Delhivery shares fall 2% amid report of block deal

Shares of Delhivery dropped nearly 2% in early trade on Wednesday amid a report that Japan-based Softbank Group is looking to sell its stake worth ₹600 crore in the company via block deal. As per the shareholding pattern available on the BSE, Softbank owns 18.42% stake in Delhivery through its subsidiary Svf Doorbell (Cayman) Ltd.

The offer floor price for the block deal, according to reports, is likely to be at a discount of 3-5% against the current market price, while Citigroup will be the broker for the deal. On Tuesday, the shares of Delhivery closed at ₹344.15, down 0.52%, with a market capitalisation of ₹25,069 crore.

Delhivery shares opened a tad higher at ₹346.95 and rose as much as 1.6% to ₹349.70 on the BSE. However, the stock soon pared gains and dropped nearly 3.5% from the day’s high to ₹337.55 levels in the early trade so far. The logistics heavyweight was down 2% against the previous closing price of ₹344.15 on the BSE. There was surge in volume trade as 280 lakh shares changed hands over the counter as compared to the two-week average volume of 1.12 lakh stocks.

Delhivery, which made its stock market debut on May 24, 2022, has delivered a negative return of 37% since its listing on the domestic bourses. The stock has witnessed decent erosion from its all-time high levels of ₹708.45 touched on July 21, 2022. It slipped to a record low of ₹291 on January 27, 2023. In the last six months, the stock has fallen 40%, while it has rebounded 12% in a month. The counter has risen 1% in a week as compared to 1.6% fall in the BSE benchmark Sensex.

For the October-December quarter of the current fiscal (Q3 Fy23), the Gurugram-based logistics services provider reported a net loss of ₹196 crore compared with loss of ₹126 crore in the corresponding period last fiscal. The logistics firm’s revenue from operations dropped 9% to ₹1,823 crore as against ₹1,995 crore in the year-ago period.

Segment-wise, revenue from the partial truckload freight segment declined to ₹277 crore in the quarter ended December 2022 compared with ₹293 crore in Q2 FY23. Revenue from Delhivery’s Express Parcel services stood at ₹1,200 Cr in Q3 FY23.

Brokerages have given mixed views on Delhivery shares post announcement of the October-December quarter result.

According to foreign brokerage Jefferies, Delhivery’s Q3 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,” the brokerage said, maintaining its ‘Buy’ call on the stock with a target price of ₹570 per share.

Analysts at Morgan Stanley cut the target price of the Delhivery stock to ₹370 per share, while giving an ‘overweight’ call. Higher operating leverage and cost rationalisation measures resulted in above estimated Adjusted EBITDA, the brokerage says.