Delhivery shares fall 2% as Q3 loss widens

Shares of Delhivery dropped over 2% in intraday trade on Monday to ₹303 apiece on the National Stock Exchange (NSE) after net loss of the Gurugram-based logistics services provider widened to ₹196 crore for the third quarter. The supply chain company had reported a net loss of ₹126 crore in the corresponding period last fiscal.

The logistics firm's revenue from operations fell 9% to ₹1,823 crore in the December quarter as against ₹1,995 crore in the year-ago period.

Revenue from the partial truckload freight segment declined to ₹277 crore in the quarter ended December 2022 compared with ₹293 crore in Q2 FY23. "The PTL business demonstrated robust volumes and consistently high service levels through November, December and January, providing a strong momentum as the business enters the busiest part of the year," the company said in its stock exchange filing.

Revenue from Delhivery's Express Parcel services stood at ₹1,200 crore in Q3 FY23. "Truckload and Supply Chain Services businesses remained stable in the seasonality-driven Q3 FY23 period. The SCS customer pipeline continued to expand, with new clients added in the auto ancillary & parts, healthcare, home furnishing & furniture, beauty & personal care, consumer electronics and construction sectors, along with the expansion of existing contracts in auto, industrial and consumer segments," the filing said.

"Leading indicators of our business - service precision, network speed and quality parameters all continue to show positive traction. We have had a good end to the year and this momentum has carried into 2023. We are confident of continued improvement in our transportation business, especially PTL, and overall profitability metrics," said Sahil Barua, managing director and chief executive officer, Delhivery.

Brokerages have mixed views on the company's stock.

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 have 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.

Delhivery made its stock market debut on May 24, 2022, with shares listing at ₹493 apiece on the BSE, a premium of ₹6 or 1.2% over its issue price of ₹487.