Buy Delhivery Ltd For Target Rs.540 by Motilal Oswal Financial Services Ltd
‘Delhivering’ growth through scale, efficiency, and market leadership
We initiated coverage on Delhivery on 9 th Jul’25 with a TP of INR460 at a market price of INR396. Since then, the stock has gained 18%, and we believe there is further momentum in this growth story. The company, through network scale, a strong balance sheet, and leadership in express parcel, is well-positioned for future growth. We reiterate our positive stance on the stock with a revised TP of INR540.
Strong industry tailwinds and market leadership
* India’s logistics sector is set for sustained expansion, driven by rising ecommerce penetration, GST-led network consolidation, and B2B formalization, with a projected industry CAGR of >15% over FY23–28.
* Delhivery, with >20% volume market share, is the largest 3PL express parcel player in India and is strategically positioned to capture disproportionate benefits from this growth. The company’s pan-India reach spans over 18,800 pin codes, supported by a modern integrated network of mega-gateways, automated sortation centers, and a high-capacity trucking fleet.
* Delhivery’s ability to serve high-growth sub-segments such as D2C brands and SME shippers provides an additional growth lever beyond large marketplaces.
Strategic expansion through the Ecom Express acquisition
* The INR14b acquisition of Ecom Express (completed in Jul’25) consolidates Delhivery’s leadership in express parcel logistics and adds a complementary rural network, strengthening its reach and customer base. This integration is likely to drive network density gains, footprint rationalization, and cost synergies.
* With rural and Tier 2–4 cities forming a substantial share of e-commerce volumes, the acquisition deepens Delhivery’s competitive moat against key rivals like Blue Dart Express and XpressBees. The combined entity is positioned to gain share as 3PL players benefit from rising cost pressures on captive logistics arms and industry-wide pricing normalization.
PTL and supply chain services remain high-growth, underpenetrated segments
* The Part Truck Load (PTL) segment remains a fragmented market with less than 25% of volumes handled by organized players. Following the Spoton integration, Delhivery has demonstrated consistent outperformance through wide geographic coverage, faster turnaround times, and tech-driven process optimization. We project an 18% CAGR in PTL revenue over FY25–28, underpinned by SME and retail segment expansion, yield improvement, and adoption of value-added services.
* Supply Chain Services (SCS) is scaling profitably, benefitting from the increasing formalization of warehousing, GST-led network redesign, and demand for integrated multi-location solutions like the “Prime” service. We expect SCS revenue to clock a 22% CAGR over FY25-28.
Margin expansion in the core business segment drives capital efficiency
* Delhivery’s EBITDA margin is projected to improve to 7.3% in FY28E from 4.2% in FY25, supported by operating leverage, improved asset utilization, and technology integration across the value chain. Management expects PTL’s EBITDA margin to reach 16–18% in the next 2-3 years (from ~11% in 1QFY26), while the express parcel service’s EBITDA margin is likely to expand to 17–18% (~16% in 1QFY26) levels by Mar’26.
* Capital intensity is moderating, with major network buildout completed and steady-state capex expected to fall to ~4-5% of revenue by FY28. A strong balance sheet with negligible debt offers significant headroom for strategic capex and acquisitions.
Valuation and view
* Delhivery is well-positioned for future growth, supported by strong momentum in its core transportation businesses and a clear focus on profitability. With Express Parcel and PTL segments delivering consistent volume growth and healthy service EBITDA margins, the company expects to sustain 16-18% margins over the next two years.
* The integration of Ecom Express is set to enhance network efficiency and reduce capital intensity, while new services like Delhivery Direct and Rapid offer longterm growth potential in on-demand and time-sensitive logistics.
* We expect the company to report a CAGR of 14%/38%/53% in Sales/ EBITDA/APAT over FY25-28. Reiterate BUY with a revised TP of INR540 (based on DCF valuation).
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