Delhivery’s Stock Rally: Unveiling Bhiwandi’s Mega Trucking Terminal Propels Shares Up Over 6%

Delhivery Limited Shares price gained more than 6% on Thursday as it launched its largest Trucking Terminal at Bhiwandi in Maharashtra.

The development provided major trigger for the Delhivery stock that had remained on a downtrend since September. Having scaled 52-week highs of ₹452 on 4^th of September and closing highs of ₹446.75 on 5^th September the share price had slipped to closing lows of 357.60 on the BSE on December 15^th.

Delhivery on Wednesday had announced launching of the mega automated gateway that has been built over 1,200,000 square feet  of land area. The facility has 196 docking stations and is designed to transact over 8,000 tonnes of freight, with 1600 vehicles transiting through it daily, a vehicle every 54 seconds. The facility’s automation system, developed and deployed by Falcon Autotech (Delhivery invested company), comprises 1.8 km of integrated double-deck cross-belt sorters coupled with over 5kms of material conveyance systems, and is equipped to process over 32,000 shipments and 17,000 freight units per hour.

Sahil Barua, Managing Director & Chief Executive Officer, of Delhivery, in a statement had said, “Our expanded Bhiwandi gateway will enable us to increase capacity for Mumbai and the West Zone’s large and SME freight shippers while maintaining world-class service reliability and efficiency.

The facility’s advanced automation systems are also likely to enable the company to generate improvements in efficiency and speed.

During the September’2023 quarter Delhivery had reported revenue from services of Rs. 1,942 crore, up 8% year-on-yeaar from Rs. 1,796 crore in the same quarter last year. Adjusted EBITDA loss reduced by 90% YoY to Rs. 13 crore in Q2 FY24 from Rs. 125 crore in Q2 FY23. Loss after tax in the same period narrowed by 59% on year-on-year basis to Rs. 103 crore in Q2 FY24 from ₹254 crore in Q2 FY23. However on sequential basis even though revenues had improved marginally from ₹1929 crore in Q1 FY24, the net loss widened from ₹89.5 Crore in the June quarter.

Delhivery also has seen upgrades by a few brokerages.

Kotak Institutional Equities recently has upgrade Delhivery to a BUY (from REDUCE), with a target price of Rs410 (Rs390 earlier), building in higher profitability in the long term. As per Kotak, its peers have outperformed and reported strong revenue growth, with no benefits of operating leverage and, in fact, deteriorating profitability. Peers may continue to leverage incoming funding support and exposure to Meesho to prolong the battle for market share before yielding in.

As per Kotak Delhivery’s current Market price is an attractive entry point as it bakes in current 15% run-rate of volume growth for the ecommerce logistics business over the next decade.