes demand-supply matching, route planning, fraud detection, and address intelligence.

These capabilities reduce delivery errors, improve reliability, and lower per-order costs. Continuous technology investments position the company well to handle complex logistics requirements and future growth.

Shadowfax Technologies Ltd is well positioned to benefit from the continued growth in India’s e-commerce, D2C, and quick commerce segments, supported by rising demand for faster and more reliable deliveries. Its integrated service offerings, asset-light nationwide network, and technology-driven operating model are expected to support sustained volume growth and operating leverage. Ongoing investments in automation, technology, and network expansion should enhance efficiency and service quality, while deeper engagement with existing clients and expansion into higher-yield segments can improve margins over the medium term. Overall, the company’s scalable platform and strong execution capabilities provide a favorable outlook for steady growth with improving profitability.

At the upper band of INR 124, the issue is valued at a P/E ratio of 170.4x, based on annualised PAT of FY26 EPS of INR 0.73, and an EV/EBITDA of 55.4x based on annualised EBITDA of FY26. We are recommending a “Neutral” rating for this issue.

— Arihant Capital

ICICI Securities, Morgan Stanley India and JM Financial are the book-running lead managers while KFin Technologies is the registrar for the offer.

Issue Size – ₹ 1,907.27 Cr

Face Value – ₹ 10/-

Employee Reservation – Shares up to ₹ 5 Cr

Price Band – ₹ 118–124

Bid Lot – 120 shares and in multiples thereof

Post-Issue Implied Market Cap – ₹ 6,870–7,169 Cr

The company serves a diversified base of enterprise clients across horizontal and non-horizontal e-commerce, quick commerce, food marketplaces, and on-demand mobility, including Meesho, Flipkart, Myntra, Swiggy, Bigbasket, Zepto, Nykaa, Blinkit, Zomato, Uber, ONDC, and others.

The company relies on a large, crowdsourced network of delivery partners, with approximately 2,05,864 average quarterly unique transacting delivery partners as of 6MFY26, with whom it does not have exclusive arrangements. Any disruption in the availability, engagement, or retention of delivery partners could adversely affect service levels and negatively impact the company’s business.

At the upper end of the price band of Rs. 124 per share, the company is trading at a P/E of 155.0x based on its FY26 annualised earnings. Supported by strong industry tailwinds and clear profitability drivers, STL appears well positioned to benefit from the evolving digital commerce landscape. We thus recommend a "SUBSCRIBE" rating to the issue from a medium- to long-term perspective.

Shadowfax Technologies Limited is a technology-led third-party logistics (3PL) company that enables digital commerce by offering end-to-end logistics solutions across India. The company operates a large, asset-light delivery network covering more than 14,700 pin codes. It serves a diverse range of enterprise clients, including e-commerce marketplaces, quick commerce platforms, food delivery companies, and on-demand mobility players.

Shadowfax benefits from strong growth in India’s last-mile logistics and e-commerce delivery space. Revenue momentum is improving, but profitability remains low and margin visibility is still evolving.

At a P/S (Price-to-Sales) ratio of roughly 2.8x, the IPO is priced at a premium compared to Delhivery.

A massive chunk of their revenue comes from just two sources: Flipkart (which is also an investor) and Meesho. Suitable only for high-risk, long-term investors; conservative investors should wait post-listing for better price discovery.

— Swastika Investmart

The issue comprises a fresh equity issuance of ₹1,000 crore and an offer for sale (OFS) of ₹907.27 crore by existing shareholders. The company plans to use the fresh proceeds for the following purposes:

• Funding of capital expenditure requirements of the Company in relation to network infrastructure – ₹423.43 crore
• Funding of lease payments for new first-mile centres, last-mile centres, and sort centres – ₹138.64 crore
• Funding of branding, marketing, and communication costs – ₹88.57 crore
• Unidentified inorganic acquisitions and general corporate purposes

Shadowfax Technologies IPO opened for the second day of bidding at 10 am today. Investors can apply for the offer till 5 pm today. The offer was booked 47% on the first day, with the retail portion fully subscribed.

Shadowfax Technologies IPO was subscribed 47 per cent on the first day of bidding on Tuesday. According to NSE data, the three-day issue received bids for 4.18 crore shares against the 8.91 crore shares on offer.

The retail individual investor (RII) segment was subscribed 1.11 times, while the qualified institutional buyers (QIBs) portion saw 38 per cent subscription. The non-institutional investors (NII) category was subscribed 22 per cent.

Shadowfax is commanding a tepid grey market premium, according to data from investorgain.com. Shadowfax IPO GMP today is ₹4. This means that shares of Shadowfax are trading ₹4 above the offer price of ₹124.

At the current GMP and offer prices, Shadownfax IPO shares could list at 3.23% premium at ₹128.