Wait for Delhivery to deliver financially, say analysts
The company posted a ₹119-cr loss in Q4FY22
Recently-listed logistics start-up Delhivery posted a ~119.68-crore loss for the fourth quarter of financial year 2021-22 (Q4FY22), marginally higher than the ~118-crore loss in the corresponding period last year. On the upside, revenue doubled in Q4 to ~2,072 crore from ~1,003 crore in Q4FY21.
For the whole of FY22, the firm reported a net loss of ~1,011 crore, compared with ~415.7 crore in the previous year. Its revenue, meanwhile, rose 89 per cent yearon-year (YOY) to ~6,882 crore.
Following the company’s first financial results after listing, announced after market hours on Monday, its stock rose over 3 per cent in a weak market on Tuesday, but it ended the session with a gain of around 2 per cent.
Watchful stance
Analysts remain watchful, since the firm is yet to turn profitable. “Delhivery, like some of the other new-age companies, is still making a loss. Given this and how the markets are playing out currently, I do not suggest investors buy Delhivery stock at these levels. Revenue visibility, growth, and stability in a company’s operational and financial performance are the three key factors investors must keep in mind before investing in any stock,” said A K Prabhakar, head of research at IDBI Capital.
Investors should avoid stocks that do not consistently make profits, he said, adding that it is difficult to predict when these newage companies will turn profitable.
Even after a strong growth in top line, the company’s net loss widened mainly because of an increase in other expenses and depreciation. At this juncture, investors should avoid fresh entry into the scrip until there is improvement in the company’s bottom line, said Mohit Nigam, Head- PMS, Hem Securities.
For FY22, Delhivery said it posted an operating profitability with an adjusted Ebitda (earnings before interest, taxes, depreciation, and amortisation) of ~72 crore and adjusted cash profit after Tax of ~212 crore.
However, despite the cash profits, cash flow from operations saw a significant decline, said Parth Nyati, founder, Tradingo.
“The frequent use of adjusted Ebitda and adjusted cash profits makes it difficult to comment on the actual profitability. We suggest investors wait for a few quarters to analyse how the business evolves in terms of revenue growth and profitability and take an investment call thereafter,” Nyati advises.