Buy Delhivery Ltd For Target Rs.534 by Prabhudas Liladhar Capital Ltd
Turns FCFF positive
We cut our adjusted EBITDA estimates by 5% as investment in new businesses (on demand intra-city logistics, international air-economy and financial services) is pegged at INR1,300-1,600mn in FY27E. DELHIVER IN reported better than expected operating performance with EBITDA margin of 7.5% (PLe 6.7%) aided by healthy traction in B2C and PTL division. Led by better scale advantage, improvement in working capital cycle to 11 days and reduction in capex intensity to 4.7% of sales, DELHIVER IN turned FCFF positive in FY26. Amid curbs on insourcing by a large marketplace platform, the B2C segment has registered healthy performance since the last two quarters. On the other hand, rising utilization has led to an improvement in service EBITDA margin of PTL division to 13.5% in 4QFY26. Given evident growth/margin levers in B2C/PTL division respectively we expect sales CAGR of 17% over the next 2 years with EBITDA margin of 8.9%/10.2% in FY27E/FY28E. DELHIVER IN trades at 47x/31x our FY27E/FY28E preIND AS EBITDA estimates. Retain BUY with a TP of INR534 (35x FY28E EBITDA).
Revenue grew 30.0% YoY:
Revenue grew by 30.0% YoY to INR28,500mn in 4QFY26 (PLe INR27,394mn). B2C segment’s volume increased 72.9% YoY to 306mn (PLe 293mn) in 4QFY26, while realization was down 15.6% YoY to INR.59.9/parcel. Consequently, B2C revenue increased 45.9% YoY to INR.18,320mn (PLe INR18,164mn). PTL segment saw volume/revenue growth of 19.9%/20.3% YoY to ~0.55mmt (PLe 0.54mmt)/INR.6,220mn (PLe INR6,185mn) in 4QFY26, while the realization remained flat YoY at INR11,330/tonne. Supply chain services (SCS) witnessed de-growth by 19.2% YoY to INR.1,850mn in 4QFY26.
EBITDA margin at 7.5%:
EBITDA increased 79.9% YoY to INR2,142mn (PLe INR1,845mn, CE INR1,967mn) with a margin of 7.5%. Adjusted EBITDA increased 174.6% YoY to INR1,512mn (PLe INR1,393mn) with a margin of 5.3% (PLe 5.1%). PAT for the quarter was flat at INR724mn. However, after adjusting for the E-com integration cost and exceptional items, adjusted PAT increased 28.0% YoY to INR929mn for 4QFY26 (PLe INR758mn, CE INR846). Service EBITDA margins for B2C parcel/PTL/SCS stood at 18.8%/13.5%/10.8% in 4QFY26 against 15.9%/10.8%/5.4% in 4QFY25, respectively.
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