Buy Delhivery Ltd for the Target Rs 541 by Prabhudas Liladhar Ltd
Margin trajectory to improve from 2HFY27E
We increase our pre-IND AS EBITDA estimates by 6%/2%/4% for FY27E/FY28E/FY29E as we fine-tune our volume and realization assumptions for B2C parcel division. DELHIVER IN’s operational performance was better than our estimates with pre-IND AS EBITDA margin of 4.0% (PLe 3.6%) led by calibrated price increases in B2C and PTL division to compensate for fuel and wage inflation. Realization for B2C/PTL division was up 4.0%/5.6% sequentially to INR60 per parcel/INR12.3 per KG respectively. Less than 50%/30% of the price revision in B2C/PTL division is inflation linked indicating proactive repricing measures have been undertaken that could be sticky in nature. With counter-inflationary measures in place and seasonality factor at play in 2HFY27E (3Q/4Q is seasonally strong quarter for B2C/PTL business) we expect operating leverage benefit to play out. Led by healthy growth in volumes we expect sales CAGR of 18% over the next 3 years with EBITDA margin of 6.9%/9.4%/11.0% in FY27E/FY28E/FY29E. Retain BUY with a TP of INR541 (30x Sep-28E pre-IND AS EBITDA; no change in target multiple).
Revenue grew 19.8% YoY:
Revenue grew by 19.8% YoY to INR30,664mn in 2QFY27 (PLe INR30,099mn). B2C segment’s volume increased 32.1% YoY to 325mn (PLe 323mn) in 2QFY27 while realization was down 7.9% YoY to INR60.3/parcel. Consequently, B2C revenue increased 21.7% YoY to INR19,610mn (PLe INR18,897mn). PTL segment saw volume/revenue growth of 14.3%/23.1% YoY to ~0.55mmt (PLe 0.55mmt)/INR6,720mn (PLe INR6,564mn) in 2QFY27, while realizations improved 7.7% YoY to INR12,330/tonne. Supply chain services revenue increased 12.4% YoY to INR1,910mn in 2QFY27.
EBITDA margin at 6.7%:
EBITDA increased 200.5% YoY to INR2,049mn (PLe INR1,821mn, CE Rs1,866mn) with EBITDA margin of 6.7% (PLe 6.1%). However, adjusted EBITDA increased 47.7% YoY to INR1,229mn (PLe INR1,077mn) with a margin of 4.0% (PLe 3.6%). PAT for the quarter stood at INR406mn (PLe INR635mn, CE INR537mn). Miss at the PAT level was due to lower-than-expected other income of INR666mn (PLe INR1,053mn). Service EBITDA margin for B2C parcel/PTL/SCS division stood at 16.2%/12.8%/12.0% in 2QFY27 against 15.3%/8.4%/12.9% in 2QFY26.
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SEBI Registration number is INH000000933
