Hold Delhivery; target of Rs 340: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on Delhivery with a target price of Rs 340 in its research report dated February 10, 2025.

Broker Research

February 11, 2025 / 15:17 IST

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Prabhudas Lilladher's research report on Delhivery

We cut our FY25E EBITDA estimates by 9% amid eruption of cost led challenges in the quarter; however our FY26E/FY27E estimates are broadly intact. Delhivery reported weak set of numbers with EBITDA miss of 13% due to high fleet cost inflation given the festive demand and increase in fixed overheads arising from operationalization of new facility at Bangalore. This was the fourth straight quarter wherein Delhivery’s B2C volume growth was in low single digits. While Meesho’s insourcing exercise has stabilized, near term growth headwinds are likely to persist as competition amongst 3PL players has now intensified. While growth challenges are evident in the B2C express segment, PTL business continues to report steady performance with volume/yield growth of 16.4%/4.7% respectively.

Outlook

We expect Delhivery to report 13% sales CAGR over the next 2 years with EBITDA margin of 6.3%/8.0% in FY26E/FY27E. Retain HOLD on the stock with a TP of Rs340 (35x FY27E EBITDA; no change in target multiple). Recovery in B2C volumes is key to re-rating.

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