Delhivery share slumps 11% post Q1; here’s why

Shares of Delhivery tumbled over 11% in the early trade on Wednesday after the logistic firm reported a more than three-fold rise in its net loss during the April-June quarter of 2022, dented by lower revenue from Part Truckload Services and higher costs. As per the company, the profitability was impacted by capacity addition (staffing, fleet, infrastructure), under utilisation of existing capacity, and inflation impact in terms of wage hikes, fuel price, and rent escalation.

The e-commerce-focused logistics firm, which was listed in May this year, posted a consolidated net loss of ₹399 crore during the first quarter ended June 2022, compared to a loss of ₹129.6 crore in the same quarter last year. The Gurgaon-based company, however, registered a 32% growth in revenue to ₹1,745.7 crore in Q1 FY23, as against ₹1,317.7 crore in the corresponding period last year.

During the quarter under review, the company incurred an adjusted Earnings before Interest, Taxes, Depreciation, and Amortisation (EBITDA) loss of ₹217 crore, as against an adjusted EBITDA loss of ₹58 crore in the year-ago period.

Delhivery in its earnings report said that the integration of the recently acquired business of Spoton has been completed, which impacted its service stability and PTL (Partial-Truckload) tonnage. The longer-than-expected time in service stabilisation disrupted pickup/delivery business due to changes in serviceability, load levels and commercial terms and for channel partners during the transition from 3P to self-run operations in select locations, it said.

The company informed the exchanges that there was no deviation in utilisation of funds raised through public offerings. As per the document filed with SEBI, the company intends to use IPO proceeds for funding organic growth initiatives, and inorganic growth through acquisitions and other strategic initiatives, besides general corporate purposes. It plans to use ₹2,000 crore to fund organic growth initiatives like building scale in existing business lines and developing new adjacent business lines, expanding its network infrastructure, and upgrading and improving its proprietary.

Reacting to Q1 numbers, Delhivery shares opened sharply lower and declined as much as 11.3% to hit a low of ₹570, against the previous closing price of ₹642.8 on the BSE. There was a surge in volume trade as 0.44 lakh shares changed hands over the counter as compared to two-week average volume of 0.52 lakh stocks, while the market capitalisation dropped to ₹44,484.5 crore.

At the time of reporting, Delhivery share price was trading 4.4% lower at ₹614.65, while the BSE benchmark Sensex was quoting at 58,826 levels, down 26 points. The stock trades 13% lower than its all-time high of ₹708.45 touched on July 21, 2022, while it was up 33.5% from its record low of ₹456.05 on June 20, 2022.

Delhivery shares made stock market debut on May 24 this year, with stock price listing at ₹493 apiece on the BSE, a premium of ₹6 or 1.2% over its issue price of ₹487. The company raised ₹5,235-crore from initial public offering (IPO), which was fully subscribed despite challenging market conditions. The issue, which opened for subscription between May 11-13, was subscribed 1.63 times, even after receiving tepid response from retail and non-institutional investors. Ahead of the IPO, Delhivery raised ₹2,347 crore from 64 anchor investors by allocating a total of 4,81,87,860 equity shares at ₹487 apiece, the upper end of the price band.