Buy Delhivery Ltd for the Target Rs. 570 by Motilal Oswal Financial Services Ltd
One-time integration costs hit 2Q performance; outlook remains bright
Strong performance in Express & PTL segments, while the supply chain margin improves
* Delhivery posted a 17% YoY rise in revenue to INR25.6b in 2QFY26 (in line).
* During the quarter, the company recognized INR900m of costs related to ecom express integration. The acquisition was formally completed in Jul’25.
* EBITDA (excluding Ecom Express integration costs) stood at INR1.5b against our estimate of INR1.6b. EBITDA margin (excluding Ecom Express integration costs) stood at 5.9% against our estimate of 6.5%.
* PAT (excluding Ecom Express integration costs) stood at INR590m against our estimate of INR820. PAT was impacted due to lower other income.
* Delhivery’s core transportation segment, comprising Express Parcel and Part Truckload (PTL), saw healthy volume growth (Express Parcel: +34% YoY and PTL: +12% YoY), supported by improved services and network utilization. Service EBITDA margins for Express Parcel/PTL stood at 15.3%/8.5%, underscoring Delhivery’s operational efficiency and scale advantages.
* Performance in the Supply Chain Services (SCS) and Cross-Border businesses was mixed. SCS reported an improvement in the service EBITDA margin to 12.8%, driven by strategic contract renegotiations with clients and technologyled operational efficiencies, while the Cross-Border business remained muted.
* Adjusted for one-time integration costs, Delhivery delivered a strong 2QFY26 performance supported by strong festive season demand and integration of Ecom Express, which led to robust volume growth in Express Parcel (+34% YoY) and PTL (+12% YoY) with decent service EBITDA margins. New services such as Delhivery Direct and Rapid are scaling up well.
* We cut our FY26E EBITDA by ~13% to factor in the one-time integration expenses, which were incurred in 2Q and will be incurred in 2HFY26 as well. We broadly retain our FY27/FY28 estimates. We expect Delhivery to deliver a CAGR of 15%/38%/54% in revenue/EBITDA/APAT over FY25–28. We reiterate our BUY rating with a revised DCF-based TP of INR570.
Core transportation businesses drive profit-accretive growth
* The Express Parcel and PTL segments remain the key drivers of Delhivery’s core growth and profitability. Express Parcel revenue grew 24% YoY to INR 16.1b, with shipment volumes rising 34% YoY to 246m parcels. The segment reported a healthy service EBITDA margin of 15.3%, down 100bp QoQ. However, margins are expected to revert to the guided range of 16–18% by the end of FY26.
* PTL revenue grew ~15% YoY to INR5.4b, with tonnage increasing 12% YoY to 0.477MT. The Service EBITDA margin was 8.5%, which was down 220bp QoQ and up 560bp YoY, supported by improved yields and a favorable client mix.
* The combined transportation business (Express + PTL) delivered a robust service EBITDA margin of 13.5% in the quarter, with pricing discipline, route optimization, and consistent investments in a high-capacity fleet and integrated gateways.
Strengthened strategic position through asset optimization and acquisition
* Delhivery has demonstrated capital discipline and strategic clarity in recent quarters. The company has completed major capex investments during FY22-25, i.e., expanding its trucking fleet from 299 to 1,741 vehicles and building megagateways in Tauru, Bhiwandi, and Hoskote. As a result, capital intensity has declined from 6.8% of revenue in FY22 to 5.1% as of 1HFY26, with expectations of further moderation to ~4% of revenue by FY28.
* Delhivery has completed the acquisition of Ecom Express, bolstering its network footprint and consolidating the marketplace with fewer players, thus providing a competitive advantage. Moreover, access to Ecom Express’s advanced automation equipment and high-quality infrastructure adds further synergies.
Highlights from the management commentary
* The company incurred a one-time integration cost of INR 900m in 2QFY26, which dragged reported profitability, resulting in a loss for the quarter. However, after adjusting for this one-time expense, the profit stood at INR 590m vs INR 102m YoY.
* Express Parcel and PTL segments continue to deliver healthy service EBITDA margins, and the company is targeting 16-18% steady-state margins across both businesses in the next two years.
* Delhivery is selectively exiting unprofitable contracts while targeting INR18-20b in supply chain revenue. It achieved a service EBITDA margin of 12% this quarter, and management expects to maintain this and achieve an RoCE of 20% in three years. This will be driven by a growing enterprise pipeline and whitelabeled “Prime” offerings.
* Delhivery is building long-term optionality through targeted investments in new service lines like Delhivery Direct (on-demand intra-city and inter-city logistics) and Rapid (dark store-led same-day fulfillment). Delhivery Direct is launched in three major cities—Ahmedabad, Delhi NCR, and Bengaluru. It also signed its first B2B client in this segment in Oct’25 and plans to take the store count to 25 by FY26. The investment in the above two businesses was INR150m in 2QFY26.
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 Delhivery to deliver a CAGR of 15%/38%/54% in revenue/EBITDA/ APAT over FY25–28. We reiterate our BUY rating with a revised DCF-based TP of INR570.
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