SHADOWFAX TECHNOLOGIES LIMITED IPO Explain

Shadowfax Technologies IPO Overview

Bengaluru-based third-party logistics (3PL) provider raising ₹1,907.27 cr (₹1,000 cr fresh issue + ₹907.27 cr OFS). Price: ₹118-124 (Book Building). Lot: 120 shares (₹14,880 min investment). GMP: ₹10 (8.06% premium over upper band – ₹134 expected listing, WEAK investor interest).

Funds for network infrastructure (₹423.4 cr), facility lease payments (₹138.6 cr), branding/marketing (₹88.5 cr), acquisitions, general corporate purposes. MAJOR 47.56% OFS by Flipkart, Qualcomm, other investors – big exit after profitability turn.

Lead: ICICI Securities, Morgan Stanley India, JM Financial.

Registrar: Kfin Technologies.

Founded June 2015 (10+ years old). Flipkart-backed (investor + largest customer 48-59% revenue). Operates across 14,758 pin codes, 4,299+ touchpoints, 2 million packages/day capacity. 1.25 lakh+ monthly active gig delivery partners (asset-light crowdsourced model).

Products/Services: End-to-end 3PL logistics – Express parcel delivery (e-commerce), Hyperlocal delivery (10-30 min quick commerce for Zepto, Blinkit, Swiggy Instamart), Same-day/Next-day delivery, Food marketplace delivery (Zomato, Swiggy), On-demand mobility, B2B logistics, Returns/exchanges, Cash-on-Delivery.

Three service lines: (1) Shadowfax Express (middle-mile), (2) Shadowfax Last-Mile, (3) Shadowfax Hyperlocal. Proprietary tech platform for route optimization, real-time tracking, delivery partner management, fraud detection.

Customers: Meesho, Flipkart, Myntra, Zomato, Swiggy, Blinkit, BigBasket, Zepto, Nykaa, Licious, Magicpin, ONDC. E-commerce shipment market share: 8% (FY22) → 23% (Sep 2025) – fastest growing 3PL.

IPO DETAILED INFORMATION

Issue Details

Parameter	Details
IPO Type	Mainboard (BSE, NSE)
IPO Open Date	20 January 2026 (Monday)
IPO Close Date	22 January 2026 (Wednesday) – 3 days
Anchor Investor Bidding	19 January 2026 (Sunday)
Allotment Date	23 January 2026 (Thursday) – Expected
Credit to Demat	27 January 2026 (Monday) – Expected
Refund Initiation	27 January 2026 (Monday) – Expected
Listing Date	28 January 2026 (Tuesday) – Tentative
Price Band	₹118 to ₹124 per share (Book Building)
Face Value	₹10 per share
Lot Size	120 shares per lot
Min Investment (Retail)	₹14,880 (1 lot = 120 shares at ₹124)
sNII Investment	₹2,08,320 (14 lots = 1,680 shares)
bNII Investment	₹10,11,840 (68 lots = 8,160 shares)
Issue Size	₹1,907.27 crore at upper band
Fresh Issue	₹1,000.00 crore (52.44%) – 8,06,45,161 shares
Offer for Sale (OFS)	₹907.27 crore (47.56%) – 7,31,66,935 shares
Total Shares Offered	15,38,12,096 equity shares
Listing	BSE, NSE (Mainboard)
Post-Issue Market Cap	₹7,169 crore (at upper band ₹124)

Issue Break-up

Category	Allocation	Shares (Approx)
QIB (Qualified Institutional Buyers)	75%	11,53,59,072 shares
NII (Non-Institutional Investors)	15%	2,30,71,814 shares
Retail Individual Investors	10%	1,53,81,210 shares

Note: ONLY 10% retail allocation – extremely low. 75% for institutions reflects positioning as institutional-grade logistics/tech story. Low retail allocation limits retail participation vs. typical 35% mainboard retail quota.

Selling Shareholders (OFS ₹907.27 crore)

MAJOR INVESTOR EXIT – 47.56% of IPO is OFS:

Selling shareholders (7,31,66,935 shares at ₹124 = ₹907.27 cr):

1. Flipkart Internet Private Limited – ₹400.00 crore – LARGEST SHAREHOLDER & LARGEST CUSTOMER (48-59% revenue) EXITING!
2. Qualcomm Ventures LLC – ₹65.40 crore – Early VC investor exiting
3. TPG Growth IV SF Pte. Ltd. – Partial exit
4. Mirae Asset Capital Markets (India) Private Limited – Partial exit
5. Eight Roads Ventures India III Limited – Partial exit
6. NGP Capital Logistics Holdings I C.V. – Partial exit
7. Other early investors and employees

CRITICAL: Flipkart is BOTH largest investor AND largest customer (48-59% of revenue across periods). Flipkart selling ₹400 cr immediately after Shadowfax’s FIRST profitable year (FY25) is RED FLAG – suggests:

• Peak valuation concerns at current pricing
• Limited upside visibility despite growth narrative
• Exit timing coincides with profitability milestone, quick commerce hype peak

Promoter holding post-IPO: Data not fully disclosed but founders Abhishek Bansal, Vaibhav Khandelwal, Praharsh Chandra, Gaurav Jaithliya retain minority stake after multiple funding rounds (raised $247 mn).

Objects of the Issue (Fund Utilization)

Fresh Issue Proceeds (₹1,000 crore) will be used for:

Specific Allocation:

1. Network Infrastructure Enhancement – ₹423.4 crore (42.34% of fresh issue)
   • Capital expenditure for network infrastructure development
   • Automation equipment for sorting centers
   • First-mile centers, last-mile centers expansion
   • Technology platform upgrades for route optimization, fraud detection
   • Scaling capacity for 2 million packages/day to higher throughput
2. Lease Payments for Fulfillment & Sorting Facilities – ₹138.6 crore (13.86%)
   • Lease rentals for new first-mile centers
   • Last-mile centers across 14,758+ pin codes
   • Automated sortation centers
   • Asset-light model: Company leases 3.50 million sq ft facilities vs. owning
   • Supports rapid geographic expansion without heavy capex
3. Branding, Marketing & Communication – ₹88.5 crore (8.85%)
   • Brand building for B2B enterprise customers (e-commerce, quick commerce platforms)
   • Marketing campaigns to acquire new clients (D2C brands, smaller sellers)
   • Customer acquisition costs for expanding beyond top 5 clients (74% revenue concentration)
4. Acquisitions – Portion of balance funds
   • Inorganic growth through strategic acquisitions
   • Recent acquisition: CriticaLog (high-value cargo handling capability)
   • Technology tuck-ins, regional 3PL consolidation
5. General Corporate Purposes – Balance funds (~₹349.5 cr, 34.95%)
   • Working capital requirements for project-based logistics contracts
   • Business expansion into tier 2/3 cities (deepening pin code coverage)
   • IPO offer-related expenses
   • Strategic initiatives

Strategic Context:

• 42% network infrastructure + 14% lease payments = 56% allocated to physical network expansion
• Asset-light model: Leasing vs. owning reduces upfront capex but creates ongoing rental commitments
• Branding/marketing 8.85% indicates need to diversify beyond top 5 clients (74% revenue concentration)
• Acquisitions focus on capability expansion (CriticaLog for high-value cargo) vs. geographic roll-up
• Quick commerce boom (10-30 min delivery for Zepto, Blinkit) driving infrastructure investments

OFS Proceeds (₹907.27 cr):

• Goes entirely to selling shareholders (Flipkart ₹400 cr, Qualcomm ₹65.40 cr, TPG, Mirae, Eight Roads, NGP, others)
• NO benefit to company – pure investor exit liquidity
• 47.56% of IPO is exit, not growth capital

Note: Flipkart (largest investor + largest customer) selling ₹400 cr immediately after FY25 profitability turn is RED FLAG. Early VCs (Qualcomm, TPG, Mirae, Eight Roads) also exiting suggests peak valuation concerns.

Lead Managers & Registrar

Book Running Lead Managers (3 BRLMs):

1. ICICI Securities Limited
2. Morgan Stanley India Company Private Limited
3. JM Financial Limited

Registrar:

• Kfin Technologies Limited
  • Address: Selenium Tower – B, Plot 31 & 32, Gachibowli, Financial District, Nanakramguda, Serilingampally, Hyderabad – 500032, Telangana
  • Phone: +91 40 6716 2222
  • Website: www.kfintech.com

Promoters & Management

Key Promoters & Founders (4 Co-Founders):

1. Mr. Abhishek Bansal – Founder & CEO
   • Co-founder since June 2015 (10+ years)
   • CEO driving overall strategy, operations, business development
   • Led company through 17 YEARS of losses to first profitability (FY25)
2. Mr. Vaibhav Khandelwal – Co-Founder
   • Co-founder since June 2015
   • Technology and product development leadership
3. Mr. Praharsh Chandra – Co-Founder
   • Co-founder since June 2015
   • Operations and logistics network management
4. Mr. Gaurav Jaithliya – Co-Founder
   • Co-founder since June 2015
   • Strategic initiatives and partnerships

Promoter/Founder Holding:

• Pre-IPO: Minority stake (multiple funding rounds diluted founders – raised $247 mn total)
• Post-IPO: Further diluted with 15.38 cr shares issued
• LOW founder holding typical for VC-backed logistics startups with heavy capital requirements

Major Shareholders Pre-IPO (Exiting via OFS):

• Flipkart Internet Private Limited – Largest shareholder + largest customer (48-59% revenue)
• TPG Growth IV SF Pte. Ltd. – Growth-stage VC
• Qualcomm Ventures LLC – Strategic investor (telecom/tech)
• Mirae Asset Capital Markets – Financial investor
• Eight Roads Ventures India III – Early-stage VC (Fidelity International’s VC arm)
• NGP Capital Logistics Holdings – Sector-focused VC

Company Contact:

• Registered Office: Regus Purva Summit, 6th Floor, GTP 3 Road, 8/1, Hosur Road, Koramangala (P), Bengaluru – 560029, Karnataka, India
• Phone: +91 80 [number not disclosed]
• Email: [email protected] (inferred)
• Website: www.shadowfax.in

COMPANY DETAILS

Shadowfax Technologies Limited is a Bengaluru-based technology-driven third-party logistics (3PL) provider founded in June 2015, making it a 10+-year-old established player in India’s express parcel delivery and hyperlocal logistics ecosystem. Operating an asset-light, crowdsourced delivery model with 1.25 lakh+ monthly active gig delivery partners across 14,758 pin codes spanning 2,500+ cities through 4,299+ touchpoints (first-mile centers, last-mile centers, sortation centers), the company provides end-to-end logistics solutions for e-commerce express delivery (Meesho, Flipkart, Myntra), hyperlocal quick commerce (10-30 min delivery for Zepto, Blinkit, Swiggy Instamart, BigBasket), food marketplace delivery (Zomato, Swiggy), on-demand mobility, B2B logistics, and returns/exchanges, leveraging proprietary technology platform for route optimization, real-time tracking, delivery partner allocation, fraud detection, and cash-on-delivery operations (34.46%-47.00% of orders), serving 18,000+ pin codes with 2 million packages/day processing capability, achieving 23% e-commerce shipment market share (Sep 2025) from 8% (FY22) – India’s fastest growing 3PL by volume.

Key Highlights:

• Founded June 2015: 10+ years operational history, established player (not startup)
• Flipkart-Backed: Largest investor + largest customer (48-59% revenue) – BOTH roles create conflict
• FIRST PROFITABLE YEAR FY25: PAT ₹6.43 cr (FY25) after 17 YEARS losses (₹142.64 cr FY23, ₹11.88 cr FY24)
• H1 FY26 Momentum: Revenue ₹1,806 cr (+68% YoY), PAT ₹21.04 cr (doubled), EBITDA ₹64.34 cr (3.5% margin)
• EXTREME Customer Concentration: Top 1 client 48-59% revenue, Top 5 clients 74-85% revenue – SEVERE risk
• MAJOR OFS 47.56%: Flipkart selling ₹400 cr + VCs exiting after FIRST profitable year – RED FLAG
• Asset-Light Gig Model: 1.25 lakh+ crowdsourced delivery partners, 3.50 mn sq ft leased facilities (NO owned assets)
• WEAK GMP ₹10: 8.06% premium – poor investor sentiment despite Flipkart backing
• ABSURD VALUATION: PE 1,018X (FY25), 953X at upper band – EXTREMELY EXPENSIVE vs. Delhivery 195X, Blue Dart 50.70X

Operations

Geographic Presence:

• Headquarters: Bengaluru, Karnataka (Regus Purva Summit, Koramangala)
• Operational Footprint: 14,758 pin codes across 2,500+ cities PAN-India
• Infrastructure: 4,299+ touchpoints (first-mile centers, last-mile centers, automated sortation centers) – ALL LEASED (3.50 mn sq ft)
• Delivery Partners: 1.25 lakh+ monthly active gig workers (crowdsourced, NO exclusive arrangements – retention risk)

Growth Trajectory:

• Revenue CAGR FY23-25: 32.50% (₹1,415 cr → ₹2,485 cr) – strong double-digit growth
• H1 FY26 YoY Growth: 68% (₹1,074 cr H1 FY25 → ₹1,806 cr H1 FY26) – growth accelerating
• PROFITABILITY TURNAROUND:
  • FY23: Loss ₹142.64 cr (-10.03% margin) – deep losses
  • FY24: Loss ₹11.88 cr (-0.63% margin) – losses narrowing 92%
  • FY25: PROFIT ₹6.43 cr (+0.26% margin) – FIRST PROFIT after 17 years!
  • H1 FY26: PROFIT ₹21.04 cr (+1.16% margin) – profitability scaling
• EBITDA Inflection:
  • FY23: -₹99 cr to -₹140 cr (-7% to -10% margin) depending on source
  • FY24: +₹11 cr (+0.58% margin) – turned positive
  • FY25: +₹56 cr (+2.25% margin) – margin expansion
  • H1 FY26: +₹64.34 cr (+3.56% margin) – 10 consecutive profitable quarters
• Total Assets: ₹442.73 cr (FY23) → ₹1,259.26 cr (FY25) → ₹1,453 cr (H1 FY26) – asset base tripled (automation, acquisitions like CriticaLog)

CRITICAL CONTEXT:

• 17 years to first profit (founded 2015, profitable FY25) – LONG path to profitability
• Profitability sustainability unproven – ONLY 10 quarters profitable (H1 FY24 onwards)
• PAT margins 0.26% (FY25), 1.16% (H1 FY26) – RAZOR-THIN vs. Blue Dart 4.35%, Delhivery 0.84%
• EBITDA margins 2-3.5% – LOW for logistics (Blue Dart 10%+, Delhivery 3-4%)
• 68% H1 FY26 growth driven by quick commerce boom (Zepto, Blinkit) – sustainability questionable if QC growth slows
• Cash-on-Delivery 34.46%-47% of orders – working capital intensive, fraud risk, failed delivery costs

E-Commerce Market Share:

• FY22: 8% → FY25: 20%+ → Sep 2025: 23% – fastest growing 3PL in India
• Gained 15 percentage points in 3 years – aggressive share gains vs. Delhivery, Ecom Express, Blue Dart

Company Strengths

• India’s booming e-commerce and quick commerce market growing at 15-20% CAGR provides strong sectoral tailwinds for third-party logistics demand.
• Shadowfax has achieved remarkable market share growth from 8% in FY22 to 23% by September 2025 making it India’s fastest growing 3PL player.
• The company’s asset-light gig-based delivery model with 1.25 lakh plus crowdsourced delivery partners enables rapid scaling without heavy capital expenditure.
• Shadowfax operates India’s only integrated platform combining express e-commerce delivery and hyperlocal quick commerce within single network.
• Strong blue-chip customer roster including Meesho Flipkart Myntra Zomato Swiggy Blinkit BigBasket Zepto demonstrates enterprise-grade service quality.
• The company achieved profitability inflection turning from losses of ₹142.64 crores in FY23 to profit of ₹21.04 crores in H1 FY26.
• Proprietary technology platform for route optimization real-time tracking and fraud detection provides competitive moat versus traditional players.
• Flipkart backing as both investor and strategic customer provides capital access competitive credibility and volume pipeline.
• Recent acquisition of CriticaLog expands capability into high-value cargo segment creating cross-selling opportunities across client base.
• Pan-India coverage across 14758 pin codes with 2 million packages per day capacity positions company to capture tier 2-3 city growth.

Key Risks & Challenges

• Extreme customer concentration with largest single client contributing 48-59% of revenue and top five clients accounting for 74-85% creates existential dependency risk.
• Flipkart selling ₹400 crores and early VCs exiting via 47.56% OFS immediately after first profitable year suggests sophisticated investors believe valuation has peaked.
• Absurdly expensive valuation at PE ratio 1018X FY25 earnings compared to Blue Dart 50.70X and Delhivery 195.07X represents unjustifiable premium.
• Only 17 years to first profit after cumulative losses exceeding ₹150 crores with profitability sustainability completely unproven.
• Razor-thin PAT margins of 0.26% FY25 and 1.16% H1 FY26 provide zero buffer against cost inflation or pricing pressure.
• Asset-light crowdsourced delivery model with 1.25 lakh gig workers without exclusive arrangements creates retention and quality control challenges.
• Intense competition from Delhivery Blue Dart Xpressbees Ecom Express plus e-commerce platforms building captive logistics limits pricing power.
• Cash-on-delivery operations representing 34-47% of orders creates working capital intensity fraud risks and collection losses.
• Quick commerce boom driving current 68% H1 FY26 growth may not sustain as platforms mature and potentially in-source delivery.
• Grey market premium of only ₹10 representing 8.06% indicates extremely weak retail investor sentiment despite Flipkart backing.

Disclaimer

This document is for educational and informational purposes only and does not constitute investment advice or recommendation. Investors are advised to read the Red Herring Prospectus (RHP) and consult with certified financial advisors before making any investment decisions. Past performance is not indicative of future results and investments are subject to market risks.