Delhivery Ltd. shares traded little changed on Friday after HSBC lowered its target price on the logistics company while retaining its "Hold" rating, citing pressure on near-term profitability from higher fuel and employee costs. The stock fluctuated between gains and losses and was trading at Rs 515.50.
The brokerage cut its target price to Rs 490 from Rs 500 and reduced its Ebitda estimates for FY27 through FY29 by 5% to 6%. It expects resilient parcel volume growth to continue but said rising costs could weigh on earnings in the coming quarters.
The revised target price reflects HSBC's lower earnings expectations even as it maintained its long-term view on the company's business.
Among the 23 analysts tracked by Bloomberg, 18 recommend "Buy", four have a "Hold" rating and one recommends "Sell". The average price target stands at Rs 568.29, implying a potential upside of 10.5% from the previous closing price.
Parcel Volumes Seen Holding Up
HSBC said parcel volumes are likely to remain resilient despite concerns over moderating consumption.
The brokerage said Delhivery could benefit if e-commerce platform Meesho reduces its in-house logistics operations, leading to higher outsourcing to third-party logistics providers such as Delhivery.
According to HSBC, increased outsourcing from Meesho could offset concerns about slowing consumption and support shipment volumes.
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Higher Costs May Weigh On Margin
HSBC said higher fuel costs and wage revisions could pressure margins despite stable shipment volumes.
The brokerage noted that fuel costs remained elevated during the first quarter of FY27, while the company has yet to pass those costs on to customers. It said the delay in recovering higher fuel expenses could weigh on profitability.
HSBC also said wage revisions of about 15% to 20% in some states are expected to increase employee costs, adding further pressure on operating margins in the June quarter.
"These cost pressures might overshadow the benefits of steady volume growth in the near term," the brokerage said.
Ebitda Estimates Cut
HSBC lowered its Ebitda estimates for Delhivery by 5% to 6% for FY27 through FY29 to reflect the impact of higher operating costs.
The brokerage also expects the company's results for the first quarter of FY27 to come under pressure. Even so, it retained its "Hold" rating, saying Delhivery continues to offer resilient volume growth and long-term structural opportunities, although rising costs have balanced the near-term risk-reward profile.
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