Delhivery shares: Should you buy, sell, hold as Q3 loss widens?
1 min read 13 Feb 2023, 08:27 AM ISTDelhivery's Q3 net loss widened while revenue also plunged
PremiumLogistics firm Delhivery net loss widened to ₹195.7 crore for the third quarter ended December 2022 (Q3 FY23) as compared to a loss of ₹127 crore in the yea-ago quarter. Its revenue also declined about 9% to ₹1,823 crore as against ₹2,019 crore year-on-year (YoY).
“Q3 EBITDA loss was lower than expectations as gross profit was better and other expenses lower. Management exhibited confidence on reducing losses further. We believe current price factors less than 10% express parcel growth in the next 3-5 years vs 30%+ levels seen in the past. We believe B2B (Spoton), operating leverage and low e-commerce penetration driven growth are being underestimated," said global brokerage Jefferies which has maintained its Buy tag on Delhivery shares with a target price of ₹570.
Dominant in B2C, Delhivery is making a mark in B2B through its Spoton acquisition. Integration issues and slowdown at its e-commerce clients in the next 9-12 months are headwinds, the note stated, adding that the company should break even in FY25E-26E with management’s focus on profitability in an industry with a strong growth tailwind.
“Delhivery’s Q3FY23 results were a mixed bag. With SpotOn’s integration, margin improvement met expectations, but express parcel shipment volume growth was sluggish at 6% QoQ/flat YoY. That said, PTL volumes are showing momentum since Jan-23 and the midmile optimisation should aid margin expansion. Growth moderation in Express currently and the FY24E uncertainty are the key variables," said brokerage Nuvama Research.
It has retained ‘HOLD’ hold tag with a revised target price of ₹361 (earlier ₹415), as a 44% stock crash in past six months largely discounts this damage to earnings roadmap. “Delhivery’s story and valuation relies heavily on e-com growth of 15–20% or above for a decade or so. For now, Delhivery believes it can achieve 15–20% in FY24E, but this will remain a key stock price determinant."
Delhivery is fully-integrated supply chain services company in the domestic and international space. The stock is down about 42% since its market debut in May 2022.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
"Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!" Click here!
