Shadowfax Technologies shares gain 6% after weak debut at 9% discount. Should you buy, sell or hold?

Shares of Shadowfax Technologies rebounded sharply on Wednesday, rising 6% to touch an intraday high of Rs 119.5 on the BSE, after a muted market debut earlier in the session. The stock had listed at a 9% discount to its issue price of Rs 124, before witnessing buying interest at lower levels.

The weak listing follows a relatively subdued response to the company’s initial public offering, which was open between January 20 and January 22. Shadowfax sold shares in a price band of Rs 118–124, raising Rs 1,907 crore through a combination of a Rs 1,000 crore fresh issue and an offer-for-sale of up to 7.31 crore shares worth Rs 907 crore.

The issue was subscribed about 2.8 times overall, drawing bids of more than Rs 3,000 crore from over 2.25 lakh applications. Institutional investors provided the bulk of the demand, with the qualified institutional buyers’ portion subscribed 3.81 times. Retail investors subscribed their segment 2.31 times, while interest from non-institutional investors was notably weaker, with that portion undersubscribed at around 84%.


What should investors do?

Shivani Nyati, Head of Wealth at Swastika Investmart recommends IPO allottees to hold with a strict stop loss at RS 105 to protect downside risk. Fresh investors should avoid immediate entry and consider buying only after price stability, with a similar stop loss of rS 104–105. On the upside, the Rs 120–124 zone is likely to act as a resistance in the short term. The discounted listing suggests valuation concerns, and the stock may remain volatile or range-bound in the near term as markets focus on profitability, cash flows, and execution, she added.

BP Wealth suggests that the company is trading at a P/E of 155x 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.

SBI Securities estimates the company is valued at an EV/Sales multiple of 2.4x and an EV/EBITDA multiple of 106.5x. The brokerage highlighted revenue growth of 32.5% compounded annually between FY23 and FY25 and noted that the company has been EBITDA positive since FY24.

However, SBI Securities has maintained a neutral stance on the stock, citing premium valuations relative to peers and advising investors to assess Shadowfax’s post-listing performance. While India’s low per capita shipment rate points to long-term structural growth for the logistics sector, the company’s debut will test investor appetite for fast-growing but still thinly profitable technology-enabled businesses in the current market climate.

Shadowfax Technologies is a technology-led third-party logistics provider with a differentiated full-stack presence across express e-commerce deliveries and last-mile logistics for quick commerce, food delivery, and other hyperlocal use cases, supported by one of the largest gig-based delivery partner networks in India and a proprietary, modular technology platform.

Chola Securities highlighted that Shadowfax Technologies is steadily diversifying its client base, with the top five clients’ contribution to total revenue declining from 83% in FY24 to 74% in H1FY26, indicating a gradual reduction in concentration risk. Meesho continues to be the largest client, contributing around 47–48% of revenue, though dependence is slowly easing.

The brokerage noted that the direct-to-customer (D2C) segment has emerged as the fastest-growing business, accounting for nearly 25% of revenue in H1FY26. In terms of revenue mix, the express segment contributes 70%, hyperlocal 20%, and the remaining 10% comes from other logistics services. Going ahead, the company plans to deepen its focus on value-added services, including reverse pickups and hand-in-hand exchanges, which are operationally complex and require tight quality control. Chola Securities has assigned a Subscribe rating for the IPO.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)