Motilal Oswal reiterates Buy on Delhivery with ₹580 target as Express shipments surge 73% and EBITDA rises 80% in Q4FY26

Motilal Oswal Financial Services has reiterated its Buy rating on Delhivery Limited with a DCF-based target price of ₹580 after Q4FY26 results that the brokerage described as an in-line performance with strong transportation volume growth and margin expansion driving earnings — even as adjusted PAT of ₹70.80 crore came in slightly below its estimate of ₹77.40 crore.

What the numbers showed

Delhivery reported consolidated revenue of ₹2,850 crore in Q4FY26 — a 30% year-on-year increase and in line with Motilal Oswal's estimate. Reported EBITDA rose 80% year on year to approximately ₹210 crore, with EBITDA margin at 7.5% — up 210 basis points year on year and 10 basis points sequentially. Adjusted PAT came in at ₹70.80 crore against the estimate of ₹77.40 crore, a 9% miss driven by below-the-line items rather than any weakness in the core transportation business.

Express Parcel: the Ecom Express dividend

Express Parcel revenue grew 46% year on year to ₹1,830 crore, with shipments rising 73% year on year to 306 million — the step-change in volume directly attributable to the integration of Ecom Express. Service EBITDA margin for the segment expanded to 18.8%, up 290 basis points year on year and 70 basis points sequentially. The margin expansion alongside volume surge confirms that the Ecom Express network has been absorbed without diluting the Express Parcel economics — higher route density and gateway utilisation are flowing through to the margin line as expected.

PTL: quietly outperforming

The Part Truckload segment delivered revenue growth of approximately 20% year on year to ₹620 crore, with tonnage also up 20% year on year to 0.549 million tonnes. Service EBITDA margin for PTL expanded to 13.5% — up 270 basis points year on year and 240 basis points sequentially — supported by improved yields and a favourable client mix shift toward higher-margin, time-sensitive freight. The combined transportation business — Express Parcel plus PTL — reported a service EBITDA margin of 17.5% in Q4FY26, the strongest in Delhivery's listed history.

What Motilal Oswal expects going forward

Motilal Oswal maintained its FY27 and FY28 EBITDA estimates unchanged, factoring in continued strong growth in the transportation segment supported by healthy service EBITDA margins. The brokerage projects revenue and EBITDA CAGR of 13% and 33% respectively over FY26-28, with the disproportionate EBITDA growth relative to revenue reflecting continued margin expansion from operating leverage, route optimisation, and the capital intensity reduction enabled by the Ecom Express integration.

Management guided for 15-20% annual volume growth across segments and expects to sustain 16-18% service EBITDA margins over the next two years. New services — Delhivery Direct targeting on-demand logistics and Rapid targeting time-sensitive shipments — are scaling well and provide incremental revenue diversification beyond the core parcel and freight model.

The integration of Ecom Express is expected to enhance network efficiency and reduce capital intensity going forward, as shared infrastructure eliminates the need for duplicated gateway and sortation investments. Motilal Oswal views this as a structural improvement in Delhivery's capital allocation framework over FY27-28.

Valuation

At the current market price of approximately ₹451.55 following the May 18 post-results selloff, Motilal Oswal's target price of ₹580 implies upside of approximately 28.5% over a 12-month horizon. The DCF-based methodology reflects the brokerage's view that Delhivery's value should be assessed on normalised long-term cash flows rather than trailing earnings — a framework that is appropriate given that the company is still in its investment and margin expansion phase rather than at a steady-state profitability level.

The near-term risk to the thesis is the 9% PAT miss in Q4FY26, which at a trailing P/E of 225.94x produced a 5% single-session stock correction on May 18. Motilal Oswal's unchanged EBITDA estimates signal that the brokerage views the miss as a below-the-line accounting item rather than a reflection of any deterioration in core business economics.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a SEBI-registered financial advisor before making investment decisions.