Delhivery hits highest level since listing, stock surges 36% in one month

Shares of Delhivery surged 7 per cent to Rs 635 on the BSE in Tuesday’s intraday trade on healthy business growth outlook. The stock of the logistics services provider was trading at its highest level since listing on May 24, 2022.

In the past one month, the stock has zoomed 36 per cent, as compared to 6 per cent rise in the S&P BSE Sensex. At current levels, Delhivery is 30 per cent higher over its issue price of Rs 487 per share. The stock had hit a low of Rs 474 on its debut day.

Delhivery is the largest and the fastest growing fully-integrated logistics services player in India by revenue as of FY22. It provides supply-chain solutions to a diverse base of 23,613 active customers such as e-commerce marketplaces, direct-to-consumer etailers and enterprises and various SMEs.

On June 22, 2022, Delhivery had said it plans to expand its infrastructure in the two key cities of Bhiwandi (Greater Mumbai) and Bengaluru. Delhivery is collaborating with Welspun on a 700,000 sq ft mega-gateway in Greater Mumbai and with GMR for a one million-plus sq ft facility in Bengaluru, which will also include a warehouse for multi-channel order fulfillment for Delhivery’s customers.

These fully-automated large integrated trucking terminals will be operational by 2023 and will increase Delhivery's processing capacity to meet the customer demand from the South and West.

“With the logistics and warehousing sector going through a transformational phase in India, this partnership will take us one step closer to positively value add to our client’s business requirements by ensuring they get the highest quality Grade A assets,” the management of Delhivery said.

Delhivery’s (D) B2C-heavy business model has a potential profit pool of Rs 6,300 crore in India by FY26E, according to analysts at ICICI Securities.  “Our base case assumes D to capture around 25 per cent of the same. We see significant scope of operating leverage with global best practices in distribution, sorting as well as consolidation likely streamlining processes. What helps us to take the leap of faith toward profitability is that D captured ~90 per cent of incremental 3PL ecommerce distribution market (FY19-22) – a rare feat in itself across industries. We expect (ex-ESOPs) PAT of Rs 940 crore/1,570 crore by FY25/26E,” the brokerage firm said in its initiate’s coverage report dated July 1, 2022 with ‘hold’ rating on the stock.

Management’s plan is to press for operational efficiencies and pass on the same to customers (partly), thereby meaningfully creating/capturing the incremental market, it added.