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Shadowfax Technologies shares have surged 137% from their IPO price, but ICICI Securities sees further upside in the stock, raising its target price to ₹330 from ₹280 while retaining an ‘Add’ rating. The brokerage expects sustained momentum in the company’s express parcel business, while stronger-than-expected growth in hyperlocal deliveries could provide an additional growth driver.
ICICI Securities expects Shadowfax’s express parcel revenue to grow 48.7% year-on-year in Q2 FY27, supported by potential market-share gains from Amazon’s e-commerce business, expansion into new pincodes and newer initiatives such as Prime and Prime Large.
The brokerage also expects customer additions among MSMEs and SMEs to support growth. A strong festive season in Q3 FY27 could provide another near-term boost to parcel volumes, potentially supporting sustained market-share gains over the medium term.
ICICI Securities expects Shadowfax’s express parcel revenue to grow at a 35.1% CAGR between FY26 and FY28.
The brokerage expects Shadowfax’s hyperlocal business to grow 78.4% YoY in Q2 FY27, with the segment potentially exceeding its earlier expectations.
According to ICICI Securities, competitive intensity in quick commerce and Amazon Now’s outsourcing strategy could support demand for third-party logistics (3PL) hyperlocal deliveries. Its channel checks indicate that gross margins are improving across players as demand for 3PL hyperlocal deliveries rises.
The brokerage believes scale benefits could push the service EBITDA margin above 6%, materially higher than its earlier estimates. As a result, it has upgraded its hyperlocal revenue estimates and expects the business to grow at a 59.7% CAGR between FY26 and FY28.
ICICI Securities expects Shadowfax’s adjusted EBITDA margin to stand at 4.9% in Q2 FY27, broadly flat sequentially, despite the recent increase in fuel prices. The brokerage noted that both express parcel and hyperlocal segments have near-real-time transmission of fuel costs.
An improving SME/MSME mix, growth in higher-yield heavy parcels and margin expansion in the hyperlocal business could support further profitability gains, according to the brokerage. It expects adjusted EBITDA margin to rise to 6.5% by FY28 from 3.8% in FY26.
Based on the improved growth outlook, ICICI Securities has raised its FY27E and FY28E adjusted EBITDA estimates by 11.6% and 25.8%, respectively.
The brokerage has retained its ‘Add’ rating and raised its target price to ₹330 from ₹280, based on a three-stage discounted cash flow model. The revised target implies an EV/EBITDA multiple of 34x FY28E.
However, ICICI Securities flagged pricing pressure in the express parcel business and an inflationary environment impacting medium-term growth visibility as key risks to its outlook.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
Dhanya Nagasundaram works as a Content Producer at LiveMint, specializing in news related to financial markets, stocks, and business. With over eight years of experience in journalism and content creation, she has honed her skills in data-driven reporting and market analysis. Her focus is on monitoring stock trends, initial public offerings (IPOs), corporate news, policy shifts, and larger economic trends that affect investors and market players. <br><br> At LiveMint, Dhanya consistently writes and produces articles that make complex financial topics accessible to readers. She keeps a close eye on equity markets, commodities, and macroeconomic indicators, assisting audiences in comprehending how global and domestic events influence investment perspectives. Her stories frequently underscore emerging trends within sectors, the IPO market, company earnings results, and market strategies pertinent to both retail and institutional investors. <br><br> Before her tenure at LiveMint, Dhanya accumulated a wealth of professional experience at various companies, including MintGenie, Informist, Cogenics, Chary Publications, KPMG, and the Royal Bank of Scotland. These positions allowed her to establish a solid foundation in financial research, reporting, and content creation. <br><br> Throughout her career, she has explored numerous subjects such as trading strategies, commodities, IPOs, wealth generation, corporate profits, and macroeconomic indicators. Her background in both financial journalism and corporate settings has given her the ability to tackle stories with analytical rigor while ensuring clarity for her audience. Through her contributions, Dhanya strives to deliver insightful, trustworthy, and investor-centric financial content.
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