Delhivery shares decline 6% as Q3 loss widens. Should you buy, sell or hold?

Its revenue from operations fell 9% to Rs 1,823 crore for the quarter under review as against Rs 1,995 crore in the last-year period. Sequentially, revenue from operations rose by a marginal 1% from Rs 1,796 crore in the preceding September quarter.

The company said its overall business economics continued to improve with the adjusted EBITDA margin rising by 330 bps from -7% in the second quarter of FY23 to -3.7% in the third quarter.

In line with the September quarter earnings, the incremental gross margin in the Express Parcel and PTL businesses combined continued to be approximately 50% in the third quarter as well. Revenue from Express Parcel services grew 7% quarter-on-quarter to Rs 1,200 crore in the third quarter as against Rs 1,125 crore in the second quarter.

Meanwhile, Express Parcel volumes rose by 9 million shipments quarter-on-quarter to 170 million shipments in the third quarter despite festive season sales starting in the second quarter.

At 11.06 am, the stock was trading 2.1% lower at Rs 309 on BSE. Also, the stock has fallen 42% in the last 12 months.

Should you buy, sell or hold Delhivery’s stock? Here’s what analysts say:

Jefferies
Jefferies maintained its Buy rating on Delhivery with a target price of Rs 570.

“3QFY23 EBITDA loss was lower than expectations as gross profit was better and other expenses lower. Management exhibited confidence in reducing losses further. We believe current price factors less than 10% express parcel growth in the next 3-5 years vs 30%+ levels seen in the past. We believe B2B (Spoton), operating leverage and low e-commerce penetration driven growth are being underestimated,” it said.

ICICI Securities maintained its Buy rating on Delhivery with a target price of Rs 425.

“Delhivery’s Q3FY23 revenue was lower than our estimates due to delayed recovery in PTL volumes. Management clarified that this was due to network footprint optimisation and subdued volumes in the first few days of Q3FY23 caused by unseasonal rains in Tauru. Given the slower-than-expected recovery in PTL, we have cut FY24E/25E revenue and EBITDA estimates by ~9% each and TP by ~8%,” it said.

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