Goldman Sachs said that Delhivery shares have rallied since its acquisition of E-Com Express in April this year, mainly on market expectations that acquiring a key competitor would bring both volumes and pricing power.
This, coupled with better part truckload (PTL) margins in the last few quarters, also makes the case for improved profitability ahead, Goldman Sachs said.While growth has resumed with E-com Express parcels now being handled by Delhivery, Goldman Sachs believes headwinds on industry growth and yield dilution on higher proportion of light parcels give limited room for upside surprise from here.
Delhivery reported its first quarter earnings earlier this month. Its consolidated net profit increased 67% to ₹91 crore from ₹54 crore in the previous year.
Its revenue increased 6% to ₹2,294 crore and EBITDA was up 533% at ₹149 crore from the previous fiscal. Its EBITDA margin expanded to 6.5% to 4.5% in the year-ago period.The express parcel segment clocked shipment volumes of 208 million, a 14% increase from the previous year. The revenue from this vertical also increased 10% to ₹1,403 crore.
Delhivery’s part truckload business posted solid gains as well, with tonnage increasing 15% and revenue rising 17% to ₹508 crore. Service EBITDA margin for the segment expanded to 10.7% from 3.2% in the year-ago period.
However, the company’s other verticals such as supply chain services, cross-border logistics and truckload, witnessed muted or declining revenues.
Delhivery CEO Sahil Barua said the company is optimistic of the upcoming festive season and continues to unlock operating leverage as volumes increase.
Of the 23 analysts that have coverage on the stock, 18 have a “buy” rating, three have a “hold” rating and two have a ‘sell” rating.
Shares of Delhivery are trading 0.3% lower at ₹469.55. The stock has risen 8% in the last one month and has taken its year-to-date gains to 35%.
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