UBS has a price target of ₹600 on the stock, which implies an upside potential of 43% from Tuesday’s closing levels. UBS’ price target on Delhivery is the second-highest on the street for the stock, following Elara’s ₹620.
The brokerage wrote in its note that the headwinds for Delhivery are now behind that the focus is now on profitable growth. It highlighted three issues that were plaguing the company:
- Impact on quick commerce and e-commerce volumes
- Insourcing by Meesho, who was a key customer
- and heightened competition from private equity-backed logistics players.
According to UBS, all of those issues have passed. With regards to Meesho, the brokerage said that after its listing and the pressure on its profitability, it expects insourcing to either reverse and / or stabilize.
The brokerage also went on to add that most Private Equity players have lost money in e-commerce logistics, implying a lack of future private capital.
“With listing of Shadowfax & mainly Delhivery’s acquisition of Ecom Express, expect scope for yield improvement, as latter played a key role in irrational pricing,” UBS wrote in its note.
23 analysts have coverage on Delhivery, of which 19 have a “buy” rating, three say “hold” and one has a “sell” rating on the stock. The consensus estimates of price targets implies an upside potential of 22% from current levels.
Shares of Delhivery are trading 2.3% higher on Wednesday at ₹428.7. The stock continues to trade below its issue price of ₹487 per share.
