Delhivery stock sheds 12% after weak Q4 results, brokerages remain bullish

Shares of Delhivery cracked 12 percent in intra-day deals after the logistics company posted a net loss in the fourth quarter ending March 2024 (Q4FY24). The company reported a loss of ₹96.2 crore in the quarter under review as against a profit of ₹52.97 crore in the previous quarter (Q3FY24). However, on a YoY basis, its net loss narrowed from ₹117.5 crore in the same quarter last year.

Its revenue for the quarter under review also fell over 7 percent to ₹1,878.77 versus ₹2,026.85 in the December quarter. On a YoY basis, the revenue rose 9 percent from ₹1,722.78 crore in March 2023. Its EBITDA climbed to ₹46 crore from ₹13 crore in the year-ago period. The company's expenses also increased to ₹2,257.2 crore in Q4FY24 against ₹2,107.6 crore a year ago.

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The stock fell as much as 11.9 percent to its day's low of ₹383.90. It is now over 21 percent away from a 52-week high of ₹488.05, hit on February 5, 2024. Meanwhile, the stock is still up 12.5 percent from its 52-week low of ₹341.05, hit on May 22, 2023.

In the last one year, the scrip has advanced over 20 percent, meanwhile, just gained 3 percent in 2024 YTD.

Meanwhile, for the full 2024 fiscal, the company's consolidated net loss declined to ₹259.2 crore from ₹1,007.7 crore in FY23.

In a separate statement, the company's MD and CEO Sahil Barua said, "FY24 has been a crucial year for us where we delivered consistent service levels, significantly improved profitability, completed a large portion of our planned long-term capital investments and achieved material working capital improvement".

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The company's board has also approved the incorporation of a wholly-owned subsidiary for manufacturing drones and freight air transport services.

Post the Q4 results, brokerage house Prabhudas Lilladher upgraded the stock to buy from accumulate with a target price of ₹530 ( ₹510 earlier), implying a 38 percent upside potential.

"Delhivery anticipates a 15-20 percent growth in the e-com sector for FY25E as it renegotiates contracts with its customers for FY25E. We expect Delhivery to maintain its market share at 21-22% and grow its volumes at 18% CAGR in the long run (FY25-35E). The express parcel segment remains the leader in generating service EBITDA margins (18%) and the management expects to pass on the incremental margin benefits to clients. PTL (at 2.2%) is expected to follow suit, on the back of higher loads and improved asset utilization. Overall, Delhivery is poised to further optimize its cost structure, driving enhanced profitability," said the brokerage.

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It also noted that Delhivery remains net debt free (Rs.53.2 bn net cash) and has a favorable working cap position (31 days vs earlier 73 days in FY20). Delhivery is expected to maintain an edge over competitors given 1) a unique low-cost business model (B2B+B2C in same infra), 2) continued investments in building infrastructure (tractor trailers, automated hubs, etc), 3) focus on cost optimization, and 4) strong proprietary tech infra, rationale PL.

Emkay also has a target price of ₹500 for the stock with a buy rating. It continues to expect the company to turn PAT positive in FY25, as tapering capex intensity and net cash balance sheet help soften the blow on volumes in the short term.

"With a focus on ramping up other businesses like supply chain services, Delhivery will not only diversify its revenue streams but strengthen its moat of being the lowest cost operator, in our view," said Emkay Global in a report.

Gurugram-based Delhivery, an integrated logistics services provider, covers around 19,000 pin codes in India.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.