Delhivery is set to announce its Q2 FY24 results on November 4, and is likely to show revenue growth, expansion in gross margins, and a cut in net losses, helped by the growth in express parcel and partial-truck load businesses.
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Delhivery’s July-September revenue is expected to rise to Rs 2,069 crore, according to an average of three brokerage estimates. Net loss is expected to narrow down to between Rs 73 crore-90 crore, according to a few brokerage estimates.
Also Read: Sucker Punch: Will Flipkart’s venture into logistics knock Delhivery sideways?
Earlier, in Q1 FY24, the logistics player reported a 78 percent cut in its net loss to Rs 89 crore from the year-ago period. Earnings before interest, taxes, depreciation and amortisation (EBITDA) loss for the quarter narrowed 89 percent on-year to Rs 25 crore in April-June.
JM Financial analysts expect Delhivery to continue delivering gross margin improvement in Q2 FY24. Key things to monitor during this period would be volume and realisations; revenue impact from recent onboarding of customers such as Tata Motors, Havells and Mamaearth; and any further clarifications on capex requirements.
Also Read: Shein re-entry could be high tide that lifts all boats in e-commerce: Delhivery CEO
As of October 2023, JM Financial had a ‘hold’ call on Delhivery stock with a target price of Rs 390. Currently, Delhivery has 14 ‘buy’ calls against 5 ‘sells’ and 4 ‘hold’ calls, as of data available on November 1.
Growth in Express Parcel, PTL business
Analysts at Kotak Securities expect Delhivery to report 17 percent on-year growth in volumes (Express Parcel+Partial Truck Load). Analysts from JM Financials expect Delhivery’s Express Parcel business to see a growth of 6.5 percent sequentially, and around 14 percent on a year-on-year basis.
Analysts at ICICI Securities expect the company’s Express Parcel shipment volumes to be flattish sequentially given that the festive season has been delayed this year but expect a 7.9 percent growth year-on-year growth. They also expect to see a steady improvement of 3.5 percent on a sequential basis in PTL volumes.
Also Read: Delhivery: A reality check on the growth hype
Profit elusive for Delhivery?
ICICI Securities has a ‘buy’ call on Delhivery stock with a target price of Rs 500, according to an October 2023 report. Elara Capital, which initiated coverage on the stock in October 2023 with a ‘reduce’ call, said that chances that Delhivery may miss consensus estimates (on volume growth and operating leverage are more than not. “While Delhivery is en-route to turning profitable, the likelihood of this miss may weigh on the stock price, near-term. There could also be supply of shares from early investors (angel/VC etc.) at every incremental price point,” the October 2023 report said. Elara Capital gave a target price of Rs 405.
Long way to go?
According to analysts at Elara, key risks for Delhivery are cash utilisation towards volume/value-accretive acquisitions, and faster-than-anticipated growth and turnaround in profitability. Elara Capital expects Delhivery to turn EBITDA positive by FY25 and PAT positive by FY27 only.
Over the last six months, the stock of Delivery has gained over 10 percent to Rs 401.45 at close on November 1.
Started in 2011 and listed in 2022, Delhivery is an integrated logistics player offering services such as express parcel, warehousing and data intelligence, amongst others.
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