Delhivery gains from express consolidation, e-commerce growth and margin expansion

Investment View and Valuation

Motilal Oswal Financial Services Limited's October 8, 2026 update on Delhivery retains a Buy rating and a DCF-based target price of Rs 510. The broker's thesis is that express-industry consolidation, healthy e-commerce shipment growth, and Delhivery's scale, diversified customer base and ability to process high-volume, cost-sensitive parcels should support growth and profitability.

Express Business and Competitive Positioning

Delhivery's Express segment delivered 55 per cent year-on-year volume growth in Q1 FY27. Motilal Oswal expects momentum to continue in Q2 FY27, supported by e-commerce growth and market-share gains following sector consolidation.

The broker views Delhivery as better positioned than certain competitors because of its more diversified customer mix. Delhivery's largest customer accounted for 17.7 per cent of revenue in FY25 and 19.2 per cent in FY26, compared with much higher customer concentration at Shadowfax. Delhivery's shipment realisation of Rs 58-60 is also above Shadowfax's reported Rs 50 per shipment.

The broker notes that low-cost, high-volume shipments are driving incremental industry growth. Blue Dart remains focused on higher-value express customers, while Xpressbees remains loss-making and relatively more concentrated in B2B volumes.

Growth Outlook Across Business Segments

Motilal Oswal forecasts a 14 per cent FY26-28 revenue CAGR for the Express business, led by e-commerce volumes and industry consolidation. It expects operating leverage and a favourable product mix to expand margins.

Part Truck Load

The Part Truck Load, or PTL, business offers further growth headroom because organised players handle less than 25 per cent of industry volumes. The broker projects a 15 per cent FY26-28 PTL revenue CAGR, driven by SME and retail expansion, better yields and growing adoption of value-added services.

Supply Chain Services

The Supply Chain Services segment is also scaling profitably after Delhivery exited unprofitable contracts. The broker expects this business to benefit from warehousing formalisation, GST-led network redesign and demand for integrated multi-location solutions such as Prime.

Financial Performance and Forecasts

The reported FY26 financial base was net sales of Rs 10,508 crore, EBITDA of Rs 640 crore and adjusted PAT of Rs 181 crore. EBITDA margin improved to 6.1 per cent in FY26 from 4.2 per cent in FY25.

Motilal Oswal estimates FY27E sales of Rs 12,473 crore, EBITDA of Rs 859 crore and adjusted PAT of Rs 397 crore, followed by FY28E sales of Rs 13,802 crore, EBITDA of Rs 1,158 crore and adjusted PAT of Rs 602 crore. This implies FY26-28 sales, EBITDA and adjusted PAT CAGRs of 15 per cent, 35 per cent and 82 per cent, respectively. The broker forecasts EBITDA margin to rise to 6.9 per cent in FY27E and 8.4 per cent in FY28E.

Margins, Capital Intensity and Balance Sheet

Management expects PTL service EBITDA margin to reach 16-18 per cent over the next two to three years from about 13.4 per cent in Q4 FY26. Management also expects Express Parcel service EBITDA margin to sustain around 18 per cent, versus 18.8 per cent in Q4 FY26, with potential upside from network optimisation.

Motilal Oswal expects capital intensity to moderate as the major network buildout nears completion, with steady-state capex declining to about 4-5 per cent of revenue by FY28. The broker identifies Delhivery's strong balance sheet and negligible debt as providing capacity for strategic capex and acquisitions.

Key Outlook Considerations

The outlook depends on sustained e-commerce volumes, continuing industry consolidation, successful PTL and SCS execution, yield improvement and delivery of the forecast margin expansion.