Shadowfax Technologies shares have surged 137% from their IPO price, but ICICI Securities sees further upside in the stock, raising its target price to ₹330 from ₹280 while retaining an ‘Add’ rating. The brokerage expects sustained momentum in the company’s express parcel business, while stronger-than-expected growth in hyperlocal deliveries could provide an additional growth driver.
ICICI Securities expects Shadowfax’s express parcel revenue to grow 48.7% year-on-year in Q2 FY27, supported by potential market-share gains from Amazon’s e-commerce business, expansion into new pincodes and newer initiatives such as Prime and Prime Large.
The brokerage also expects customer additions among MSMEs and SMEs to support growth. A strong festive season in Q3 FY27 could provide another near-term boost to parcel volumes, potentially supporting sustained market-share gains over the medium term.
ICICI Securities expects Shadowfax’s express parcel revenue to grow at a 35.1% CAGR between FY26 and FY28.
Hyperlocal could emerge as an incremental growth driver
The brokerage expects Shadowfax’s hyperlocal business to grow 78.4% YoY in Q2 FY27, with the segment potentially exceeding its earlier expectations.
According to ICICI Securities, competitive intensity in quick commerce and Amazon Now’s outsourcing strategy could support demand for third-party logistics (3PL) hyperlocal deliveries. Its channel checks indicate that gross margins are improving across players as demand for 3PL hyperlocal deliveries rises.
The brokerage believes scale benefits could push the service EBITDA margin above 6%, materially higher than its earlier estimates. As a result, it has upgraded its hyperlocal revenue estimates and expects the business to grow at a 59.7% CAGR between FY26 and FY28.
Margin expansion remains on track
ICICI Securities expects Shadowfax’s adjusted EBITDA margin to stand at 4.9% in Q2 FY27, broadly flat sequentially, despite the recent increase in fuel prices. The brokerage noted that both express parcel and hyperlocal segments have near-real-time transmission of fuel costs.
An improving SME/MSME mix, growth in higher-yield heavy parcels and margin expansion in the hyperlocal business could support further profitability gains, according to the brokerage. It expects adjusted EBITDA margin to rise to 6.5% by FY28 from 3.8% in FY26.
ICICI Securities raises target price to ₹330
Based on the improved growth outlook, ICICI Securities has raised its FY27E and FY28E adjusted EBITDA estimates by 11.6% and 25.8%, respectively.
The brokerage has retained its ‘Add’ rating and raised its target price to ₹330 from ₹280, based on a three-stage discounted cash flow model. The revised target implies an EV/EBITDA multiple of 34x FY28E.
However, ICICI Securities flagged pricing pressure in the express parcel business and an inflationary environment impacting medium-term growth visibility as key risks to its outlook.
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