Delhivery Shares Slump Nearly 7% After Q1 Results; Brokerages Downgrade Stock

Shares of logistics startup Delhivery plunged about 7% to INR 599.9 on the BSE on Wednesday (August 10) following its lacklustre Q1 FY23 results. 

On Tuesday, the startup reported widening of its loss by 208% year-on-year (YoY) to INR 399.3 Cr, while loss grew 233% on a quarter-on-quarter (QoQ) basis.

Delhivery’s total income increased 31% YoY to INR 1,794.5 Cr during the June quarter. The startup reiterated that it’s “extremely well-capitalized”, with cash and investments of over INR 6,000 Cr as of June 30, 2022.

“…will continue to invest in building infrastructure, technology, and operational capacity to deliver high-quality service to our customers,” Delhivery MD and CEO Sahil Barua said.

However, this failed to impress the investors. Delhivery shares fell as much as 9% to INR 584.05 during the intraday trading on the BSE on Wednesday. 

A few brokerages also changed their views about the stock on the back of its Q1 performance. ICICI Securities downgraded the stock to ‘sell’ from ‘hold’, but kept the target price unchanged at INR 484. 

The brokerage noted that the under-utilisation of existing capacity had a major impact on Delhivery’s Q1 performance, especially in June. Besides, the brokerage doesn’t expect Delhivery to capture much of third-party logistics and cross-border profit pool.

“This (Delhivery) appears to be much better placed than Indian internet players, while appearing expensive as compared to global delivery / Chinese delivery players (exceptions being ZTO, Blue Dart, TCIE and Concor) – presumably due to high embedded growth,” the analysts at ICICI Securities said.

On the other hand, Credit Suisse, which was largely positive about Delhivery, downgraded the stock to ‘neutral’ from ‘outperform’, but retained its target price of INR 675. 

Edelweiss Securities also downgraded the stock to ‘hold’ from ‘buy’ and cut the target price to INR 620 from INR 650 earlier. Meanwhile, IIFL Securities, which, unlike several other brokerages, had initiated coverage on Delhivery with a ‘sell’ rating, maintained the same rating and said that the quarter’s performance partly reflects the execution challenges, which may weigh high on its ambitions.

Delhivery got listed in May this year at INR 493 per share on the BSE and at INR 495.2 on the NSE. The shares were recently on a rally when they touched a high of INR 699.95 in July.

Delhivery’s market capitalisation also crossed INR 50,000 Cr mark last month, helping the startup become a part of top 100 companies in terms of market cap.

As of Wednesday, Delhivery’s market cap stood at INR 43,462.94 Cr. The shares are currently trading about 22% higher than their listing price.

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