Shares of Delhivery surged 7% to Rs 635 in intraday trading on the BSE on Tuesday, buoyed by good business growth prospects. Shares of the logistics service provider are at their highest level since going public on May 24, 2022.

The stock has risen 36% in the past month, compared with the S&P BSE Sensex’s 6% gain. At current levels, Delivery is 30% above its issue price of Rs 487 per share. The stock fell to a low of Rs 474 on its first day.

Delivery is India’s largest and fastest growing integrated logistics services company as of FY2022. It provides supply chain solutions to 23,613 active customers, including e-commerce marketplaces, direct-to-consumer retailers and businesses, and a variety of small and medium businesses.

On June 22, 2022, Delhivery said it planned to expand its infrastructure in two major cities, Bhiwandi (Greater Mumbai) and Bengaluru. Delhivery is working with Welspun to build a mega gateway of 700,000 sq ft in Greater Mumbai and with GMR to build a more than 1 million sq ft facility in Bengaluru, which will also include a warehouse for multi-channel orders for Delivery’s customers.

These fully automated large-scale integrated cargo terminals will be operational in 2023 and will increase Drifley’s handling capacity to meet customer demand from the South and West.

Delhivery’s management said: “As India’s logistics and warehousing industry is going through a transformational phase, this partnership will bring us one step closer to delivering positive value-add to our customers’ business needs by ensuring they receive the highest quality Grade A assets”.

According to analysts at ICICI Securities, Delhivery’s B2C-heavy business model has a potential profit pool of Rs 6,300 crore in India in FY26. “Our base case assumes Delhivery is about 25%. We see significant operational leverage with global best practices in distribution, sorting and consolidation, potentially simplifying the process. What helped us leap profitability is that Delhivery accounts for about 90% of the incremental 3PL e-commerce distribution market (FY2019-22) – a rare feat in the industry as a whole. We expect by FY25/FY26 (excluding ESOPs) at Rs 940 crore/Rs 1,570 crore,” the brokerage said in its first report dated July 1, 2022, with a “hold” rating.

It added that management plans to increase operational efficiency and pass it on to customers (sections) to create/capture incremental markets meaningfully.