Shares of logistics services firm Delhivery gained for the fifth straight session today on the back of reports that MSCI has added 24 companies including Delhivery and deleted 5 securities from MSCI India Domestic Small Cap Index. All changes will be implemented as of the close of February 28, 2023.
The stock of Delhivery gained 5.33 per cent intraday to Rs 358 against the previous close of Rs 339.90 on BSE. Market cap of Delhivery rose to 26,078 crore.
Total 1.15 lakh shares of the firm changed hands amounting to a turnover of Rs 4.05 crore on BSE.
The stock has gained 7.37% in 2023.
In terms of technicals, the relative strength index (RSI) of the stock stands at 64.8, signaling the stock is neither oversold nor overbought. Delhivery stock is trading higher than the 5 day, 20 day and 50 day moving averages but lower than 100 day and 200 day moving averages.
The stock hit a record high of Rs 708.45 on July 21, 2022 on BSE and a 52-week low of Rs 291 on January 27, 2023.
Delhivery shares have gained 23.26% from their 52-week low.
Meanwhile, Morgan Stanley is overweight on the Delhivery with a target of Rs 370.
“Operating leverage is high. Cost rationalization resulted in better-than-expected adjusted EBITDA. However, the revenue growth is missing estimates,” it said.
In the third quarter of the current fiscal, Delhivery’s net loss widened to Rs 195.7 crore compared to a loss of Rs 127 crore in the year-ago quarter. Revenue also fell 9% to Rs 1,823 crore as against Rs 2,019 crore year-on-year (YoY).
Global brokerage Jefferies has maintained its Buy tag on Delhivery shares with a target price of Rs 570.
“Q3 EBITDA loss was lower than expectations as gross profit was better and other expenses lower. Management exhibited confidence on reducing losses further. We believe current price factors less than 10% express parcel growth in the next 3-5 years vs 30% plus levels seen in the past. We believe B2B (Spoton), operating leverage and low e-commerce penetration driven growth are being underestimated,” said Jefferies.
Abhijeet from Tips2trade said, “Despite another loss making Q3FY23 results, Delhivery stock price has seen strong short covering due to a strong positive divergence technically. Currently, Rs 365 remains a strong resistance and investors can book some profits here as it approaches overbought levels on the Daily charts and wait for a dip near Rs 298 to think of initiating fresh buy positions.”
Nuvama has retained ‘HOLD’ tag with a revised target price of Rs 361 (earlier Rs 415) on the Delhivery stock.
“Delhivery’s Q3FY23 results were a mixed bag. With SpotOn’s integration, margin improvement met expectations, but express parcel shipment volume growth was sluggish at 6% QoQ/flat YoY. That said, PTL volumes are showing momentum since Jan-23 and the midmile optimisation should aid margin expansion. Growth moderation in Express currently and the FY24E uncertainty are the key variables,” said brokerage Nuvama Research.
Meanwhile, Kotak Institutional Equities has a buy rating of Rs 395 for Delhivery stock.
Australian brokerage Macquarie has initiated coverage on the logistics services provider with a buy call. The brokerage has assigned an outperform rating to the firm with a target price of Rs 440. It sees a clear path to 100% returns in 3 years for the stock.
The brokerage has forecasted four times volume growth by FY30 with a sustainable cost leadership position, positive unit economics and no external funding needs.
“Over the next few quarters, we see a low-growth operating environment due to tighter funding conditions for e-commerce platforms,” the brokerage said in a note. If the low-growth operating period becomes the new normal, Macquarie’s bear case valuation would be Rs 215 with a 30% downside from the current price, it said.
Delhivery is engaged in providing a full range of logistics services, including delivery of express parcel and heavy goods, PTL freight, TL freight, warehousing, supply chain solutions, cross-border Express, freight services, and supply chain software. Delhivery is the largest and fastest-growing fully integrated logistics services player in India by revenue as of FY21.
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