Delhivery volume growth remains strong as fuel and wage inflation pressures margins

Investment View and Rating

Prabhudas Lilladher’s August 10, 2026 Q1 FY27 result update on Delhivery retains a HOLD rating and reduces the target price to Rs 503 from Rs 534. The current market price is Rs 473.

The broker’s core concern is near-term margin pressure from fuel-price inflation and higher labour costs following minimum-wage revisions in Haryana, Karnataka, Uttar Pradesh and Punjab. PL cut its FY27E EBITDA estimate by 24.3 per cent and EPS estimate by 39.8 per cent, while fine-tuning B2C and PTL margin assumptions.

PL expects fuel-cost recovery to be relatively swift from Q2 FY27E because fuel pass-through clauses have been activated. However, passing wage inflation through customer-contract repricing could take longer.

Q1 FY27 Operating Performance

Delhivery reported Q1 FY27 revenue of Rs 29,307 mn, up 27.8 per cent year on year and broadly in line with PL’s estimate of Rs 29,474 mn. B2C express volume growth was ahead of expectations, while realisation declined. PTL delivered strong volume and revenue growth, whereas Supply Chain Services revenue declined.

Profitability Miss and Margin Performance

Profitability missed expectations materially. Reported EBITDA fell 4.5 per cent year on year to Rs 1,422 mn, versus PL’s Rs 2,063 mn estimate and consensus of Rs 1,849 mn. The reported EBITDA margin was 4.9 per cent, compared with PL’s forecast of 7.0 per cent.

Adjusted EBITDA declined 0.9 per cent to Rs 752 mn, resulting in an adjusted EBITDA margin of 2.6 per cent versus PL’s estimate of 3.9 per cent. Reported PAT fell 65.0 per cent to Rs 319 mn. After adjusting for Ecom Express integration costs, adjusted PAT declined 46.3 per cent to Rs 489 mn, below PL’s estimate of Rs 902 mn and consensus of Rs 557 mn.

Service EBITDA margins in Q1 FY27 were 15.6 per cent for Express Parcel, 11.2 per cent for PTL and 6.7 per cent for Supply Chain Services, compared with 16.3 per cent, 10.7 per cent and 7.2 per cent respectively in Q1 FY26.

Management Commentary and Growth Outlook

Management indicated that Delhivery delivered record volumes despite a seasonally weak quarter. It expects FY27E Express volume growth of 20-30 per cent, toward the middle to upper end of the range, and PTL volume growth of 18-22 per cent.

• Delhivery Direct has reached approximately Rs 1,500 mn of GMV, with a FY27E GMV target of Rs 2,500 mn.
• Express service EBITDA margin is expected to reach 16-18 per cent in H2 FY27E.
• PTL service EBITDA margin is expected to be about 15.5 per cent in the FY27E exit quarter and 16-18 per cent over the longer term.
• Management attributed the lower Express yield to a higher mix of small parcels after the Ecom Express acquisition rather than pricing pressure, with sequential improvement expected in H2 FY27E.
• Supply Chain Services margins were temporarily affected by the onboarding of two large clients.

Earnings Estimates and Valuation

PL expects healthy volumes to drive an 18 per cent sales CAGR over FY26-FY28E. Its forecasts imply revenue of Rs 1,23,841 mn in FY27E and Rs 1,46,607 mn in FY28E. The corresponding EBITDA margin assumptions are 6.7 per cent and 9.5 per cent, respectively, while FY28E adjusted PAT is estimated at Rs 9,525 mn.

PL has reduced its FY27E service EBITDA margin assumptions for B2C and PTL to 16.8 per cent and 13.1 per cent, respectively.

The target price of Rs 503 is based on 35 times FY28E EBITDA, with no change in the target multiple. The valuation exhibit uses FY28E pre-Ind AS EBITDA, after reducing rent, of Rs 9,216 mn, arriving at an equity value of Rs 3,76,577 mn and a target price of Rs 503 per share.

Key Downside Factors

• Persistent fuel-price inflation.
• Continued wage inflation following minimum-wage revisions.
• Delayed repricing of client contracts to recover higher labour costs.
• Slower-than-expected margin recovery.