Delhivery shares slip 5% to hit all-time low after Q3 earnings miss estimates

Stock market today: Extending their weakness to the third straight day on Monday, February 10, shares of Delhivery, the country’s largest fully integrated logistics services provider, tumbled another 5%, slipping below the ₹300 mark for the first time since their listing in May 2022 to record a fresh all-time low of ₹299.80 apiece.

Today’s decline came after the company’s December quarter numbers missed analysts’ estimates. Despite Q3 being a seasonally strong quarter for Express Parcel due to festivities, the company failed to deliver robust growth, impacted by a consumption slowdown, the rise of quick commerce, and increased insourcing at Meesho.

Moreover, analysts noted higher rental costs following the Bangalore facility going live, along with increased vehicle rental expenses due to heavy volumes in the first week of the festive season, and subdued margin expansion.

Considering these challenges, domestic brokerage firm JM Financial lowered its target price for the stock to ₹380 from ₹420, while retaining its ‘buy’ rating.

Delhivery’s shares have been on a downward trajectory, closing in the red for each of the past four months. Over this period, the stock has corrected by 30% and is down 58% from its all-time high of ₹708, attained in July 2022.

This significant underperformance can be attributed to several factors, including a slowdown in the third-party logistics (3PL) market, increasing insourcing at Meesho, and the rapid expansion of quick commerce within e-commerce. 

In the December quarter, the company reported revenue from services of ₹2,378 crore in Q3, a growth of 8% as compared to ₹2,194 crore in the same quarter last fiscal. EBITDA reduced marginally to ₹102 crore from ₹109 crore in Q3 FY24. 

Profit after tax (PAT) grew 114% YoY to ₹25 crore in Q3 FY25 from ₹12 crore in Q3 FY24, making it the third consecutive profitable quarter for the company.

Express parcel growth slows; soft quarter for PTL

The Express Parcel segment revenue stood at ₹1,488 crore, reflecting a sequential growth of 14.6% (2.8% YoY), driven by an 11.4% QoQ (2.5% YoY) increase in volume and a 0.3% QoQ (3.0% YoY) rise in realization.

“While volume growth was subdued due to overall consumption softness, rising quick commerce, and increased insourcing at Meesho, the almost flat realization despite the growth in ‘heavy’ shipments was surprising,” said JM Financial.

The brokerage channel checks suggest that Meesho’s insourcing has reached 60–65%, indicating that any further increase would be gradual.

On the other hand, PTL volume declined by 3.4% QoQ (+16.6% YoY), while realizations improved by 0.9% QoQ (+4.5% YoY), leading to a sequential revenue decline of 2.5% (+21.8% YoY).

The segment sustained a positive service EBITDA margin at 3.9% (compared to 2.9% in 2QFY25 and -1.8% in 3QFY24). However, the brokerage noted that the margin uptick was not as sharp as expected because the company operates an integrated network, requiring the PTL business to bear some of the costs of expanding the network for express and heavy shipments.

Rapid commerce gained early traction

The company has launched its rapid commerce operations in Bangalore, Hyderabad, and Chennai, with two core customers currently live and 15 more scheduled to start in 4Q. The brokerage noted that the dark store model has gained early traction, with the first store, launched about 45 days ago, now handling nearly 500 orders per day.

“The breakeven point is estimated at 700–800 orders per day, and the business is expected to reach profitability within a year. Positioned as an add-on service for the top eight cities and select SKUs, rapid commerce is seen as a valuable capability to better serve D2C brands,” said the brokerage.

According to the company’s management, this business could contribute ₹0.8–1.0 billion in incremental revenue over the coming fiscal year.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.