Delhivery Stock Not Pricing In Slowing E-Commerce Volumes, Says Kotak Report

Kotak said third-party logistics players are “susceptible” to the risk of a slowdown from the current base of e-commerce volumes. “E-commerce volumes, excluding Meesho, may have grown closer to or lower than 20% over such a period. This reflects growth moderation for both Amazon and Flipkart since FY18 and FY19, respectively, coinciding with their cash burn flattening out.”

“In the current context of Meesho focusing on reducing its monthly cash burn, we see merit in being conservative on growth in e-commerce shipment volumes in the next one-two years.”

Also, constraints will come in way of Delhivery growing very fast in the partial truckload segment given the long tail of customers, it said. “The pace of winning accounts faster than the industry entails convincing several small customers of shifting vendors. While Delhivery’s interplay of loads and scalable business model should help, there would be constraints in growing much ahead of the market.”

Shares of the company opened 0.6% lower at Rs 565.05 apiece, but reversed losses and gained 0.4% in early trade at Rs 570.9.

Of the 13 analysts tracking the company, six maintain a ‘buy’, four suggest a ‘hold’ and three recommend a ‘sell’, according to Bloomberg data. The 12-month consensus price target implies a 9.7% upside.