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B2C volume growth back in double-digit

We increase our FY26E/FY27E EBITDA estimates by 3.7%/2.0% amid strong performance in 1QFY26 but downgrade DELHIVER IN to ACCUMULATE (earlier BUY) with a TP of Rs466 given 34% appreciation in stock price since our last update report. While DELHIVER IN’s top-line was a miss by 6.8% due to weak performance from SCS and cross border businesses, B2C shipment volume growth was back in double-digits after 5 quarters. Operating performance was better than our estimate with EBITDA margin of 6.5% (PLe 5.5%) while PAT was aided by higher other income of Rs1,299mn (PLe Rs1,059mn) due to MTM gains. As retention volumes at E-com express are trending higher at ~55-65% versus earlier expectation of ~30%; near term earnings pressure arising from acquisition related integration cost of Rs3,000mn will be low. Improvement in the service EBITDA margin profile of PTL/SCM division to 13%/15% and 5%/6% in FY26E/FY27E respectively is expected to provide additional earnings cushion. We expect sales CAGR of 13% over the next 2 years with EBITDA margin of 7.2%/9.2% in FY26E/FY27E and arrive at DELHIVER IN’s per share value of Rs405 (40x FY27E EBITDA; no change in target multiple). We value Ecom express separately at Rs61 per share and arrive at a blended TP of Rs466. Downgrade to ACCUMULATE amid sharp appreciation in stock price.

Revenue grew 5.6% YoY: Revenue grew by 5.6% YoY to Rs22,940mn in 1QFY26 (PLe Rs24,622mn). B2C segment’s volume stood at 208mn in 1QFY26, up 13.7% YoY while realization was down 3.3% YoY to Rs.67.5/parcel. Consequently, B2C revenue increased 10.0% YoY to Rs.14,030mn. PTL segment saw volume/revenue growth of 14.8%/16.8% YoY to ~0.46mmt (PLe 0.45mmt)/Rs.5,080mn (PLe Rs5,047mn) in 1QFY26, while the realization improved marginally by 1.7% YoY to Rs11,092/ton. Supply chain services (SCS) revenue was down 20.8% YoY to Rs.2,050mn in 1QFY26 as warehousing service to one quick-com client was discontinued. FTL revenue was down 5.1% YoY to Rs1,480mn while cross border revenue decreased 44.2% YoY Rs240mn.

EBITDA/PAT margin at 6.5%/4.0%: EBITDA increased 53.3% YoY to Rs1,488mn (PLe Rs1,342mn). PAT increased 67.5% YoY to Rs910mn (PLe Rs554mn, CE Rs615mn). Beat at PAT level was due to higher other income of Rs1,299mn (PLe Rs1,059mn) aided by MTM gains. Service EBITDA margins for Express parcel/PTL/SCS stood at 16.3%/10.7%/7.2% in 1QFY26.

Con-call highlights: 1) Revenue of SCS segment was down 20.8% YoY to Rs2,050mn as warehousing service to one quick-comm client was discontinued. 2) Steady state margin guidance for B2C express parcel segment remains intact at ~16-18%. 3) DELHIVER IN invested Rs140mn in 2 new services: Rapid Commerce (2-hour same-day delivery; via 20 dark stores in 3 cities, currently) and Delivery Direct (on-demand intracity service in Ahmedabad, Delhi NCR, and Bengaluru) in 1QFY26. Rapid commerce services will be expanded to 3 more cities with total dark stores count of 35-40 by 4QFY26E. 4) Yield decline in B2C parcel segment was driven by a double-digit drop in average weight per parcel. 5) Volume transition from E-com Express to Delhivery’s network has started from July-25. 6) Retention volumes at E-com express are trending higher at ~55-65% versus earlier expectation of ~30% odd. 7) SCS business is expected to scale revenues of ~Rs18- 20bn with service EBITDA margin of 12%+ over the next 3 years supported partly by a strong pipeline of ~Rs10bn (~Rs3bn of supply chain mandates in active conversion stages). 8) PTL division is expected to achieve service EBITDA margin of ~16-18% at a quarterly load of ~600–640K tons driven by better fixed cost absorption, improved utilization, and pricing discipline. 9) Trucking utilization stood at ~60-65%. 10) Current asset turnover stands at ~2x with a target of reaching 3x in the B2C parcel and PTL businesses. 11) Corporate overheads to stabilize at ~6-7% of revenue in steady state (0.5-0.7% of annual reduction expected). 12) Steady state capex to be at ~4% of revenue.

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