Delhivery shares defy market sentiment, jump 4% on Ecom Express acquisition

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E-commerce player Delhivery shares gained four percent in a sour market, as the Street was bullish on the firm’s latest acquisition of logistics firm Ecom Express.

At 3.15 pm, Delhivery’s stock was quoting Rs 267.6, higher by 3.4 percent on the NSE compared to the previous session’s closing price.

Delhivery has formally announced its decision to acquire a rival firm, Ecom Express Limited, for a total sum of Rs 1,407 crore. The acquisition, undertaken as a cash deal, once completed, will make Ecom Express a subsidiary to Delhivery following regulatory approvals.

Domestic brokerages JM Financials and Emkay Global reiterated their bullish ‘buy’ rating, with a target price of Rs 400 and Rs 380, respectively.

“By combining forces, the companies intend to provide a more seamless and enhanced service experience to their collective customer base. Delhivery sees strategic value in Ecom’s experienced team and robust network, with the company potentially gaining the opportunity to cherry pick the right facilities,” said JM Financial.

The brokerage added that after an initial period, Delhivery would take a bottom-up approach to retain the necessary Ecom Express facilities while transitioning the majority of the business to its network as substantial overlap is likely to exist.

Emkay has also reiterated its ‘buy’ call. “The combined entity would command ~55-60 percent market share of the 3PL B2C express market, dwarfing the immediate peer by ~3x. Apart from scale benefits, given that both operators service ~97 percent of pin-codes in India, we believe there are significant cost synergies to be realized over the next 12-18 months.”

Over the past year, shares of Delhivery have crashed 41 percent, as against a two percent fall in the frontline Nifty 50 index.

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