Delhivery Ltd. delivered a first quarter defined by a familiar tension in India's logistics sector: robust volume growth running headlong into a squeeze on margins. ICICI Securities has maintained its Buy rating on the stock, holding its target price at Rs 600 — implying roughly 27% upside from the current market price of Rs 473. Consolidated revenue grew a healthy 28% year-on-year to Rs 2,930 crore, but higher fuel and manpower costs pulled adjusted EBITDA margin down to just 2.6%, the lowest level in over a year. Crucially, the brokerage expects this to prove temporary, with margin recovery likely from the second quarter as cost increases work their way into customer contracts.

The Headline Numbers

Segment Scorecard: Express Leads, Supply Chain Lags

Why Margins Slipped — And Why ICICI Expects a Q2 Rebound

The margin contraction traces to two specific cost pressures: elevated fuel prices and manpower costs, both of which hit faster than Delhivery's contractual pricing mechanisms could absorb. Management explained that fuel cost pass-throughs to customers carry a built-in one-month lag under standard contracts, meaning the current quarter's fuel spike hasn't yet been fully recovered in pricing — with full pass-through expected only by Q2FY27. Separately, the company has begun actively revising client contract pricing to offset the manpower cost increase.

Management's own guidance calls for service-level EBITDA margins to recover to 16-18% for express parcel and 15-15.5% for PTL once these pricing adjustments flow through — both comfortably above the levels reported this quarter. ICICI Securities appears to broadly share this view, characterizing the margin pressure as temporary rather than a sign of any structural deterioration in Delhivery's earnings trajectory.

The Bigger Story: A Sharp Upgrade to Volume Guidance

Buried beneath the near-term margin noise is what may be the report's most important data point: management has raised its full-year FY27 express parcel volume growth guidance to 20-30% year-on-year, up sharply from the 15-20% range guided previously. The upgrade is being driven by continued market share gains from other third-party logistics (3PL) providers, rising outsourcing appetite among e-commerce companies, and steady new customer additions. Express parcel volumes themselves grew a striking 55% year-on-year in the quarter, spread across the direct-to-consumer (D2C), SME and broader consumer segments. PTL volume growth guidance was left unchanged at 18-22% year-on-year, with management separately noting that PTL's 5.3% year-on-year yield improvement is structural rather than a seasonal blip.

What's New: This Quarter's Strategic Initiatives

Delhivery also launched two new tech-driven products during the quarter: SmartNDR, an AI-powered tool designed to help e-commerce brands reduce return-to-origin rates, which had already attracted over 500 client subscriptions by quarter-end; and Delhivery Maps, with more than 200 businesses currently in active integration discussions.

Leadership Update

Delhivery has appointed Vani Venkatesh as Deputy CEO, while Chief Operating Officer Ajith Pai will step down in September 2026. The source report does not elaborate further on the reasons behind the COO transition or provide additional detail on the incoming Deputy CEO's mandate.

Valuation: A DCF-Anchored Target

Unlike many of its peers in this coverage universe, ICICI Securities values Delhivery using a three-stage DCF model rather than a simple earnings multiple, reflecting the company's still-early stage of margin maturity. The resulting target price of Rs 600 implies an EV/EBITDA multiple of 37x on a one-year-forward basis — a rich multiple that reflects the market's continued willingness to pay up for Delhivery's scale and market leadership even as near-term profitability remains modest in absolute terms.

The projected earnings trajectory is striking: adjusted EPS is expected to jump from Rs 2.0 in FY26 to Rs 9.8 in FY27E, a 377% increase, before growing a further 25.5% to Rs 12.2 in FY28E — underscoring how much of Delhivery's valuation case rests on the market's confidence that this quarter's margin dip is a temporary detour rather than a change in direction.

Key Risks

ICICI Securities flags two principal risks to its thesis: pricing pressure in either the express parcel or PTL business, which could delay or dilute the margin recovery management has guided toward; and worsening medium-term growth visibility due to global headwinds, which could weigh on the e-commerce and export-linked demand that underpins Delhivery's volume growth story.