Synopsis:
Delhivery shares are in focus after Motilal Oswal expects its operating profit and net profit to grow by a CAGR of 36 percent and 52 percent, respectively.
Ecom parent is back in focus after Motilal Oswal initiated a Buy call on the stock with a further upside. In this article, we will dive deep into the details of what is the rationale behind this.
With a market capitalisation of Rs 31,318 crores, the shares of Delhivery Ltd are currently trading at Rs 420 per share, down by 6.20 percent from its 52-week high of Rs 447.75 per share. In the last one year, the stock has delivered a return of 7.24 percent.
On Wednesday, Motilal Oswal assigned a target price of Rs 480 per share on Delhivery, signalling an upside potential of 17.41 percent from its Tuesday closing price of Rs 408.80 per share.
The brokerage cited that since 2011, Delhivery has grown quickly by focusing on express parcel delivery, which is the fastest-growing area of logistics. Now, it plans to expand into the more profitable Part Truck Load (PTL) segment to increase both growth and profits. From FY19 to FY25, its revenue grew at a rate of 32 percent per year, and it became EBITDA positive. This growth was driven by the scale in express delivery and better performance in PTL after acquiring Spoton.
Delhivery increased its revenue by 32 percent annually from FY19 to FY25 and became EBITDA positive. This growth was supported by the express parcel and PTL segments, as well as the Spoton acquisition. Looking ahead, a 14 percent revenue growth is expected, driven by strong progress in PTL.
Because of this, Motilal Oswal expects the company to strengthen its market dominance and grow its EBITDA and Profit After Tax (PAT) with a CAGR of 36 and 52 percent, respectively, over FY25-28. Its strong balance sheet and negligible debt would enable it to fund its capex requirements over the next few years, which will help its ROE to improve to 5.6 percent in FY28 from 1.8 percent in FY25.
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Financial Highlights
Delhivery reported a consolidated revenue of Rs 8,932 crores in FY25, up 9.71 percent from Rs 8,142 crores in FY24. It reported a net profit of Rs 162 crores in FY25 as compared to a loss of Rs 249 crores in FY24.
During FY25, the express parcel segment was the highest contributor to the top line with 60 percent, followed by the PTL (Part truckload) segment with 21 percent, the TL(Truck Load) segment with 7 percent, and the SCS (Supply Chain Services) segment with 10 percent, and the rest of the revenue comes from its cross-border segment.
The stock delivered a poor ROE and ROCE of 1.80 percent and 2.72 percent respectively, and is currently trading at a P/E of 157.04x, much higher than its industry average of 26.55x.
Delhivery is India’s largest fully integrated logistics services provider. With its nationwide network covering over 18,833 pin codes, the company provides a wide range of logistics services such as express parcel transportation, PTL freight, TL freight, cross-border, supply chain, and technology services. Delhivery has successfully fulfilled over 3.4 billion shipments since inception and today works with over 33K+ businesses served, including large & small e-commerce participants, SMEs, and other enterprises & brands.
Written by Satyajeet Mukherjee
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