In a recent development, CLSA has lowered its target price for logistics firm Delhivery Ltd from ₹550 to ₹493, driven by weaker than anticipated Q2 revenue growth and a decrease in EBITDA. Despite the downward revision, the new target price suggests a potential 22% gain over Delhivery's recent closing price of ₹403.15.
The Q2 sales growth of Delhivery was reported to be 3.6% below CLSA's estimate, even though the company saw an increase in express parcel shipment volume and parts truck load revenue. This growth was offset by a decline in supply chain and cross-border segment revenue.
Despite the lower-than-expected Q2 performance, CLSA maintains its 'Buy' rating on Delhivery, citing the long-term growth potential of the express parcel business. In October, Delhivery reported double-digit growth in ecommerce and PTL businesses and expects profitability to increase with rising revenue, indicating an improving EBITDA margin.
The company is aiming for EBITDA breakeven in FY24 and PAT breakeven in FY25, a consensus that market observers have underestimated according to CLSA. Even though Q2 sales increased by 8.1% to ₹1,941.7 crore, Delhivery's net loss was reduced by 59% to ₹103 crore (INR100 crore = approx. USD12 million), reflecting the operating leverage in the business.
InvestingPro Insights
In light of the recent developments, InvestingPro's real-time data and tips provide an insightful perspective on Delhivery's financial health and future prospects.
InvestingPro Data reveals a mixed performance in terms of price total returns. The firm experienced a 3.64% increase in the last week, a slight dip of 0.38% over the past month, and a 9.14% rise over the last six months as of the end of 2023. It's worth noting that Delhivery's price is currently at 93.48% of its 52-week high.
InvestingPro Tips further shed light on Delhivery's financial standing. The company holds more cash than debt on its balance sheet and has been consistently increasing its earnings per share. Moreover, it's a prominent player in the Air Freight & Logistics industry with impressive gross profit margins. Although it was not profitable over the last twelve months, analysts predict a profitable year ahead.
These insights are just a glimpse of the wealth of knowledge available to InvestingPro users. With over 8 additional tips on Delhivery and other companies, InvestingPro offers valuable guidance for investors.
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