Delhivery shares rally 9% after company swings backs to profit in Q2; Jefferies, Elara say 'Buy', check target prices

Delhivery shares surged 9.67 percent to hit an intraday high of Rs 423.35 on the BSE, compared with the previous close of Rs 386. The stock opened at Rs 400 mark in early trade and was quoting 8.83 percent higher at Rs 420.10, up Rs 34.10, around 10:05 am. The Gurugram-based logistics company reported posted a net profit of Rs 41 crore in the reporting quarter, compared with a net loss of Rs 50 crore in the corresponding quarter last year.

Delhivery had reported a net profit of Rs 32 crore in the April-June quarter of FY27. The company reported a 20 percent year-on-year (YoY) increase in operating revenue to Rs 3,066 crore in the September quarter. The turnaround followed an improvement in the company's operating performance over recent quarters. Express parcel, or the ecommerce shipment business, reported a 32 percent YoY volume growth   and a 22 percent revenue growth during the September quarter.

This is Delhivery’s   biggest business vertical. Brokerages on Delhivery share price Jefferies on Delhivery: Buy, target price cut to Rs 470 Global brokerage firm Jefferies maintained its 'Buy' rating on Delhivery. However, it trimmed its target price to Rs 470 from Rs 540 earlier, citing improving profitability and the potential for a recovery in the stock after its underperformance against peers.

The brokerage said Delhivery's adjusted EBITDA for the July-September quarter bear its estimates by 23%, while margins expanded 70 basis points YoY despite the festive season deferring largely to the December quarter. Jefferies raised its FY27 earnings per share (EPS) estimate by 21% following the quarterly performance but cut its FY28-FY29 EPS estimates by 8-10%, factoring in higher anticipated insourcing by Meesho, a key monitorable for Delhivery's express parcel business.\

Express parcel volumes grew 32% YoY in Q2 FY27, compared with Jefferies' estimate of 34%. The brokerage attributed the growth partly to lower insourcing by Meesho compared with the year-ago period. “Realisation declined 8% YoY due to volumetric weight/customer mix in our view. On a QoQ basis though, realisations rose 4% after declining for six quarters. Price increases to pass-on fuel/wage inflation drove the QoQ rise,” it stated.

Service level EBITDA margins in the express parcel business rose 60 bps QoQ. Management also indicated a strong start to Q3 FY27 and indicates FY27E volume growth could reach the upper end of its 20-30% YoY guidance even on conservative assumptions (JEFe: 29%), supported by new initiatives. In the PTL business, volumes rose 14% YoY, while realisations increased 8%, with management expecting PTL service-level margins to exceed 15% by the end of FY27, compared with 12.9% in the September quarter.

Supply chain margins also nearly doubled sequentially as new contracts stabilised and newer business initiatives gained traction. Jefferies said it expects Delhivery's EBITDA to compound at around 52% over FY26-FY28. Its revised target price is based on a valuation multiple of 20 times September 2028 estimated EV/EBITDA, compared with 22 times earlier. The brokerage also flagged weak e-commerce growth, an increase in Meesho's insourcing and a sharp rise in fuel costs as key downside risks.

Elara Capital on Delhivery share price: Buy, target price Rs 620 Elara Capital reiterated its 'Buy' recommendation on Delhivery with a target price of Rs 620, citing the company delivered strong volume growth in  Q2 FY27, driven by continued market share gains in express and network expansion in part truck load (PTL), alongside improving realization following   pricing revisions. Sequential profitability recovery reflects better network   utilization and operating leverage despite elevated fuel and labour cost,” it said.

Pricing actions, automation, and higher utilization are set to drive further margin expansion, with express margin targeted at 16-18% and PTL at over 15% by FY27-end. Elara said fuel-linked pricing revisions, customer repricing, automation and better network utilisation should support further margin expansion despite elevated fuel and labour costs. It also highlighted investments in artificial intelligence, robotics and new business initiatives as potential drivers of longer-term growth and cash generation.

The brokerage cautioned that newer initiatives remain a near-term drag on profitability but said their expansion and improving contribution margins could support sustainable growth over time.