Shadowfax: 8x profit jump priced at 90 times earnings

Shadowfax Technologies Limited (NSE: SHADOWFAX) grew Q1 FY27 revenue 65% to ₹1,358 crore and lifted profit eightfold to ₹65.4 crore. The stock hit an all time high of ₹276.20 on 22 September. What happened Net profit rose from ₹8 crore a year ago. Operating margin improved to 6.8%, up 370 basis points, and net margin to 4.8%. Expenses grew 60%, slower than the 65% revenue growth. Employee costs rose 49% to ₹124 crore. Depreciation rose 82% to ₹40 crore. The stock listed in January at ₹112.60, below its ₹124 issue price, and has since more than doubled. Why it matters Only a small share of Indian retail is online, so parcel volumes keep compounding. Quick commerce adds more. Shadowfax carries those parcels. Its revenue grows with the platforms it serves. My view The operating leverage is genuine. Revenue grew faster than costs, and that is what turned a loss making company into a profitable one. But look at how thin the cushion is. Net margin is 4.8%. On ₹1,358 crore of quarterly revenue, a one percent cut in delivery rates would erase about ₹13 crore, or a fifth of the quarterly profit. The large platforms it serves negotiate hard and can move volumes in house. Now the price. At roughly 90 times trailing earnings and 9 times book, the stock assumes this margin expansion continues without pause. Annualise the June quarter and it is still near 60 times. Promoters hold just 16.5%, so there is no anchor holder to steady the price. What I am watching Q2 FY27 results, due in November, festive volumes, and net margin holding near 4.8%. On the chart, ₹276 is the high and ₹230 is the first support. My stance: Do not chase it. Revisit near ₹230. Disclosure: I do not hold a position in Shadowfax Technologies Limited at the time of writing. This is not investment advice.