On April 8, 2025, shares of Delhivery Ltd., a key player in India's logistics sector, experienced a notable decline of 5%, closing at Rs. 251.60, compared to the previous day's close of Rs. 268.35. This dip comes amid rising concerns about broader market conditions, including fears of recession and the impact of U.S. tariffs on trade. The company's stock opened at Rs. 275.00, but by mid-morning, it had fallen to as low as Rs. 247.10, marking an intra-day drop of over 10% from its earlier high of Rs. 275.75.
Delhivery's recent performance reflects a tumultuous period for the logistics industry, particularly for firms heavily involved in e-commerce deliveries. Analysts attribute the stock's volatility to a combination of internal and external pressures, including the recent announcement of Delhivery's acquisition of Ecom Express for Rs. 1,400 crore, which is seen as a significant consolidation move within the sector.
During the third quarter of FY 2024-25, Delhivery reported an 8% increase in revenue from services, totaling Rs. 2,378 crore, up from Rs. 2,194 crore in the same period last year. The company's profit after tax rose to Rs. 25 crore, reflecting a 14% year-over-year increase from Rs. 12 crore reported in Q3 FY24. However, its EBITDA saw a slight decline, dropping to Rs. 102 crore from Rs. 109 crore in the previous third quarter.
Segment-wise performance revealed that revenue from Express Parcel services increased by 3% to Rs. 1,488 crore, while Part Truckload revenue surged by 22% to Rs. 462 crore. Notably, Supply Chain Services revenue jumped by 29% year-over-year, reaching Rs. 222 crore. These figures indicate a mixed bag of growth within the company, highlighting areas of strength even as overall market conditions remain shaky.
The acquisition of Ecom Express, which Delhivery plans to finalize within six months pending regulatory approval from the Competition Commission of India (CCI), is expected to significantly reshape the logistics landscape in India. Ecom Express, previously valued at over Rs. 7,000 crore in June 2024, has faced challenges that led to a steep decline in its valuation, now reflected in the acquisition price. The deal will see Delhivery acquiring a 99.4% stake in Ecom Express, positioning the combined entity to command a market share of 55-60% in the third-party logistics (3PL) B2C express segment, nearly tripling that of its nearest competitor.
Market analysts have mixed views on the implications of this acquisition. While the deal is expected to create significant economies of scale and improve pricing discipline across the logistics ecosystem, it is also anticipated that it may not be earnings accretive in the immediate term. JM Financial and Emkay Global both maintain a 'buy' rating on Delhivery, with target prices set at Rs. 380 and Rs. 400 respectively. Emkay Global analysts noted that while the acquisition could unlock operational synergies, concerns regarding Meesho's increasing insourcing of logistics could dampen volume growth in the short run.
Despite the recent downturn in stock prices, analysts suggest that long-term investors may find value in Delhivery, especially given the projected upside of nearly 70% from its current price, with an average target of Rs. 432.50 according to reports from Trendlyne. However, the recommendation landscape remains cautious, with 71% of market experts advising to buy, while 24% recommend holding, and none suggesting a sell.
As the logistics sector continues to evolve, Delhivery's strategic moves, including its recent appointment of new executives and its partnerships to enhance international shipping capabilities, indicate a commitment to maintaining its competitive edge. The company has also extended its collaboration with Plix for air freight services from Mumbai to New York, further broadening its operational reach.
In the face of these challenges and opportunities, the coming months will be crucial for Delhivery as it navigates the complexities of the logistics market and integrates Ecom Express into its operations. Investors are advised to keep a close eye on market trends and expert analyses to make informed decisions regarding their holdings in Delhivery.
