Prabhudas Lilladher has reiterated a BUY recommendation on Delhivery with a revised target price of Rs 534, implying meaningful upside from the current market price of Rs 476. The brokerage believes Delhivery’s operational turnaround is gathering pace as the company benefits from stronger B2C parcel demand, improving profitability in its part-truckload business, and a sharper focus on capital efficiency. Despite near-term investments into new-age logistics initiatives such as intra-city delivery and international parcel solutions, the company has turned free cash flow positive and is steadily expanding margins. Analysts expect revenue CAGR of nearly 17% over FY26-FY28, backed by scale advantages and improving network utilization.

Delhivery’s Operating Momentum Signals Structural Shift in Profitability

Delhivery appears to have crossed a critical inflection point in its business model. The logistics major delivered a robust operational performance during the fourth quarter of FY26, outperforming street expectations on both revenue growth and EBITDA margins. Revenue for the quarter surged 30% year-on-year to Rs 28,500 million, while EBITDA jumped nearly 80% to Rs 2,142 million, translating into a margin of 7.5%.

The company’s adjusted EBITDA margin also expanded meaningfully to 5.3%, supported by strong traction in the B2C parcel and PTL businesses. Analysts noted that scale efficiencies, lower capital intensity, and tighter working capital management have significantly improved the company’s financial profile.

Unlike earlier phases when Delhivery was largely viewed as a growth-centric but cash-burning logistics platform, the latest numbers indicate a business that is beginning to monetize scale more effectively.

B2C Express Parcel Business Emerges as the Primary Growth Engine

The B2C segment remained the standout performer during the quarter. Parcel shipment volumes climbed an impressive 72.9% year-on-year to 306 million parcels in Q4FY26, substantially ahead of historical trends. Even more noteworthy was the fact that volumes grew sequentially despite seasonal weakness typically witnessed during the period.

Although realizations per parcel declined 15.6% year-on-year to Rs 59.9, the sharp expansion in volumes pushed B2C revenues higher by 45.9% to Rs 18,320 million. Analysts attributed the momentum partly to restrictions on insourcing by a major marketplace platform, which appears to have benefited third-party logistics providers such as Delhivery.

The brokerage highlighted that Delhivery’s B2C service EBITDA margin expanded sharply to 18.8% during the quarter, compared with 15.9% a year ago. This indicates that the company is extracting significantly better operating leverage from its network.

PTL Division Quietly Becomes a Margin Expansion Story

One of the more understated positives in the earnings report was the improvement in the PTL business. Part-truckload volumes increased 19.9% year-on-year to nearly 0.55 million metric tonnes, while revenues rose 20.3% to Rs 6,220 million.

What caught analyst attention, however, was the substantial improvement in profitability. PTL service EBITDA margins climbed to 13.5% in Q4FY26 versus 10.8% in the same period last year. Rising utilization levels, route optimization, and fuel pass-through clauses appear to be supporting profitability expansion.

Management now expects transportation business margins — comprising both B2C and PTL operations — to exceed 10% over the next eight to ten quarters.

For long-term investors, this may prove significant because PTL businesses generally enjoy more stable economics once network density improves.

Cash Flow Transformation Becomes a Major Investor Trigger

Perhaps the most important development from an institutional investor perspective was Delhivery turning free cash flow positive.

The company generated free cash flow to the firm (FCFF) of approximately Rs 890 million in FY26, aided by a reduction in capital expenditure intensity and a substantial improvement in working capital efficiency.

Capex intensity declined to 4.7% of revenue during FY26 compared with 5.2% in FY25, while net working capital days reduced sharply to 11 days from 22 days a year earlier.

This improvement is strategically important because investors have historically questioned whether Indian logistics aggregators could scale profitably without continuously consuming capital. Delhivery’s latest trajectory suggests the company may now be entering a more financially disciplined growth cycle.

International Expansion and New Businesses Add Optionality

Delhivery is simultaneously investing in multiple emerging logistics opportunities.

The company’s intra-city logistics platform, Delhivery Local, is currently operational across six cities. Meanwhile, its international economy air parcel service — launched in December 2025 — already serves destinations including the United States, United Kingdom, Canada, and Australia. Management aims to expand this network to ten destinations by Q2FY27.

Additionally, the company has built a supply chain services pipeline worth nearly Rs 18 billion spanning sectors such as auto, FMCG, industrials, and e-commerce.

However, these initiatives come with near-term costs. Prabhudas Lilladher has cut its FY27 EBITDA estimates modestly due to expected investments of Rs 1.3-1.6 billion into these emerging businesses.

Still, analysts appear comfortable with the tradeoff, viewing these investments as long-duration growth levers rather than short-term margin drags.

Financial Outlook Suggests Strong Earnings Acceleration Ahead

The brokerage expects Delhivery’s earnings trajectory to strengthen considerably over the next two fiscal years.

Revenue is projected to rise from Rs 105,083 million in FY26 to Rs 143,177 million by FY28, while EBITDA could more than double from Rs 6,400 million to Rs 14,551 million over the same period.

Analysts now value Delhivery at 35x FY28 pre-Ind AS EBITDA, arriving at a target price of Rs 534 per share.

Why Analysts Believe Competitive Threats May Be Overstated

Concerns around aggressive competition from large e-commerce players continue to persist in the logistics sector. However, Delhivery management believes the threat from Amazon’s entry into the third-party logistics market remains limited.

The company argues that captive logistics networks inherently face cost disadvantages when serving external clients and may struggle to accommodate third-party volumes during peak festive demand periods.

This argument gains credibility as Delhivery continues to scale its open logistics ecosystem while maintaining improving asset utilization.

Investment View: Operational Leverage Finally Arriving at Scale

Delhivery’s latest quarterly performance may represent a defining transition from a high-growth logistics disruptor into a financially scalable infrastructure platform.

The company is now demonstrating simultaneous growth across express parcels, PTL logistics, and supply chain services while also improving free cash flow generation and operating margins. Importantly, management’s long-term focus on capital efficiency appears to be gaining traction.

While near-term investments in international logistics and intra-city delivery could weigh modestly on margins, the broader structural outlook remains favorable. Investors tracking India’s rapidly formalizing logistics ecosystem may increasingly view Delhivery as a long-duration compounding opportunity rather than merely a cyclical e-commerce proxy.