Shares of Delhivery tumbled nearly 12% in intraday trade on Tuesday after the new age technology company reported weak earnings in the fourth quarter ended March 31, 2024. The sentiment was further dented following the resignation of Sandeep Barasia from the post of Executive Director & Chief Business Officer of the Gurgaon-based company.

Early today, Delhivery shares opened marginally lower at ₹435.65 after ending 4.5% lower at ₹435.90 on the BSE on Friday. Extending opening losses, the midcap stock crashed as much as 11.9% to ₹383.90 amid strong volume. As many as 4.25 lakh shares changed hands over the counter so far, compared with two-week average of 0.42 lakh stocks.

At the time of reporting, shares of Delhivery were down 10% at ₹392.5, with a market capitalisation of ₹28,945 crore. At the current price, Delhivery share trades 20% lower than its 52-week high of ₹488.05 touched on February 5, 2024, while the stock is up 15% from its 52-week low of ₹341.05 hit on May 22, 2023.

In the last one year, the logistics stock has risen 8%, while it has fallen nearly 2% in six months. In the calendar year 2024, the counter gained 2%, while it fell nearly 13% in the past one month.

Delhivery, a homegrown logistics and supply chain company, released its earnings report post-market hours on May 17, posting a loss of ₹68.5 crore in March quarter of FY24, compared to loss of ₹159 crore in the same period last year. The company had posted a profit of ₹11.7 crore in the December quarter of FY24, for the first time since its stock market debut in May 2022.

In Q4 FY24, the revenue rose 12% to ₹2,076 crore from ₹1,860 crore recorded in the corresponding quarter last year. In the December quarter, Delhivery had clocked a revenue of ₹2,194 crore.

On the operating front, EBITDA increased to ₹46 crore in Q4 FY24, versus ₹13 crore in Q4 FY23.

For the full financial year 2023-24, revenue rose to ₹8,142 crore, up 13% from ₹7,224 crore in FY23. The loss narrowed to ₹249 crore from ₹1,008 crore in the previous fiscal. This is the first time when the company turned EBITDA positive for the full year to ₹127 crore from a loss of ₹452 crore in FY23.

Post Q4 results, ICICI Securities has maintained ‘BUY’ call on Delhivery stock with a target price of ₹600, an upside potential of 32% from Friday’s closing price. Prabhudas Lilladher has also assigned ‘BUY’ rating with a price target of ₹530, citing faster than expected recovery in the Part Truckload Freight (PTL) margins. All business segments have reached service EBITDA breakeven, it says in its report.

The brokerage in its report says that Express parcel segment remains the leader in generating service EBITDA margins (18%) and the management expects to pass on the incremental margin benefits to clients. PTL (at 2.2%) is expected to follow suit, on the back of higher loads and improved asset utilisation. “Overall, Delhivery is poised to further optimise its cost structure, driving enhanced profitability,” as per the report.

In Q4FY24, Delhivery’s express parcel revenue declined 16% QoQ (+3% YoY), as e-commerce spends softened post a strong festive season. However, PTL revenue recovery (10% QoQ) and sustained profitability improvement (400 bps QoQ) helped the company deliver positive adjusted EBITDA.

Management has guided for 15-20% YoY revenue growth in express parcel segment and reduction in capex from 7.4% of revenue to 6.6-6.9%. “Service EBITDA margin for express parcel segment is now in the guided ballpark of 18-20% and further efficiency led margin improvements are likely to be passed on to customers. Management re-iterated its view that service EBITDA margin for PTL can be compared to express business,” says ICICI Securities in its report.

Prabhudas Lilladher in its report says that Delhivery remains net debt free with ₹5,320 crore net cash and a favourable working cap position (31 days vs earlier 73 days in FY20). “Delhivery is expected to maintain an edge over competitors given 1) unique low cost business model (B2B+B2C in same infra), 2) continued investments in building infrastructure (tractor trailers, automated hubs etc), 3) focus on cost optimisation and 4) strong proprietary tech infra,” the report notes.    

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