Delhivery - The Night Is Darkest Before The Dawn: ICICI Securities

ICICI Securities Report

We maintain Buy rating on Delhivery Ltd. with a target price of Rs 600 valuing the company at 40 times FY26E enterprise value/Ebitda.

Delhivery’s stock performance has been subdued given:

1. slowing growth of the third party logistics market as the proportion of insourcing at Meesho continues to increase;

2. faster growth of quick commerce within the e-commerce space, where logistics is generally completely in-house and

3. concerns around some of the peers gaining significant share even within the 3PL space.

We think that even in the express parcel market, Delhivery is consolidating its leadership position among 3PL players through focus on cost and service quality. In partial truckload, it has slowly but steadily managed to reach ~90% of Delhivery + Spoton volumes and, from Q4 FY24, is profitable at service Ebitda level.

Delhivery has clarified how the apparent share losses to a peer are on account of different reporting standards.

Key risks:

1. Pricing pressure in the express parcel or PTL business; and

2. medium term growth visibility worsening due to global headwinds.

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