Equity Research - Delhivery Limited

Summary

DELHIVERY LIMITED : A LEADING LOGISTICS AND SUPPLY CHAIN SERVICES COMPANY

Company Profile:

Delhivery Ltd presents supply chain solutions to e-commerce marketplaces, direct-to-consumer e-trailers, businesses, FMCG, consumer durables, client electronics, life-style, retail, automobile and production industries in India.

The employer offers logistics offerings, consisting of specific parcel delivery, heavy goods delivery, part truckload freight, truckload freight, warehousing, cross-border express, and freight services; supply chain software; and e-trade return offerings, charge collection and processing, maintenance and assembly, and fraud detection services.

It offers transport offerings, such as on-call for shipping, same-day/next-day delivery, time-defined/slot-based delivery, and returns management offerings; special services, together with product alternative/change, large/oversize order delivery, high-value product delivery, and HAZMAT/risky goods shipping offerings; and technology services, which include real-time tracking and manage, consignee address validation, fraud detection, flexible payment on shipping offerings.

The agency was established in 2011 and is based in Gurugram, India.

Market Statistics: 

Market Cap : Rs. 50657 Crores

52 High / Low : Rs. 693.80/456.10

Book Value : Rs. 154.50/- 

Face Value : Rs. 1/-

P/E Ratio : -374.6

P/BV Ratio : 4.50

Dividend Yield : 0.00

Source: www.sharescart.com

Shareholding Pattern:

Source: www.sharescart.com                                                                                                        

Industry Outlook :

 Market conditions are challenging :

• Geopolitical conditions continue to cause significant disruption
• e-Commerce market growth will continue; individual players likely to see volatility in demand and rising customer acquisition costs.
• Input cost inflation continues to affect consumer sentiment; unlikely to have large impact on non-discretionary logistics spends.
• Wage inflation and talent shortage to increase in medium term.
• Climate change continues to cause significant disruption to operations.

Improving regulatory environment:

• Infrastructure status for logistics, continued improvement of road, air and rail infrastructure.
• Tailwinds from Govt reforms - Make in India, Gati Shakti, PLI schemes.
• Rapid adoption of digitization (GST, EWB, e-POD, e-Invoicing).
• New axle load norms enabling higher GWV and loading capacity of trucks.
• ONDC, new data privacy law likely to increase merchant demand for direct logistics services.

Large opportunities remain intact:

• Continued increase in online purchase frequency, rising e-Commerce penetration in Tier 3/4 cities, new category development.
• M&A driven consolidation across logistics industry.
• Continued shift towards organised players and consolidation of LSPs by large enterprises.
• Leading enterprises continue to shift to 3PL/end-to-end supply chain visibility and solutions.
• Development of new automation systems driving operating leverage and service enhancements. 

      source : Company Earnings Report

FY23 Growth Initiatives:

• Integration of DLV and SO networks, realize network synergies, launch economy PTL service.
• Up to 4 Mn sqft infra expansion, fleet expansion by 150 TTs, 35% expansion of ASCs.
• Introduction of new automation - AGVs/AMRs, ASRS systems, system-directed MM operations.
• Expand usage of EVs in FM/LM operations; piloting LNG & EVs in MM operations.
• Aggressively grow cross-border express product (DLV + FedEx).
• Accelerating SCS business growth with focus on key industrial verticals.
• Launch of Delhivery D2C Academy with key ecosystem partners.
• Launch Unified Client Portal, merchant panel for SMB customers to access all products.
• Launch of PaaS for global 3P developers along with SaaS offering in select international markets.
• Launch Delhivery Direct (C2C) mobile app, Orion (truckload price discovery and booking).

Source: Company Earnings Report.

Company Financials : 

Balance Sheet :

Source: www.sharescart.com

Cash Flows Statement:

Source: www.sharescart.com

Profit and Loss Account : 

Source: www.sharescart.com

Conclusion : 

on the basis of the discount cash flow valuation method we are recommending 'Buy' for the stock. Since the stock  offers good opportunity, we initiate a 'Buy' signal on the stock with 12 month price target of Rs. 732/- share an upside of 4.72% from current levels.