Hold Delhivery Ltd For Target Rs.503 by Prabhudas Liladhar Capital Ltd
Inflationary pressures erupt
We cut our FY27E EBITDA estimates by 24.3% as we fine tune our margin assumptions for B2C and PTL division given sharp inflationary pressure arising from rise in fuel prices and revision in minimum wages across 4 states like Haryana, Karnataka, UP and Punjab. DELHIVER IN reported a weak operational performance with EBITDA margin of 4.9% (PLe 7.0%) due to fuel & wage inflation. As fuel pass through clauses have been activated margin recovery can be swift from 2QFY27E. However, we believe passing wage cost inflation via repricing client contracts could take a bit longer and consequently we have trimmed our service EBITDA margin estimates for B2C/PTL division to 16.8%/13.1% respectively in FY27E. Led by healthy growth in volumes we expect sales CAGR of 18% over the next 2 years with EBITDA margin of 6.7%/9.5% in FY27E/FY28E. Retain HOLD with a TP of INR503 (35x FY28E EBITDA; no change on target multiple) given imminent margin pressure
Revenue grew 27.8% YoY:
Revenue grew by 27.8% YoY to INR29,307mn in 1QFY27 (PLe INR29,474mn). B2C segment’s volume increased 54.8% YoY to 322mn (PLe 306mn) in 1QFY27, while realization was down 13.9% YoY to INR58.0/parcel. Consequently, B2C revenue increased 33.2% YoY to INR18,690mn (PLe INR18,665mn). PTL segment saw volume/revenue growth of 18.3%/24.6% YoY to ~0.54mmt (PLe 0.55mmt)/INR6,330mn (PLe INR6,282mn) in 1QFY27, while realizations improved 5.3% YoY to INR11,679/tonne. Supply chain services witnessed marginal de-growth of 2.9% YoY to INR1,990mn in 1QFY27.
EBITDA margin at 4.9%:
EBITDA decreased 4.5% YoY to INR1,422mn (PLe INR2,063mn, CE INR1,849mn) with EBITDA margin of 4.9% (PLe 7.0%). Adjusted EBITDA declined 0.9% YoY to INR752mn (PLe INR1,135mn) with a margin of 2.6% (PLe 3.9%). Higher fuel inflation and manpower availability issue have impacted margins. PAT for the quarter decreased 65.0% to INR319mn. However, after adjusting for the Ecom integration cost, adjusted PAT decreased 46.3% YoY to INR489mn in 1QFY27 (PLe INR902mn, CE INR557mn). Service EBITDA margins for Express parcel/PTL/SCS stood at 15.6%/11.2%/6.7% in 1QFY27 against 16.3%/10.7%/7.2% in 1QFY26.
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