Delhivery shares sink 7% after losses widen sharply in June quarter

delhivery shares sink 7% after losses widen sharply in june quarter

Delhivery shares sink 7% after losses widen sharply in June quarter

Shares of technology-driven logistics startup Delhivery sank over 7 percent on August 10 after the company’s June quarter earnings worsened concerns over the sustainability of the stock’s rich valuations.

The company reported a net loss of Rs 399 crore for the quarter ended June 2022 as against a net loss of Rs 129.6 crore a year back. At the same time, the company’s revenues grew 32.5 percent on-year to Rs 1,745.7 crore.

On a sequential basis, the company’s topline performance deteriorated considerably as revenues slumped 15.7 percent largely driven by seasonal factors and challenges experienced in integration of recently acquired SpotOn.

“We paused volumes from a section of key accounts with specific business processes or freight with special requirements, until operational parameters were conclusively stabilised. Some clients decided to reduce volumes themselves,” Delhivery said in an investor presentation.

The sequential weakness in the topline of the company was driven by a slowdown in e-commerce logistics services as express parcel delivery sales slumped 15 percent on-quarter even as it grew 34 percent on a year-on-year basis.

The weakness in the quarter was acutely reflected in the operating performance of the company as its services operating profit, which is the cash operating profit generated by the company after accounting for direct and fixed variable costs, slipped into the negative territory.

Delhivery’s adjusted operating margin sank to negative-12.5 percent after turning positive in the March quarter. The metric also deteriorated from negative 3.8 percent in the year-ago quarter.

Brokerage firm Credit Suisse Securities India, which downgraded the stock to ‘neutral’, cut its earnings per share estimate for 2022-23 by 280 percent and for 2023-24 by 14 percent following the weak June quarter results.

At 10:55am, shares of Delhivery were down 5.6 percent at Rs 606.50 on the National Stock Exchange.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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