Buy Delhivery; target of Rs 600: ICICI Securities

ICICI Securities's research report on Delhivery

Express parcel volumes grew 33% YoY, with 24% YoY revenue growth. Express parcel’s yield declined 3% QoQ due to inferior mix. PTL tonnage grew 12% YoY despite a 3% YoY price increase, which shows Delhivery’s pricing power. Express parcel and PTL’s service-level EBITDA margin missed our estimates by ~100bps due to a premature festive capacity build-up and a week’s delay in festive dispatches, following the GST rate change. Transient costs due to the
Ecom Express acquisition were INR 900mn in Q2FY26. Management believes that the overall integration cost will likely come in at ~INR 2.1bn (30% lower than initial guidance of INR 3bn). We think, any correction in the stock’s price should be an attractive opportunity to buy as the outlook for Delhivery remains strong given the underlying demand uplift and consolidation trend in express parcel business. BUY.

Outlook

We maintain BUY on the stock with a target price of INR 600 as per our three-stage DCF model. The implied EV/EBITDA at our TP is 40x one-year forward. Key risks: 1) Pricing pressure in express parcel or PTL business; and 2) medium-term growth visibility worsening due to global headwinds.