Logistics player Delhivery has delivered a strong stock rally in the last six months, surging 89% and hitting a fresh 52-week high of ₹480.50 in August 2025. However, InCred has reinitiated coverage with a ‘Reduce’ rating and a target price of ₹300, implying a potential 36% downside from current levels. The brokerage flagged concerns over the near-term impact of its Ecom Express acquisition, intensifying competition from Amazon and Flipkart’s entry into the third party logistics (3PL) cargo segment, and limited operating leverage over FY20-25.
Stock Price Trend:
Despite its cautious stance, InCred acknowledged Delhivery’s strong price momentum. Over the last year, the stock has gained 15%, including a 10% rise in August, marking its sixth consecutive month of gains. The rally also included an 11% rise in July, 7% in June, 17% in May, 2% each in April and March. However, the stock had corrected 22% in February and 7.2% in January 2025 before staging its strong recovery. As of the last close, Delhivery shares stood at ₹473.80, just shy of their 52-week high, and well above the 52-week low of ₹236.80 recorded in March 2025.
4 key reasons behind the reduce call
Ecom Express Acquisition – Near-Term Dampener: According to InCred, the acquisition of Ecom Express may not immediately translate into meaningful gains. Ecom had a 9% market share in FY25, which, if fully retained, could boost Delhivery’s express volumes by 60%. However, combined express volumes in Q1FY26 were 21% below FY25 levels, suggesting that FY26F volumes may rise only 25-30% compared to FY25. This, coupled with low operating leverage and increased competition from Ekart and Amazon in the 3PL cargo space, could limit margin expansion. InCred estimates Delhivery’s FY27F PBT could be ₹1.6 billion lower compared to its ex-Ecom projections.
Competitive Pressures from Amazon and Flipkart: InCred pointed out that the 3PL express market’s share grew from 42% to 48% between FY20-23, driven by Meesho’s reliance on outsourced logistics. However, the share dipped to 44% in FY24 as Meesho began insourcing logistics and is expected to reach 70% insourcing by FY27F. With Amazon and Flipkart aggressively building their own 3PL cargo capabilities, pure 3PL players like Delhivery may face pressure on both volumes and margins, further complicating their growth outlook.
Weak Operating Leverage Over FY20-25: InCred highlighted that while EBT margins improved over FY20-25, absolute EBT in FY25, adjusted for depreciation changes, remained similar to FY20 levels. Delhivery’s FY24 sales were nearly three times that of Ecom and benefitted from PTL and TL synergies, yet its FY24 EBT margin remained negative at 8% — the same as Ecom. The brokerage also drew parallels with global peers, noting that express companies in China and the US did not see significant margin expansion between CY17-23, suggesting inherently low operating leverage in the business.
Muted Recent Performance: The brokerage flagged that Delhivery’s organic express cargo volume growth over the past six quarters has been just 1-2% YoY. While PTL cargo growth appeared strong in FY23-1QFY26, its CAGR over FY22-25 was only 2%. PTL service EBITDA margins improved significantly from -20.5% in FY23 to 10.6% in Q1FY26, but overall service EBITDA margin improvement was modest, rising from 11.5% in FY24 to 13% in Q1FY26 due to weaker express margins. For comparison, VRL Logistics maintains an EBITDA margin above 16%, and SpotOn posted 10.8% in 9MFY22.
Valuation and Recommendation:
InCred values Delhivery at ₹300 per share using a DCF methodology with an 11% discount rate, assuming post-FY28F sales growth of 14% per annum and a 130-bps annual EBITDA margin improvement. The brokerage uses an 18x EV/EBITDA exit multiple on FY31F EBITDA. At current levels, Delhivery trades at 2.7x FY27F EV/Sales, close to its median forward multiple of 2.8x since March 2023. While acknowledging upside risks such as better-than-expected margin expansion, InCred continues to recommend a Reduce rating given the risk-reward skew.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
