Delhivery's stock drops 15% amid Q2 FY23 update; expects moderate growth

Delhivery shares fell below the IPO issue price to Rs 473.00 on the BSE on Thursday’s intra-day trade after the logistics solution provider shared its quarterly update. In its Q2 FY23 update, the company shared it anticipates moderate growth in shipment volumes through the rest of the financial year.

Currently, Delhivery is trading below its issue price of Rs 487 per share. It made its market debut on May 24, 2022. The company had hit a record low of Rs 456.05 on June 20.

According to the company, market sentiment in Q2 continued to remain broadly unchanged from Q1. Consumer discretionary spending remained muted due to continuing high levels of inflation, with average user spends and total active shoppers remaining flat or lower during the ongoing festive season, as per the industry reports.

"Industrial output (IIP) also remained weak in the first two months of the quarter. In spite of the challenging

market conditions, our market position remains strong owing to our structural cost advantages, network

size and investments in capacity," the company said in a letter to shareholders.

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Delhivery said that Express Parcel volumes remained stable in Q2 and picked up towards the end of the quarter, driven by festive season sales, especially in the Heavy Goods category.

Overall service line volumes for the business grew in the high teens in Q2 FY23 over a large base of the same quarter last year (Q2FY22).

"While the festive season sale surge in shipment volumes will spill over to Q3 FY22 as well, we anticipate moderate growth in shipment volumes through the rest of the financial year,” the company added.

Part Truckload (PTL) business faced operational challenges in Q1 FY23 due to the integration of Delhivery and SpotOn networks. However, the company said that the business is on a path to recovery and recorded growth in the high teens in freight tonnage handled on a QoQ basis (Q2FY23 v/s Q1FY23).

Going forward, it plans to be watchful of the market sentiment.

"We have made sufficient capacity investments in FY22 and early FY23 to sustain our current rate of growth and expect new mega-gateway and sorter decisions only by early FY24,” the company stated.

As inflationary pressures and service disruptions due to monsoon ease across the country, the company expects an improvement in volumes, revenue, and service margins going ahead.