Delhivery’s Stock Performance Sees a New Low
Shares of logistics giant Delhivery plunged 5% during intraday trading on the Bombay Stock Exchange (BSE) on January 22, touching a 52-week low of INR 312.40 per share. The stock recovered some losses later in the day, trading 2.86% lower at INR 319.45 as of 2:31 PM.
At this level, Delhivery’s market capitalisation stood at INR 23,794.55 crore (around $2.75 billion), reflecting a significant decline over the past year. The stock has nosedived 18% in the last 12 months and is currently 34% below its 52-week high of INR 488.05, highlighting ongoing pressures in the market.
Analysts Recommend ‘HOLD’ Rating
Leading brokerage Prabhudas Lilladher has issued a ‘HOLD’ rating for Delhivery, with a target price of INR 361, representing a potential upside of 10% from the stock’s previous close. However, the firm expressed concerns about the company’s growth prospects in the near term.
“Delhivery’s B2C express volume growth has come under pressure over the past three quarters due to rising insourcing by Meesho, a major e-commerce player,” Prabhudas Lilladher said in its report. The firm also highlighted broader challenges, including a slowdown in consumption and increasing competition from quick commerce platforms, which continue to impact the logistics company.
Mixed Financial Results
Despite challenges, Delhivery has shown signs of improvement in its financial performance. In the second quarter of FY25, the company reported a consolidated net profit of INR 10.2 crore, marking a recovery from a loss of INR 102.9 crore in the same quarter last year. However, on a sequential basis, its net profit fell from INR 54.3 crore, indicating some stagnation in its profit momentum.
Delhivery’s revenue from services grew 13% year-on-year (YoY), reaching INR 2,189.7 crore in Q2 FY25, compared to INR 1,941.7 crore in the year-ago period. This increase underscores its ability to grow its top line despite external pressures.
Strategic Innovations to Stay Ahead
To counter the headwinds and strengthen its market position, Delhivery has been actively pursuing innovative strategies. Recently, the company launched a two-hour delivery service in Bengaluru, targeting brands in categories like beauty, personal care, apparel, and fashion. This pilot initiative is part of its broader push into rapid commerce, a high-growth segment in the logistics space.
Delhivery plans to roll out the service in other metropolitan cities, including Hyderabad, Chennai, Delhi NCR, Mumbai, Pune, and Ahmedabad, in the coming months.
Additionally, the company has been building a network of multi-tenant dark stores to facilitate rapid in-city deliveries for e-commerce companies. This initiative, announced in August 2024, aims to position Delhivery as a key player in enabling faster and more efficient last-mile deliveries.
Challenges Loom Ahead
While Delhivery’s efforts to innovate and expand are commendable, the company faces several obstacles. The B2C segment, once a key growth driver, is experiencing a slowdown due to Meesho’s insourcing strategy, which has reduced third-party logistics demand. Combined with a general decline in consumer spending and intensifying competition, Delhivery’s growth outlook remains uncertain in the near term.
Prabhudas Lilladher’s report further cautioned that these challenges are unlikely to dissipate quickly, even if Meesho stabilizes its insourcing. The brokerage cited the broader macroeconomic slowdown and competition from quick commerce players as ongoing risks.
A Long-Term Path to Recovery
Despite these challenges, Delhivery’s investments in innovation and infrastructure signal its commitment to adapting to market demands. The company’s foray into rapid commerce and its growing network of dark stores are expected to create new revenue streams and enhance customer satisfaction.
For investors, the ‘HOLD’ rating reflects cautious optimism. While the stock’s steep decline may deter some, the target price of INR 361 offers a potential upside of 10%, indicating moderate confidence in Delhivery’s ability to navigate current challenges.
Conclusion
Delhivery’s stock performance mirrors the broader pressures on India’s logistics sector, exacerbated by shifting market dynamics and competitive threats. However, with strategic innovations like rapid delivery services and dark store networks, the company is positioning itself for long-term resilience.
As the logistics landscape evolves, Delhivery’s ability to adapt and innovate will be crucial in regaining investor confidence and ensuring sustained growth in a highly competitive environment. For now, stakeholders are watching closely to see if these efforts can offset the immediate challenges and restore momentum in the months ahead.
