Delhivery shares traded little changed on Friday after HSBC lowered its target price on the logistics company while retaining its 'Hold' rating, citing pressure on near-term profitability from higher fuel and employee costs. The stock fluctuated between gains and losses and was trading at ₹515.50 during the session. The brokerage cut its target price to ₹490 from ₹500 and reduced its Ebitda estimates for FY27 through FY29 by 5% to 6% to reflect the impact of higher operating costs.
Despite cost pressures, HSBC expects parcel volumes to remain resilient despite concerns over moderating consumption. The brokerage noted that Delhivery could benefit if e-commerce platform Meesho reduces its in-house logistics operations, leading to higher outsourcing to third-party logistics providers such as Delhivery. This development helps ease concerns over potential business loss for third-party logistics providers. The broker also anticipates the company's part-truckload (PTL) business to sustain its growth momentum, while the supply chain services (SCS) segment is likely to accelerate, though it expects some near-term margin pressure.
HSBC said higher fuel costs and wage revisions could pressure margins despite stable shipment volumes. The brokerage noted that fuel costs remained elevated during the first quarter of FY27, while the company has yet to pass those costs on to customers. It said the delay in recovering higher fuel expenses could weigh on profitability. Additionally, wage revisions of about 15% to 20% in some states are expected to increase employee costs, adding further pressure on operating margins in the June quarter. "These cost pressures might overshadow the benefits of steady volume growth in the near term," the brokerage said.
Among the 23 analysts tracked by Bloomberg, 18 recommend 'Buy', four have a 'Hold' rating and one recommends 'Sell'. The average price target stands at ₹568.29, implying a potential upside of 10.5% from current levels. This compares to the previous target price of ₹610 from other brokerages. Delhivery is India's largest fully-integrated logistics services provider with a nationwide network covering over 18,850 pin codes. The company provides comprehensive logistics services including express parcel transportation, PTL freight, TL (Truckload) freight, cross-border, supply chain, and technology services.
The logistics company reported marginal 0.22% year-on-year decline in consolidated net profit to ₹72.39 crore in Q4 FY26 from ₹72.55 crore a year earlier. However, revenue from operations rose 30.04% YoY to ₹2,849.99 crore, indicating strong top-line growth despite profit challenges. According to HSBC, the brokerage expects the company's results for the first quarter of FY27 to come under pressure due to cost pressures, even as it maintains its long-term view on the company's business prospects.
