Delhivery shares: Kotak Equities upgrades stock to ‘Buy’, raises target price; sees over 24% upside

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₹570 per share from ₹500 earlier, implying an upside of over 24%. Analysts at Kotak Equities said their assessment of the positioning of the players’ e-commerce ecosystem and recent developments makes them more confident of increasing the relevance of Delhivery over time. The increase in FV of 14% is driven broadly equally by higher revenue CAGR (~20% over FY2024E-32E) and higher adjusted EBITDA margin (50-250 bps).

Its growth assumptions factor in Amazon and Flipkart growing their captive business at 80% of the pace of their volume growth, helping Delhivery gain share. Also Read: CLSA cautious on steel companies amid higher valuation, margin pressure; downgrades Tata Steel, JSW Steel "We increase our adjusted margin estimates due to the impact of faster growth and a higher gross margin on incremental revenues of express parcel and PTL segment—we build ~10% adjusted EBITDA margin in FY2028, implying gross margin on incremental revenues lower than the 30-50% guidance," Kotak Equities said. The brokerage notes that, unlike Delhivery, its peers have not been able to meaningfully improve cost structure with higher volumes and have seen their losses accelerate faster than sales.

Also, the company’s peers have limited defense against the unrelenting pricing pressure of Delhivery. “Losses of Delhivery’s competitors in express parcel have only accelerated with accelerated growth. Some of these peers have a large concentration to Meesho and a limited presence with Amazon and Flipkart or to PTL business.