Delhivery ka comeback: Kya yeh long-term hai? | Markets by Zerodha Hindi

Summary

Delivery's growth journey from its origin in 2011 to its profitable year in FY25 is impressive. The company achieved a ₹72.6 crore profit in Q4 FY25, reversing the previous year's loss. Key revenue segments like Express Parcel, PTL, and Supply Chain Services contributed to the growth. Cost optimization and strategic acquisitions, including Ecom Express, are pivotal to its success. With expanding operations, including dark stores and robotics investments, Delivery is actively positioning itself for sustainable future growth. Will its recent profitable year signal long-term success or remain a one-off achievement?

Takeaways

• 😀 Delivery reported its first profitable year in FY25, achieving a profit of ₹72.6 crores in Q4, after previously reporting a loss of ₹68.5 crores in Q4 FY24.
• 😀 The company's growth was driven by cost optimization, with major contributions from its Express Parcel, Part Truck Load (PTL), and Supply Chain Services segments.
• 😀 Delivery's origins date back to 2011, when it started with food delivery services in Gurugram and expanded into e-commerce logistics.
• 😀 In 2012, Delivery raised its first round of funding from Times Internet, leading to significant growth in workforce and shipment volumes.
• 😀 By 2019, Delivery became a unicorn, achieving a valuation of $1 billion after raising $43 million from investors like SoftBank's Vision Fund.
• 😀 Delivery went public in May 2022, raising ₹5,200 crores through its IPO, though its financial performance had been weak until FY25.
• 😀 Express Parcel is the largest revenue contributor, but its growth has slowed, with revenue increasing by only 5% year-on-year in FY25.
• 😀 The PTL segment showed significant growth, with a 25% year-on-year increase in revenue and improved EBITA margin performance.
• 😀 Supply Chain Services saw a 17% increase in revenue, with growth driven by both existing and new clients, including sectors like air conditioning, electrical goods, and automotive.
• 😀 Delivery is diversifying into B2B segments, targeting high-value clients and expanding into rapid commerce, with plans to increase its dark store presence.
• 😀 Delivery is also focusing on acquisitions, such as the purchase of Ecom Express, to expand its customer base and capacity, while also streamlining operations.

Q & A

What was the main reason behind Delivery's profitability in FY 25?

The main reason behind Delivery's profitability in FY 25 was cost optimization across the company, along with significant revenue growth in key segments like express parcel, part truck load, and supply chain services.

Which segments contributed the most to Delivery's revenue growth in FY 25?

The three main revenue segments that contributed to Delivery's growth in FY 25 were Express Parcel, Part Truck Load (PTL), and Supply Chain Services.

What was the impact of Meesho's in-house logistics platform on Delivery's business?

Meesho's shift to its in-house logistics platform, Valmo, is expected to put pressure on Delivery's parcel volumes, as Valmo now handles 20% of Meesho's volume and is expected to handle up to 40% in the future.

How did Delivery perform in terms of profitability in Financial Year 25's fourth quarter?

In the fourth quarter of FY 25, Delivery reported a profit of ₹72.6 crore, which marked a significant improvement compared to the ₹68.5 crore loss in the last quarter of FY 24.

What were the major challenges faced by Delivery's Express Parcel segment in FY 25?

The major challenges faced by the Express Parcel segment in FY 25 included pricing pressure and a significant client loss, particularly with Meesho shifting to its in-house logistics platform, which impacted the segment's volume and margins.

What was the growth rate of Delivery's Part Truck Load (PTL) segment in FY 25?

The Part Truck Load (PTL) segment saw a remarkable 25% year-on-year growth in FY 25, with the freight weight increasing by 19% and the segment reporting its highest-ever EBITDA margin of 10.8% in Q4.

How has Delivery optimized its operational costs in FY 25?

Delivery achieved cost optimization by reducing corporate overheads from 10.6% to 9.4%, keeping employee costs under control, reducing capital expenditure intensity, and lowering depreciation and amortization expenses by 26% year-on-year.

What role does the acquisition of Ecom Express play in Delivery's strategy?

The acquisition of Ecom Express will help Delivery expand its customer base and increase capacity without significant risks, as both companies share a similar customer base. This acquisition is also expected to streamline operations by shutting down unnecessary facilities.

How is Delivery addressing future growth opportunities in rapid commerce?

Delivery is expanding in the rapid commerce logistics segment, which focuses on delivering products in less than two hours. The company already operates 18 dark stores across three cities and plans to open 50 more by the end of FY 25.

What is Delivery's future outlook regarding pricing in the logistics industry?

Delivery's CEO, Sahil Barwa, commented that the trend of 'suicidal pricing' in the logistics industry is ending, meaning that competitors are no longer slashing prices to gain market share. This shift is expected to improve the financials of companies like Delivery and others in the logistics space.