Delhivery posts loss of Rs 120 crore in fourth quarter; should you sell or keep the shares?
Delhivery, the recently listed logistics giant, posted a loss of Rs 119.68 crore for the fourth quarter of FY 2021-22 (Q4FY22). This was slightly higher than the loss of Rs 118 crore Delhivery reported in the same period of last financial year.
On the upside, its revenue for the latest quarter doubled from a year earlier to Rs 2,072 crore, from Rs 1,003 crore in Q4FY21.
For the full financial year ending in 2022, the logistics technology company’s net loss ballooned to Rs 1,011 crore from Rs 415.7 crore the previous year. Its revenue, meanwhile, rose by 89% to Rs 6,882 crore for the year.
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Following the company’s first financial results after its IPO, its stock rose more than 3% in a weak market on Tuesday, but quickly slumped and stabilized.
For their part, analysts remain vigilant given that the company is not yet profitable.
“Delivery, like some of the other new era companies, is still making losses. Given this and the way the markets are currently moving, I would not suggest investors buy Delhivery shares at these levels. Visibility , revenue growth and stability in a company’s operational and financial performance are the three key factors investors should keep in mind before investing in a stock,” said AK Prabhakar, Head of Research at IDBI Capital.
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Investors should avoid equities, which don’t consistently make a profit, because one-off or one-time losses are always acceptable, he said, adding that it remains difficult to predict when these new-era companies will become profitable.
For FY22, Delhivery said it posted operating profitability with Adjusted EBITDA of Rs 72 crore and Adjusted Cash after Tax (APAT) profit of Rs 212 crore.
This was due to operational leverage and was in line with management’s strategy to become profitable after scaling up. However, despite the cash profits, cash flow from operations has seen a significant decline, said Parth Nyati, founder of Tradingo.
“The frequent use of Adjusted EBITDA and Adjusted Cash Earnings makes it difficult to comment on actual profitability. We suggest investors wait a few quarters to analyze the evolution of the business in terms of revenue growth and profitability and take an investment call afterwards,” advises Nyati.
In an IPO note, analysts at Indsec Research had said that given the high total addressable market and very high degree of unorganized market share, Delhivery could benefit greatly from the formalization of the logistics sector. , because it relies on strong technological capabilities.
However, the nature of the business forces the company to burn cash in order to fuel growth. “So we believe the IPO is for investors with a high risk appetite who are willing to expect the business to become EBITDA positive on a sustainable basis over the next 2-3 years.” , they said.