Delhivery Q3 preview: Express delivery vertical may drive sales growth

However, the partial truck load (PTL) freight business is likely to see muted growth.

For the September quarter, Delhivery had reported a 20% on year and 3% sequential growth

in consolidated revenue to Rs 1,796 crore. The net loss narrowed to Rs 254 crore from

Rs 635 crore a year ago and Rs 399 crore a quarter ago.

Analysts will watch out the trend on freight costs and employee expenses as these make for a chunk of the total expenditure for the company.

In the second quarter, freight handling and services cost rose 24% on year to Rs 1,436 crore. Staff expenses on the other hand, declined nearly 21% on year to Rs 353 crore. The Street will also look for an outlook for both the business segments.

Brokerage Jefferies is bullish on the logistics space and has Delhivery as one of its top picks.

“Formalisation of the logistics sector is a multi-year theme that should play out,” it said.

Following is a summary of analysts’ expectations from the express logistics services provider.

Nuvama Institutional Equities
For Q3, the brokerage expects Delhivery to reduce its losses as sequential volume growth in express parcel and PTL should corroborate into positive operating leverage. It is building in 8% sequential volume and revenue growth in express parcel division, whereas PTL can potentially clock 12% tonnage growth.
Overall, it expects Delhivery to clock an 8.6% sequential growth in revenue.

Kotak Institutional Equities
The brokerage is assuming flat YoY growth in volumes for express parcel vertical, and a 20% decline in the PTL segment. However, the overall revenue quantum will be marginally higher YoY due to scale-up in other segments.

It expects Delhivery to report a negative adjusted and reported EBITDA.

The brokerage, however, expects such loss to be much lower than 2QFY23 based on 13.5% QoQ revenue growth and 50% gross margin on incremental sales till Rs20 bn top-line.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)