Delhivery Ltd Upgraded to Sell as Technicals Improve Amid Mixed Financials

Quality Assessment: Persistent Profitability Concerns

Delhivery’s quality metrics continue to reflect significant challenges. The company reported a Return on Equity (ROE) of just 0.45%, indicating minimal profitability relative to shareholders’ funds. This low ROE underscores inefficiencies in management’s ability to generate returns, a critical factor for long-term investors. The recent quarterly financials for Q2 FY25-26 reveal a steep decline in profitability, with Profit Before Tax (PBT) excluding other income plunging to a loss of ₹145.44 crores, marking a 118.5% fall compared to the previous four-quarter average. Net losses after tax widened dramatically to ₹50.38 crores, a 201.4% deterioration.

Despite these setbacks, the company maintains a relatively conservative capital structure, with a half-year Debt-to-Equity ratio of 0.48 times, which is moderate for the logistics sector. However, the negative operating profits and poor management efficiency continue to weigh heavily on the quality grade, justifying the Sell rating from a fundamental perspective.

Valuation: Risky but Showing Signs of Market Confidence

From a valuation standpoint, Delhivery’s stock is trading at levels considered risky relative to its historical averages. The company’s Price/Earnings to Growth (PEG) ratio stands at 0.7, suggesting that the stock price may not fully reflect the underlying earnings growth potential. Over the past year, the stock has delivered an impressive 18.67% return, significantly outperforming the BSE500 index’s 7.53% gain. This market-beating performance is supported by a remarkable 339.4% increase in profits over the same period, signalling improving operational leverage despite recent quarterly losses.

With a market capitalisation of ₹30,059 crores, Delhivery is the second-largest company in the transport services sector, accounting for 18.06% of the sector’s total market cap. Its annual sales of ₹9,423.19 crores represent 11.42% of the industry’s revenue, underscoring its significant market presence. However, investors should remain cautious given the stock’s elevated valuation relative to its financial volatility.

Financial Trend: Mixed Signals Amidst Profit Volatility

Delhivery’s financial trend presents a complex picture. While the recent quarter’s results were disappointing, the company has demonstrated healthy long-term growth in operating profit, expanding at an annual rate of 22.52%. This suggests that despite short-term setbacks, the underlying business model retains growth potential. Institutional investors appear confident, with holdings rising to 83.7%, an increase of 1.16% over the previous quarter. Such high institutional participation often signals belief in the company’s recovery prospects and governance standards.

However, the negative operating profits and quarterly losses cannot be overlooked. The company’s debt profile remains manageable, with an average Debt-to-Equity ratio close to zero historically, which mitigates financial risk to some extent. Investors should monitor upcoming quarters closely to see if the positive operating profit trajectory can be sustained and translated into consistent net profitability.

Technical Analysis: Upgraded to Mildly Bullish Outlook

The primary driver behind the upgrade from Strong Sell to Sell is the improvement in Delhivery’s technical indicators. The technical grade has shifted from a sideways trend to a mildly bullish stance, reflecting growing investor interest and momentum. Key technical signals are mixed but show encouraging signs:

• MACD on a weekly basis remains bearish, but monthly MACD has turned mildly bearish, indicating a potential bottoming out of downward momentum.


• RSI on the weekly chart is bullish, suggesting short-term buying strength, while the monthly RSI remains neutral.


• Bollinger Bands show a mildly bearish trend weekly but a mildly bullish trend monthly, signalling reduced volatility and potential for upward price movement.


• Daily moving averages are mildly bullish, supporting a positive near-term price outlook.


• KST (Know Sure Thing) indicator is bearish weekly but bullish monthly, indicating mixed momentum across timeframes.


• Dow Theory analysis shows no clear weekly trend but a mildly bearish monthly trend, reflecting some caution among investors.


• On-Balance Volume (OBV) is neutral weekly and mildly bearish monthly, suggesting volume trends are not strongly supporting price moves yet.

Delhivery’s current price stands at ₹401.70, marginally up 0.04% from the previous close of ₹401.55. The stock has traded within a range of ₹395.05 to ₹404.30 today, well below its 52-week high of ₹489.95 but comfortably above the 52-week low of ₹236.80. This price action aligns with the technical upgrade, indicating a stabilisation phase with potential for moderate gains.

Comparative Performance: Outperforming Sensex but Lagging Sector Growth

Over the last year, Delhivery has delivered an 18.67% return, more than double the Sensex’s 8.65% gain, highlighting its ability to outperform the broader market. However, over a three-year horizon, the stock’s 32.27% return trails the Sensex’s 36.79%, suggesting some underperformance in the medium term. The stock’s one-month and year-to-date returns are slightly negative (-0.97% and -0.48%, respectively), but these losses are less severe than the Sensex’s declines over the same periods (-1.98% and -2.32%).

This relative resilience amid market volatility is a positive sign, but investors should remain cautious given the company’s financial volatility and valuation risks.

Conclusion: A Cautious Upgrade Reflecting Technical Recovery

Delhivery Ltd’s upgrade from Strong Sell to Sell is primarily driven by an improved technical outlook, signalling a potential stabilisation and mild bullish momentum in the near term. However, the company’s fundamental challenges remain significant, with weak profitability, negative quarterly earnings, and valuation risks tempering enthusiasm.

Institutional confidence and healthy long-term operating profit growth provide some optimism, but investors should remain vigilant about the company’s ability to convert these trends into sustained net profitability. The stock’s market-beating returns over the past year contrast with recent financial losses, underscoring the importance of a balanced approach.

Overall, Delhivery’s current rating of Sell reflects a cautious stance that recognises technical improvements while acknowledging ongoing financial and valuation concerns. Investors seeking exposure to the transport services sector may consider this rating as a signal to monitor developments closely rather than initiate fresh positions at this stage.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →