IPO closes on 22 Jan'26
Shadowfax Technologies Ltd
Minimum Investment
₹ 14,880 / 120 shares
Our Verdict:
Avoid
- Shadowfax Technologies Ltd (Shadowfax) has shown impressive revenue growth over the past three years, thanks to its large-scale operations. However, this growth has not translated into strong earnings. The company posted losses in FY23 and FY24, only managing a modest Rs 6.4 crore net profit in FY25.
- While there has been an improvement in operating margins, the adjusted EBITDA margin for H1FY26 remains low at 2.86%. Although the company is no longer burning cash, its profitability remains weak.
- Despite these challenges, Shadowfax benefits from strong sector tailwinds (outlined in the “Strengths” section below). The company's expansive network has allowed it to capture approximately 23% of the third-party logistics market in FY25.
- From a valuation standpoint, Shadowfax's P/E ratio, based on FY25 earnings, is exceptionally high at around 954x, suggesting that much of the anticipated future growth is already priced in. This leaves little room for error if the company falls short of expectations.
- While revenue and market share continue to rise, margins remain tight. Additionally, the company is heavily reliant on a single client, Meesho, which contributed ~48% of the revenue in FY25. Any disruption to this relationship could have a severe impact on the company’s financial health.
- While business metrics are improving, the IPO valuation, combined with cautious broader market sentiment, makes this an unfavourable risk-reward scenario. It would be prudent to avoid the IPO at this stage and monitor the company’s performance, particularly with regard to margins and its efforts to diversify its client base, over the next few quarters. Any potential listing gains will likely be driven by the prevailing market sentiment rather than the company’s core fundamentals.
About the company
Founded in
21 Apr'15
Managing director
Abhishek Bansal
- Shadowfax is the fastest-growing third-party logistics (3PL) express parcel delivery player in India. The company operates through three verticals — Express, Hyperlocal and Other Logistics — offering a diverse range of logistics solutions to its clients.
- Shadowfax operates an extensive logistics network with 4,299 touchpoints, including first and last-mile centres and sort centres, covering 14,758 pin codes as of September 30, 2025. This network spans over 3.5 million square feet of operational space, which includes 53 sort centres responsible for consolidating, sorting and dispatching shipments.
- Its service offerings include traditional forward and reverse parcel logistics, including exchanges, as well as time-sensitive solutions such as quick commerce, prime delivery and on-demand hyperlocal mobility. Notable clients include horizontal marketplaces like Flipkart and Meesho, vertical specialists like Nykaa, Purplle and Licious, as well as on-demand mobility and delivery platforms such as Uber, Swiggy, Zepto and Blinkit.
STRENGTHS
- Strong Market Positioning: Shadowfax is the fastest-growing player in the 3PL space, with its e-commerce shipment market share surging from 8% in FY22 to 23% by 30 September 2025. This growth is driven by a remarkable increase in business volumes. In FY25, the platform processed 436 million shipments/orders, achieving a CAGR of ~30% from FY23. Notably, in H1FY26, order volumes reached 294 million, a 50% increase from 196 million in H1FY25.
- Improving Financials: Shadowfax has achieved an impressive 33% CAGR in revenue from FY23 to FY25. This growth has translated into profitability, with the company reporting a net profit of Rs 6 crore in FY25, marking a significant turnaround from the losses of Rs 12 crore and Rs 14 crore in the previous two years. Profitability further strengthened to Rs 21 crore in H1FY26, up from Rs 10 crore in H1FY25.
- Operational Efficiency: Adjusted EBITDA margins have risen to 1.96% in FY25, a sharp recovery from negative 7.18% in FY23, and further improved to 2.86% in H1FY26. On a full-year basis, these margins surpass those of Delhivery, which stands at 1.65%.
- Sector Tailwinds: India’s online retail market is expected to grow at a 20-25% CAGR from 2025 to 2030, with the quick commerce segment expanding even faster, at 50-62% during the same period. With a consumer base of 1.5 billion people, e-commerce is experiencing increasingly frequent orders. In FY25 alone, the e-commerce logistics sector handled between 4.9 to 5.3 billion shipments.
RISK FACTORS
- Client Concentration: Despite its significant scale, Shadowfax remains heavily reliant on a small group of clients. In FY25, its largest customer contributed 48% of total operating revenue, while the top five clients accounted for 75%, and the top ten for 86%. Any changes in pricing or relationships with these key clients could have a significant impact on future revenues.
- Pricing Pressure: Pure-play e-commerce logistics companies like Shadowfax face a challenging pricing environment due to shifting market dynamics. A prime example is Meesho's launch of its in-house logistics arm, Valmo, which led to the collapse of Ecom Express, a company that was heavily reliant on Meesho. This serves as a cautionary tale for investors.
- Seasonality: Shadowfax’s business is highly seasonal, with significant order spikes during festive sales and promotional periods, followed by slower quarters. However, infrastructure and manpower cannot be easily scaled down during off-peak periods, creating a mismatch between fixed operational costs and variable demand, which contributes to thin margins.
- Regulatory Changes: The implementation of India's New Labour Codes, expected to come into effect on April 1, 2026, represents a systemic regulatory shift for the logistics and gig economy. Shadowfax, which relies heavily on a vast network of delivery partners, may face significant cost-side pressures due to these new regulations.
- Lost Shipments: A significant cost burden for Shadowfax is "lost shipments." When packages are damaged or go missing, the company has to compensate clients. This issue has worsened over time. In FY25, lost shipments cost Shadowfax Rs 141 crore, or nearly 6% of revenue. In H1FY26, the cost surged to Rs 148.2 crore, or over 8% of revenue — 7 times the company’s net profit. These leakages represent a critical vulnerability in its cost structure.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 1,907 crore
Fresh Issue
₹ 1,000 crore
OFS
₹ 907 crore
Price range
₹ 118 - 124
Lot size
120 shares
Issue Objective
The net proceeds from the fresh issue will be utilized for the following purposes:
- Financing capex requirements related to network infrastructure;
- Covering lease payments for new first-mile centres, last-mile centres and sort centres;
- Supporting branding, marketing and communication expenses; and
- Funding potential inorganic acquisitions and other general corporate purposes.
Dates
Bidding open
20 Jan'26
Bidding close
22 Jan'26
Allotment date
23 Jan'26
Refund date
27 Jan'26
Listing
28 Jan'26
IPO Reservations
Qualified institutional buyers
>75%
Non-institutional investors
<15%
Retail individual investors
<10%
Read the Offer Document
© 2026 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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