US LNG exports surge but will buyers in China turn up?
On Friday, Bernstein SocGen Group shifted its stance on Delhivery (NSE:DELH) Ltd (DELHIVER:IN), raising the company’s stock rating from Market Perform to Outperform, albeit with a reduced price target of INR430.00, down from the previous INR450.00. Analyst Venugopal Garre highlighted two primary factors influencing the upgrade decision.
The first factor cited is the ongoing consolidation within the third-party logistics sector (3PLs), which is anticipated to bolster margins and volumes for leading companies. Delhivery, in particular, is noted for its robust financial position. The acquisition of Ecom Express by Delhivery is seen as a transformative event for the industry. Garre estimates that even if Delhivery retains only 30% of Ecom Express’s volumes, it could still lead to a significant 15% increase in Delhivery’s parcel volumes and potentially enhance margins by up to 200 basis points.
The second element contributing to the upgrade is the growth of Delhivery’s traditional logistics operations. The company’s part truck load business has reportedly experienced rapid growth and outperformed competitors following the integration of a recent acquisition. The analyst suggests that the reduced execution risks, along with underlying market support and potential market share gains, are likely to benefit Delhivery.
Garre also touched upon the challenges faced by long-haul e-commerce due to the rise of quick commerce. However, he believes that the larger 3PLs, including Delhivery, may recover some market share as pricing stabilizes. Additionally, he notes that Meesho’s reliance on in-house logistics is expected to reach its limit due to the absence of extensive proprietary infrastructure and persistent issues among smaller 3PLs.
In conclusion, Bernstein SocGen Group’s upgrade of Delhivery’s stock rating reflects a positive outlook on the company’s strategic acquisitions and its capacity to scale up traditional logistics operations, which are expected to contribute to its growth and profitability in the competitive logistics market.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.