Delhivery rises 2% as MOFSL initiates coverage with 'Buy'; 18% upside eyed

Shares of logistics company Delhivery rose nearly 2% on Tuesday, trading around ₹417.50, after Motilal Oswal Financial Services (MOFSL) initiated coverage on the stock with a ‘Buy’ rating and a target price of ₹460, implying an 18% upside from current levels. The brokerage firm based its valuation on a discounted cash flow (DCF) model, applying a 12% weighted average cost of capital (WACC) and a 5% terminal growth rate, with a fair value estimate of up to ₹480 per share.

In its report, MOFSL highlighted Delhivery’s strong position in India’s growing logistics sector, driven by its asset-light model, extensive network, and technological infrastructure. The company currently serves over 44,000 customers across 19,000 PIN codes and operates with 111 gateways, 45 automated sort centers, and 20 million square feet of warehousing space. It has also increased its market share in the e-commerce express parcel segment from 12% in FY19 to nearly 25% in FY24.

Delhivery turned EBITDA positive in FY25, reporting ₹370 crore in earnings, a major turnaround from a ₹1,600 crore loss in FY19. MOFSL expects strong financial growth going forward, projecting a 14% revenue CAGR, 36% EBITDA CAGR, and 52% PAT CAGR over FY25–28. The growth is expected to be driven by the partial truckload (PTL) segment, improved integration from past acquisitions like Spoton, and increasing demand for end-to-end logistics solutions.

Despite the optimistic outlook, MOFSL also pointed out certain risks such as customer concentration in its 3PL segment, potential pricing pressure from competition, and volume fluctuations in express logistics. Nonetheless, Delhivery's scale, expanding service mix, and focus on profitability position it well to benefit from India's logistics sector transformation.