Delhivery shares plunge 4% as net profit tumbles 65% YoY. Why Nuvama still maintains Buy rating

Delhivery shares dropped by 4% in early trading after the logistics firm reported a 65% year-on-year decline in its first quarter net profit. The company posted a profit of Rs 32 crore, which fell short of investor expectations despite a 28% increase in total revenue. This divergence between top-line growth and bottom-line performance has raised questions about the company's operational efficiency and cost management.

The decline in profitability is significant for investors, as it suggests that the company is finding it difficult to convert higher sales into actual earnings. While the revenue growth is a positive sign, the sharp drop in net profit indicates that expenses may be rising faster than sales. This could impact the company's ability to generate free cash flow and fund future expansion.

Going forward, investors should monitor Delhivery's efforts to control operational costs and improve margins. The brokerage firm Nuvama has maintained a 'Buy' rating but lowered its target price to Rs 570, signaling that while they remain optimistic about the stock, they are cautious about the near-term earnings outlook.