Delhivery shares fell 11.33% to Rs 570 on Wednesday, August 10 as concerns about the sustainability of the stock’s high valuations increased in response to the company’s June quarterly earnings.

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The company posted a net loss of Rs 399 crore for the fiscal quarter ending June 2022, compared to a net loss of Rs 129.6 crore the previous year. At the same time, revenue increased 32.5% year on year to Rs 1,745.7 crore.

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On a sequential basis, the company’s topline performance deteriorated significantly as revenues fell 15.7%, mostly due to seasonal factors and the integration issues with newly acquired SpotOn.

“We paused volumes from a section of key accounts with specific business processes or freight with special requirements until operational parameters were conclusively stabilised. Some clients decided to reduce volumes themselves,” Delhivery said in an investor presentation.

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The company’s sequential downturn in the topline was led by a contraction in e-commerce logistics services, as express parcel delivery sales fell 15% on quarter while growing 34% year on year.

The company’s operating performance suffered as a result of the quarter’s downturn, as its services operating profit, which is the cash operating profit generated by the company after accounting for direct and fixed variable expenses, fell into the red.

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After becoming positive in the March quarter, Delhivery’s adjusted operating margin fell 12.5%. The metric also declined 3.8% from the year-ago quarter.

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Following the disappointing June quarter results, brokerage firm Credit Suisse Securities India downgraded the stock to ‘neutral,’ lowering its earnings per share projection for 2022-23 by 280% and for 2023-24 by 14%.