Shadowfax Technologies IPO review (Not Rated)

•    The company is leading the segment of new-age, technology lead 3PL logistics services.
•    It marked declining losses from FY23 to FY24, and marked a turnaround for FY25.
•    H1-FY26 indicates likely trends going forward. 
•    Based on its recent financial data, the issue appears exorbitantly priced.
•    Though the IPO appears pricey, it holds the fort for long term investment. Well-informed, cash surplus, risk seekers may park moderate funds for long term.

ABOUT COMPANY:
ShadowFax Technologies Ltd. (STL) is a new-age, technology-led third-party logistics (“3PL”) company, and leverage technology to facilitate digital commerce, with its service network encompassing 14,758 Indian pin codes as of September 30, 2025. The company serves a wide category of enterprise clients including horizontal and non-horizontal e-commerce, quick commerce, food marketplace, and on-demand mobility companies. 

STL’s range of services includes express forward parcel deliveries, reverse pickups and hand-in-hand exchange deliveries, prime deliveries, quick commerce and on-demand hyperlocal deliveries, mobility, and other services, including critical logistics enabling it to cater to the most diverse and complex needs of clients. One of the key drivers of the next wave of growth for 3PL providers will come from solutions that enhance the end -customer experience (Source: RedSeer Report).

The company operates on a three key factors - 1. Velocity: Fast delivery has become essential to delivering a superior end-consumer experience, particularly as quick commerce gains wider adoption (Source: RedSeer Report). It aims to optimize ‘click-to-doorstep’ time for digital commerce clients. 2. Versatility: 3PL models require a tech-first approach, real-time fleet management, and other innovations to ensure efficiency and meet the growing demands of consumers (Source: RedSeer Report). The company aims to identify the various needs of clients to provide tailored solutions serving their niche requirements. Its platform is designed to quickly add different use cases depending on the ever-changing requirements of the industry in a cost-effective manner. 3. Value: Delivery cost is a key component of the cost structure for online retail companies. As customer expectations evolve, order frequency rises, and average order value declines, optimizing delivery costs has become increasingly important for logistics providers and online retailers and platforms (Source: RedSeer Report). 

It believes that its unified platform is built to improve efficiencies across the network to ensure low costs for clients and increase digital commerce inclusiveness.

It is the fastest growing 3PL company of scale in India as of March 31, 2025, expanding its e-commerce shipment market share from approximately 8% in the Financial Year 2022 to approximately 23% in the six months period ended September 30, 2025 and within the express service line, the company is market leaders in reverse pickup shipments, in terms of order volume for the Financial Year 2025 and the six months period ended September 30, 2025 (Source: RedSeer Report). STL is also a market leader in 3PL quick commerce (or “Q-Commerce”) solutions and same-day delivery based on order volume for the Financial Year 2025 and the six months period ended September 30, 2025 (Source: RedSeer Report). 

Its platform processed 436.36 million orders during Financial Year 2025, achieving a compound annual growth rate (“CAGR”) of 29.77% from the Financial Year 2023. During the six months period ended September 30, 2025, it processed 294.45 million orders, which represents a CAGR of 50.11% from the six months period ended September 30, 2024. Its logistics network includes logistics facilities comprising first-mile pick-up and return-to-origin centers, middle-mile sorting, last mile delivery and its linehaul. STL’s nation-wide network coupled with proprietary technology enables its platform to be fast, efficient, and adaptable to changes in volume and shipment profiles. It has developed an expansive network of last-mile gig based delivery partners in more than 2,300 cities and towns across India as of the date of this offer document.

A majority of its revenue from operations is derived from services where it delivers directly to the end-customer. Its platform supports a wide range of time-sensitive and flexible delivery needs of diverse set of its clients like Meesho, Flipkart, Myntra, Swiggy, Bigbasket, Zepto, Nykaa, Blinkit, Kartrocket, Zomato, Uber, Pincode, Purplle, Licious, ONDC, Magicpin, amongst others, making it the only player of scale to service last mile and end-to-end delivery for e-commerce, and last-mile delivery for quick commerce, food delivery and other hyperlocal services. The company offers API integration solutions for B2C logistics, enabling digital-first businesses, including e-commerce platforms, D2C brands, and service marketplaces, to manage scale with reliability and speed. As of September 30, 2025, its employee count stood at 4472, and contract labour tally stood at 17182.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO of 153812096 equity shares of Rs. 10 each (worth Rs. 1907.27 cr. at the upper cap). The IPO consists of fresh equity issue worth Rs. 1000.00 cr. (approx. 80645161 equity shares at the upper cap), and an Offer for Sale (OFS) worth Rs. 907.27 cr. (approx. 73166935 equity shares (at the upper cap). The company has announced a price band of Rs. 118 – Rs. 124 per equity shares of Rs. 10 each. The issue opens for subscription on January 20, 2026, and will close on January 22, 2026. The minimum application to be made is for 120 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 26.61% of the post-IPO paid-up equity capital. From the net proceeds of the fresh equity issue, the company will utilize Rs. 423.43 cr. for capex on network infrastructure, Rs. 138.64 cr. for funding lease payment for new first mole centers, last mile centers and sort centers, Rs. 88.57 cr. for branding, marketing and communication costs, and the rest for funding inorganic growth and general corporate purposes.

The company has reserved equity shares worth Rs. 5.00 cr. (approx. 403226 shares for its eligible employees and from the rest, it has allocated not less than 75% for QIBs, not more than 15% for HNIs and not more than 10% for Retail investors.

The three Book Running Lead Managers (BRLMs) to this issue are ICICI Securities Ltd., Morgan Stanley India Co. Pv.t Ltd., and J M Financial Ltd., while KFin Technologies Ltd., is the registrar to the issue. JM Financial Services Ltd. is a syndicate member.

After issuing initial equity shares at par, the company has issued/converted further equity shares in the price range of Rs. 7098.00 – Rs. 118595.82 per share (based on FV of Rs. 10), between July 2015, and December 2025. It has also issued bonus shares in the ratio of 19 for 1 in May 2019, 500 for 1 in March 2025. The average cost of acquisition of shares by the promoters/selling shareholders is Rs. 0.88, Rs. 0.89, Rs. 21.44, Rs. 21.45, Rs. 26.72, Rs. 38.13, Rs. 39.76, Rs. 108.11, Rs. 108.24, 112.14, and Rs. 172.16 per share.

Post-IPO, its current paid-up equity capital of Rs. 497.49 cr. will stand enhanced to Rs. 578.13 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 7168.85 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit/ -(loss), of Rs. 1422.89 cr. / Rs. – (142.64) cr. (FY23), Rs. 1896.48 cr. / Rs. – (11.88) cr. (FY24), and Rs. 2514.66 cr. / Rs. 6.43) cr. (FY25). For H1 of FY26 ended on September 30, 2025, it earned a net profit of Rs. 21.04 cr. on a total income of Rs. 1819.80 cr. Thus, it marked turning of corner from FY25 onwards with continued growth in its top lines.

For the last three fiscals, the company has posted an average negative EPS of Rs. – (0.59) and an average negative RoNW of – (13.94) %. The issue is priced at a P/BV of 9.21 based on its NAV of Rs. 13.46 as of September 30, 2025, and at a P/BV of 4.36 based on its post-IPO NAV of Rs. 28.43 per share (at the upper cap).

If we attribute FY26 annualized earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at negative P/E of 169.86.  Based on FY25 earnings, the P/E stands at 1127.27. Thus, the issue appears exorbitantly priced. The only attraction is that the company has turned the corner and has reduces the gestation period going ahead.

PAT margins and RoCE margins data is missing from the offer documents.

DIVIDEND POLICY:
The company has not declared any dividends for the referred periods of the offer document. It has already adopted a dividend policy in June 2025, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Blue Dart Express, and Delhivery Ltd. as its listed peers. They are currently trading at a P/E of 48.4 and 219.0 (as of January 14, 2026). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
The three BRLMs associated with this offer have handled 114 public issues in the past three years, out of which 28 issues closed below the issue price on listing date.