Brokerages are increasingly positive on Delhivery after the company delivered a stronger-than-expected third quarter, driven by robust volume growth, expanding margins and early signs of competitive positioning. While both Investec and J.P. Morgan see further room for upside, their views vary subtly on the sustainability of gains and catalyst timing.
In a fresh review, Jefferies has upgraded its rating from Underperform to Buy, hiking its target from Rs 360 to Rs 525. Investec maintained its Buy rating on Delhivery with a hiked price target of Rs 515 (previous: Rs 500), underscoring confidence in earnings momentum and structural opportunities in express parcel delivery (EPD) and part-truckload (PTL) segments.
J.P. Morgan also stayed constructive, keeping an Overweight call on the stock and lifting its 12-month price target to Rs 600, signaling stronger medium-term conviction following continued execution improvements.
Margin Expansion Fuels Broker Optimism
Delhivery's Q3 results impressed across key metrics. Revenue grew 18% year-on-year to Rs 2,811 crore, while reported EBITDA more than doubled - up 104% over the prior year - driven by both volume and operating leverage. Adjusted EBITDA margins expanded to 5.2% in Q3, a notable improvement from around 3.3% in the prior quarter and just 1.9% a year ago.
Both brokerages pointed to EPD's outsized contribution to the beat. EPD volumes climbed over 40% year-on-year and around 20% quarter-on-quarter, with market share gains from smaller players helping drive scale. PTL volumes also grew strongly, buoyed by Delhivery's expanding network and competitive pricing.
Cost Discipline and Business Mix
Investec highlighted scale benefits visible in a nearly 4% year-on-year lift in service EBITDA margins, though it flagged that higher corporate overheads - particularly in sales and GTM spend for PTL - will need to be monitored.
J.P. Morgan echoed the margin narrative but also drew attention to segment performance nuances. It noted that returns on yields and smaller parcel mix shifts (post-acquisition dynamics) are moving in the right direction, and that broader industry consolidation - if it occurs - could be a net positive for competitive pricing and capacity utilisation.
Growth Optionality Beyond Core Logistics
Both brokerages see optional growth levers beyond the core, with Delhivery's intra-city "Delhivery Direct" service gaining traction. The company's international air parcel services - already profitable in the UK - are slated to expand into the EU, GCC, Canada and Australia over FY27.
While Investec and J.P. Morgan remain bullish, they caution that sustainability of margin gains, execution on newer verticals and cost control will be key to validating the Q3 beat as more than a cyclical spike.
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