Buy Delhivery; target of Rs 500: Emkay Global Financial

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Delhivery's EBITDA margins expanded ~180bps qoq to 6.7% in 2Q, driven by price hikes and proactive contract repricing.
  • The company's integrated and diversified logistics network is expected to sustain volume trajectory, despite demand headwinds from higher insourcing.
  • New initiatives, such as Delhivery Local and International, provide substantial long-term optionality, but may lead to a near-term drag on profitability.
  • The management's confidence in sustaining PTL volume trajectory and margin expansion in PTL underpins the analyst's bullish stance.

Thesis Validation Checklist

  • Investors should watch for margin recovery, driven by automation-led operating efficiencies and disciplined demand shaping.
  • The company's ability to maintain service EBITDA margins of ~17% in B2C and expand margins in PTL will be key monitors.
  • Progress in new initiatives, such as Delhivery Local and International, will be important to validate the long-term growth thesis.
  • Any changes in the competitive landscape, such as increased insourcing by e-commerce platforms, should be closely monitored.