Delhivery gets a ‘buy’ rating from Motilal Oswal but target still below IPO price

Shares of logistics services provider Delhivery Ltd., which have surged 70% in the past three months, are expected to see more gains ahead over the next 12 months. This outlook comes from brokerage firm Motilal Oswal, which has initiated coverage on the stock.Motilal Oswal has assigned a ‘Buy’ rating to Delhivery, with a price target of ₹480 per share, implying a potential upside of 17% from current levels.
The brokerage believes Delhivery’s focus on strategic acquisitions and providing integrated logistics solutions will further strengthen its growth prospects.
The company is well-placed to benefit from key industry trends, including:- Rising e-commerce penetration with increasing contributions from new business-to-consumer (B2C) commerce models.

– Formalisation of the partial truckload (PTL) and full truckload (FTL) segments.

– A shift towards the ‘total cost’ approach, driving demand for integrated service providers.

Delhivery plans to build its future growth around the express parcel and PTL segments, while other business areas will rely on its existing customer base and infrastructure. This strategy is expected to improve both utilisation levels and cost efficiency.With robust industry tailwinds and Delhivery’s strong infrastructure in place, the company is well-placed to capitalise on the opportunity, the brokerage wrote in its note.

Delhivery currently serves a vast network of 19,000 pin codes and holds over 20% market share in India’s express logistics segment, making it one of the country’s top third-party logistics (3PL) players.

During FY19-25, Delhivery reported a 32% revenue CAGR, driven by the express parcel and PTL segments. During this period, it also turned EBITDA positive, reporting EBITDA of ₹370 crore in FY25, compared to an operating loss of ₹1,600 crore in FY19.

Motilal Oswal expects that Delhivery will maintain strong momentum, with expected EBITDA and adjusted profit after tax CAGR of 36% and 52%, respectively, between FY25 and FY28. As profitability improves, return on equity (RoE) is estimated to rise from 1.8% in FY25 to 5.6% by FY28.

With a healthy balance sheet and minimal debt, Delhivery is well-equipped to fund its capital expenditure in the coming years.

Motilal also highlighted key downside risks, including slower growth in the e-commerce sector and weaker-than-expected adoption in the B2B express logistics market.

Shares of Delhivery ended with gains of 3.38% on Tuesday at ₹409.50. The stock continues to remain below its IPO price of ₹487.