Delhivery Ltd

Initiating Coverage

Revolutionizing India’s Logistics Landscape – Initiate with LONG

December 16, 2024

Jainam Shah ([Link]@[Link])

Shreyans mehta ([Link]@[Link])
all@[Link] - 17/12/2024 [Link] PM
 India Equity Research | Logistics
December 16, 2024
Initiating Coverage

Delhivery Ltd
CMP Target Price
Revolutionizing India’s Logistics Landscape - Rs 393 Rs 459
Mar 2026
Initiate with LONG Rating Upside
LONG 17% ()

➢ Delhivery, one of India's leading logistics players, has evolved into a comprehensive Stock Information
logistics solutions provider with a focus on supply chain reliability and efficiency. Its Market Cap (Rs Mn) 2,91,652
services include express parcel (B2C), part-truck load (PTL), truck load (TL), 52 Wk H/L (Rs) 488/326
warehousing & supply chain solutions, and cross-border logistics. Avg Daily Volume (1yr) 31,55,545
➢ The company’s robust network of 18,775 pin codes, 80 in-house tech applications, Avg Daily Value (Rs Mn) 14.7
advanced data intelligence, and an asset-light model with a strong partner ecosystem Equity Cap (Rs Mn) 91,446
enable agility, superior service, and an expansive reach across 38,044 customers.
Face Value (Rs) 1
➢ We project a 14% revenue CAGR over FY24-FY27E, with EBITDA margins expanding Share Outstanding (Mn) 742.0
to 8.6% by FY27E, driven by operating leverage and improved B2B PTL margins.
Bloomberg Code DELHIVERY IN
➢ Given Delhivery's rapid growth, market share gains from established B2B players, and
Ind Benchmark SPBSMIP
transition to profitability, we expect its premium valuations (over traditional logistics
players) to sustain. The stock is currently trading at P/E of 142x/69x/39x and an Ownership (%) Recent 3M 12M
EV/EBITDA of 57x/35x/22x on FY25E/FY26E/FY27E earnings respectively. Initiate
Promoters 0.0 0.0 0.0
coverage with LONG and a Mar’26 TP of Rs 459 at 27x one-year fwd. EV/EBITDA.
DII 28.6 -6.5 -13.9

India’s e-commerce market – strong industry tailwinds: As per a Redseer report, India's FII 55.0 6.6 10.5
e-commerce market is poised for stellar growth with a projected ~21% CAGR over next Public 16.4 0.0 3.4
five years, outpacing China (~10%) and USA (~8%). Despite accelerated growth, India’s
B2C e-commerce penetration (as a proportion of total retail) remains low at ~7%, way
below China’s 31% and USA’s 16%. Also, per capita shipments for India (~3) pale in
comparison to China (~78) and the USA (~62), indicating massive growth potential. As
per Redseer, B2C shipment volumes should grow at a 28-32% CAGR over FY24-FY29P.
B2B+B2C under a single network – a unique capability: Delhivery operates its B2B PTL
and B2C express parcel business under a single network – a remarkable attribute across
the logistics industry. The company’s B2B PTL segment stabilises operations and enhances
efficiency through pricing flexibility and cross utilisation of assets, boosting truck utilisation
and mitigating B2C festive volatility. Shared infrastructure lowers cost, enhances reliability,
and optimises fixed capacities while balancing heavy PTL loads with volumetric
e-commerce shipments.
Delhivery’s PTL surge – outpacing established peers: Delhivery’s focus on scaling its PTL Relative price chart
segment, bolstered by the Spoton acquisition, has propelled it to the no. 3 position in India’s DELHIVERY IN EQUITY Nifty Index
500
organised PTL market. Despite initial integration challenges, including a ~50% tonnage loss
in 1QFY23, Delhivery has rebounded strongly, outdoing peers in both volume and revenue 450

growth. While competitors posted marginal growth in FY24 and 1HFY25, Delhivery’s PTL 400

volumes surged by ~30%/~20% in FY24/1HFY25. This sharp growth underscores 350

Delhivery’s competitiveness, more so when other players are struggling in this segment. 300
Mar-24

Sep-24
Jun-24
Dec-23

Dec-24

Key Risks: E-commerce dependency, concentration risk, competitive pressures, funding

constraints impacting e-commerce growth, cost management, and profitability risks. Source: Bloomberg

Financial Summary Analysts

EV/ Core EBITDA Jainam Shah
YE Mar Recurring P/E P/B ROE
Sales EBITDA EPS (Rs) EBITDA ROIC Margin [Link]@[Link]
Rs mn PAT (x) (x) (%)
(x) (%) (%)
+91-079 6901 5021
(127.
FY24A 81,415 1,266 (2,268) (3.1) 3.2 231.3 (2.7) (13.6) 1.6 Shreyans mehta
7)
FY25E 90,881 4,220 2,112 2.8 138.1 3.1 69.4 2.2 (3.0) 4.6 [Link]@[Link]
+91-022 4332 0611
FY26E 1,05,284 6,830 4,258 5.7 68.5 3.0 42.9 4.5 1.7 6.5
FY27E 1,21,445 10,440 7,411 10.0 39.4 2.8 28.1 7.3 8.1 8.6
Source: Company Data, Equirus

Refer to important disclosures at the end of this report December 16, 2024 | 1
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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Contents
Story in Charts .............................................................................................................. 3
Delhivery – Largest 3PL player in India’s B2C e-commerce logistics ........................ 7
Delhivery’s PTL surge puts legacy players on backfoot ............................................ 17
Delhivery's SCS growth surpasses peers, though on a modest base ....................... 20
Full-truck load freight – Aggregators market going forward ................................... 23
Cross-border services – Expanding global reach ..................................................... 24
Tech-Driven logistics solutions at Delhivery .............................................................. 25
Financial Analysis ....................................................................................................... 27
Valuation & View ........................................................................................................ 31
Key Risks ..................................................................................................................... 32
Company Background ............................................................................................... 33
ESG Analysis ............................................................................................................... 37

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Story in Charts
Exhibit 1: India’s e-commerce GMV (Including Hyperlocal) Exhibit 2: Low penetration of B2C e-commerce in overall retail

India e-commerce GMV (incl. Hyperlocal) (Rs bn) B2C e-commerce as a % of total retail
14000

12000
India 7%
10000

8000
China 31%
6000

4000

2000 USA 16%

0
FY20 FY21 FY22 FY23 FY24 FY29E 0.0% 10.0% 20.0% 30.0% 40.0%

Source: Redseer, Company Data, Equirus Source: Redseer, Company Data, Equirus

Exhibit 3: Per capital B2C e-commerce spending Exhibit 4: B2C e-commerce shipments in India – by volume (In bn)

Per capita B2C e-coomerce spending (In Rs) 18

350000 16

15-17.5
300000 14

12
250000
10
200000
8
150000
6
100000
4
4.4
3.7

50000 2
2.9
1.4

1.9

0 0
USA China India FY20 FY21 FY22 FY23 FY24 FY29P

Source: Redseer, Company Data, Equirus Source: Redseer, Company Data, Equirus

Exhibit 5: B2C e-commerce shipments per capita Exhibit 6: B2C e-commerce shipments – captive vs. 3PL (In bn)
90 3PL Captive
78
80 5.0

70 4.5
62
4.0
60
3.5
50 3.0 56%
52%
40 2.5
50%
30 2.0
1.5 54%
20
1.0 58% 48% 44%
10 50%
3 0.5 46%
42%
0 0.0
India China USA FY20 FY21 FY22 FY23 FY24

Source: Redseer, Company Data, Equirus Source: Redseer, Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Exhibit 7: Horizontal accounted for ~80% shipments in FY24 Exhibit 8: 3PL leads non-horizontal shipment market

Non-horizontal Horizontal 3PL Captive

5.0 1.0
4.5 0.9
4.0 0.8
30%
3.5 0.7
28%
3.0 0.6

In bn
In bn

2.5 80% 0.5 26%

79%
2.0 0.4
81% 70%
1.5 0.3 72%
1.0 87% 0.2 25% 74%
86% 33%
0.5 20% 0.1 75%
19% 21% 67%
0.0 14% 13% 0.0
FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24

Source: Redseer, Company Data, Equirus Source: Redseer, Company Data, Equirus

Exhibit 9: Captive leads horizontal shipment market Exhibit 10: 3PL B2C e-commerce logistics market size by value

3PL Captive B2C e-commerce logistics market size by value (Rs bn)
4.0 400

3.5 350

3.0 300

2.5 63% 250

In bn

2.0 59% 200

53%
1.5 150
58%
1.0 100
62%
47% 41% 37%
0.5 50
38% 42% 43 115 360
0.0 0
FY20 FY21 FY22 FY23 FY24 FY20 FY24 FY29E

Source: Redseer, Company Data, Equirus Source: Redseer, Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Exhibit 11: Express parcel revenues to grow 12% CAGR over FY24- Exhibit 12: Express parcel service EBITDA margin to remain ~18% over
FY27E medium term

Revenues (Rs bn) Growth yoy % Service EBITDA (Rs bn) Service EBITDA margin (%)

80 70% 14 20%
70 18%
60% 12
16%
60
50% 10 14%
50 12%
40% 8
40 10%
30% 6 8%
30
20% 4 6%
20
4%
10 10% 2
2%
0 0% 0 0%
FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E FY19 FY20 FY21 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus Source: Company Data, Equirus

Exhibit 13: PTL revenues to grow at 20% CAGR over FY24-FY27E Exhibit 14: PTL service EBITDA margin improvement to continue

Revenues (Rs mn) EBITDA margin (%)

30000 20.0%
7% 10%
10.0% 4%
25000
0.0%
Spoton -10.0% -3%
20000 -6%
acquisition -20.0%
-30.0% -20%
15000
-40.0%
-36%
10000 -50.0%
-60.0%
5000 -70.0%
-80.0%
0 -90.0% -79%
FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E FY19 FY20 FY21 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus Source: Company Data, Equirus

Exhibit 15: SCS revenues to grow at 20% CAGR over FY24-FY27E Exhibit 16: SCS service EBITDA margin to remain range bound

Revenues (Rs mn) EBITDA (Rs mn) EBITDA margin (%)

16000 1500 7.0% 10.0%

5.0%
14000 3.2% 5.0%
6.8%
1000 6.0%
12000 0.0%
-5.0%
10000 500
-10.0%
8000
-15.0%
6000 0
-23.0% -20.0%
4000 -25.0%
-500 -23.0%
2000 -30.0%
0 -1000 -30.6% -35.0%
FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E FY19 FY20 FY21 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Exhibit 17: Consolidated revenues to grow at 14% CAGR over FY24- Exhibit 18: Express parcels and PTL to continue to contribute ~80% of
FY27E the consolidated revenues

Revenues (Rs bn) Express parcel Part truck load Truck load Supply chain Cross border

140 100.0%
90.0%

8%

11%
120 80.0%

8%

16%
20%

19%

21%

21%

22%
100 70.0%
60.0%
80
50.0%

83%
60 40.0%

70%
70%

63%
63%

62%

59%

59%

58%
40 30.0%
20.0%
20
10.0%
0 0.0%
FY21
FY15

FY16

FY17

FY18

FY19

FY20

FY22

FY23

FY24

FY25E

FY26E

FY27E

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
Source: Company Data, Equirus Source: Company Data, Equirus

Exhibit 19: EBITDA margin improvement to continue Exhibit 20: Delhivery to witness strong profitability

EBITDA (Rs bn) EBITDA margin (%) Reported PAT (Rs bn)

10 7.4
8.6%
6.5%

12
4.6%

20.0%
1.6%

10.0% 4.3
10 5 2.1
8 0.0%
-31.4%

-2.5%

-10.0%
-3.1%

6 0
-6.2%

-6.3%
-8.3%

-20.0%
4 -0.7
-30.0% -5 -2.7 -2.5
2 -3.2
-61.0%

-4.2

-10.1
-40.0%
-66.7%

0 -6.4 -6.9
-50.0% -10
-78.5%

-2 -60.0% -10.1
-4 -70.0% -15
-6 -80.0%
-8 -90.0% -20 -17.8
FY25E
FY26E
FY27E

FY25E

FY26E

FY27E
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23
Source: Company Data, Equirus Source: Company Data, Equirus FY24

Exhibit 21: Comfortable leverage Exhibit 22: Asset turnover to improve

Gross debt / equity (x) Net debt / equity (x) Gross asset t/o (x) Net asset t/o (x)

0.3 4.0
0.2 3.5
0.1
3.0
0.0
2.5
-0.1
-0.2 2.0
-0.3 1.5
-0.4
1.0
-0.5
0.5
-0.6
FY25E

FY26E

FY27E
FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

0.0
FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Delhivery – Largest 3PL player in India’s B2C e-commerce logistics

Industry overview:
India’s e-commerce market
Strong growth prospects

Over FY20-FY24, India’s e-commerce market grew at ~31% CAGR to attain a GMV of ~Rs 5,100bn;
growth was fuelled by COVID-19-led tailwinds that resulted in wider e-commerce adoption in India.
As per Redseer Research and Analysis (Redseer), the market is projected to grow at a ~21% CAGR for
the next 5 years to become Rs 12,500-13,500bn in FY29, surpassing in China (10% growth) and USA
(8%) during this period.

Exhibit 23: India e-commerce GMV (Incl. Hyperlocal) Exhibit 24: India’s e-commerce market to outpace other markets

India e-commerce GMV (incl. Hyperlocal) (Rs bn) FY24-29 - growth projection
14000

12000
India 21%
10000

8000
China 10%
6000

4000

2000 USA 8%

0
FY20 FY21 FY22 FY23 FY24 FY29E 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Source: Redseer, Company Data, Equirus Source: Redseer, Company Data, Equirus

Low penetration B2C e-commerce

In India, B2C e-commerce as a percentage of total retail market stands at ~7% as against 31% and
16% in China and USA respectively. Further, per capita B2C e-commerce spend in India is significantly
low at ~Rs 3,700 vs ~Rs 78,000 for China and ~Rs 2,90,000 for USA.

Exhibit 25: Low penetration of B2C e-commerce as a % of total retail Exhibit 26: Per capita B2C e-commerce spending

B2C e-commerce as a % of total retail Per capita B2C e-coomerce spending (In Rs)
350000

India 7% 300000

250000

200000
China 31%
150000

100000
USA 16% 50000

0
0.0% 10.0% 20.0% 30.0% 40.0% USA China India

Source: Redseer, Company Data, Equirus Source: Redseer, Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

India’s B2C e-commerce logistics market

The B2C logistics value chain includes several critical stages:

- First Mile: Movement from the seller or platform warehouse to the pickup centre

- Mid-Mile: Multiple sorting processes at various centres and cross-docking at sortation centres

- Last Mile: Delivery from the dispatch centre to customers, after passing through delivery hubs

Each of these stages involves multiple touchpoints, such as gateways, sortation centres, bagging
centres, processing centres, delivery centres, and return processing centres. Effective coordination
B2C logistics demands advanced
across these stages is crucial to prevent disruptions like delays or inventory issues that can affect overall
technologies for real-time tracking,
efficiency.
route optimisation, and precise
inventory management Managing this intricate network requires a careful balance between cost and operational efficiency
while maintaining high levels of customer satisfaction. Logistics providers must employ advanced
technologies for real-time tracking, route optimisation, and precise inventory management. This
complexity underscores the need for specialised solutions and infrastructure, making it difficult for new
entrants and internal teams to manage the entire process effectively.

As per Redseer, India’s B2C e-commerce logistics market is expected to grow at a faster pace than the
overall B2C e-commerce market over the next five years. This market's growth is driven by its highly
complex and multi-faceted nature, demanding advanced technological operations for effective
management.

Exhibit 27: B2C e-commerce shipment value chain

Source: Redseer, Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Indian B2C e-commerce shipment landscape

Strong growth projected in Indian B2C e-commerce shipments: Indian B2C e-commerce shipments
grew by a robust 33% during FY20-FY24, reaching ~4.4bn in FY24. As per Redseer, this figure is
projected to surge to 15-17.5bn shipments by FY29, growing at a CAGR of 28-32%, outpacing growth
in B2C e-commerce GMV (~20% CAGR).

Exhibit 28: B2C e-commerce shipments in India – by volume (bn)

18

16

15-17.5
14

12

India’s B2C e-commerce shipments to 10

outpace growth in B2C e-commerce 8
GMW over the next few years
6

4.4
3.7
2
2.9
1.4

1.9

0
FY20 FY21 FY22 FY23 FY24 FY29P

Source: Redseer, Company Data, Equirus

Low penetration in India’s B2C e-commerce shipments: As per redseer, India’s ~3 shipments per
capita is significantly lower than global counterparts like China and the USA, with ~78 and ~62
shipments per capita respectively. This disparity underscores the substantial untapped growth potential
within India’s B2C e-commerce logistics market.

Exhibit 29: B2C e-commerce shipments per capita

90
78
80

India fares low compared to China and 70

62
USA in terms of per capita 60
e-commerce shipments 50

40

30

20

10 3
0
India China USA

Source: Redseer, Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Captive vs 3PL – Captive leading the battle

B2C e-commerce players often utilise both their own logistics arms and 3PL partners for shipments.
Traditional logistics providers, focused on courier and document delivery, lack the scale and expertise
to manage high shipment volumes and non-document categories. Their value chains are often
fragmented, requiring significant manual intervention, and are ill-equipped for handling returns, large-
scale cash management, and near real-time cash reconciliation, which can create working capital
issues. Additionally, their last-mile delivery technology is insufficient, impacting delivery efficiency and
route optimization. To address these challenges, large B2C e-commerce companies have developed
their own logistics solutions for high-density areas. Examples include Amazon Transportation Services
(ATS), Flipkart’s Ekart, and Meesho’s Valmo.

As per Redseer, in FY23, captive logistics managed ~52% of total shipments, while it has increased to
Large B2C e-commerce players like ~56% in FY24 due to the launch of a leading player’s captive network. In FY24, 3PL providers handled
Amazon, Flipkart, and Meesho have ~44% of last-mile shipments. Exhibit 32 depicts the market share trends of captive vs 3PL shipments
developed captive logistics solutions over last five years.

Exhibit 30: B2C e-commerce shipments – captive vs. 3PL (In bn)

3PL Captive
5.0
4.5
4.0
3.5
56%
3.0
52%
2.5
50%
2.0
1.5 54%
1.0 58% 48% 44%
50%
0.5 46%
42%
0.0
FY20 FY21 FY22 FY23 FY24

Source: Redseer, Company Data, Equirus

Geographic reach and market expansion

As per Redseer, 3PL providers cover ~27,000 pin codes, while captive logistics handle ~12,000 pin
codes. To expand their market reach into these additional locations, B2C e-commerce platforms rely
on 3PL providers, as their own captive logistics are limited to fewer pin codes. With growth increasingly
coming from tier 2+ cities, the dependence of B2C platforms on 3PL providers to manage these
deliveries is likely to remain high.

Exhibit 31: Pin-code reach – Captive vs 3PL

Demand for 3PL providers here to stay
Pincodes

30000

25000

20000

15000

10000

5000

0
Captive 3PL

Source: Redseer, Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Captive vs 3PL – Horizontal (e-commerce platforms) vs non-horizontal (D2C)

Horizontal platforms dominate the market, but non-horizontals to grow faster ahead
Market shares: As per Redseer, in FY24, horizontal platforms contributed 80% of total shipments (vs.
86% in FY20) while non-horizontal platforms the balance 20% (vs. 14% in FY20).
Growth: As per Redseer, during FY20-FY24, horizontal shipments grew at a 31% CAGR, while non-
horizontal shipments at a much sharper at a 45% CAGR. Non-horizontal shipments are expected to
grow at a faster rate than horizontals over the next five years.
Non-horizontal segment prefers 3PL providers: As per Redseer, non-horizontal platforms rely more on
Captive logistics are typically used for 3PL providers compared to their horizontal counterparts. In FY24, horizontal platforms primarily used
high-value items (mobile phones, captive logistics, handling 63% of their shipments internally. Meanwhile, non-horizontal platforms
electronics) and 3PL for complex/ heavy entrusted 3PL providers with ~70% of their shipments, highlighting their greater dependence on
shipments (appliances, furniture) outsourced logistics.
Horizontal segment: captive vs 3PL: As per Redseer, leading horizontal players rely on captive logistics
to maintain control over customer experience, even with a slightly higher cost per shipment. Captive
logistics are typically used for high-value items like mobile phones and electronics. For complex or
heavy shipments such as appliances and furniture, these players turn to 3PL partners. In FY23, a major
horizontal player began in-sourcing logistics to reduce delivery costs for sellers on its platform. This led
to a rise in shipments managed by captive logistics. Its captive arm uses software to choose the best
partner from a network of providers for each delivery stage. Unlike other top horizontal players who
accept higher costs for better control, this player focuses on minimizing cost per shipment through its
captive logistics, even if it affects service levels.

Exhibit 32: Horizontal accounted for ~80% B2C shipments in FY24

Non-horizontal Horizontal

5.0
4.5
4.0
3.5
3.0
In bn

2.5 80%
79%
2.0
81%
1.5
1.0 87%
86%
0.5 21% 20%
13% 19%
0.0 14%
FY20 FY21 FY22 FY23 FY24

Source: Redseer, Company Data, Equirus

Exhibit 33: 3PL leads non-horizontal shipment market Exhibit 34: Captive leads horizontal shipment market

3PL Captive 3PL Captive

1.0 4.0
0.9 3.5
0.8
30% 3.0
0.7
28%
2.5 63%
0.6
In bn
In bn

0.5 2.0 59%

26%
53%
0.4 1.5
0.3 72% 70% 58%
1.0
0.2 25% 74% 62%
33% 47% 41% 37%
0.1 0.5
67% 75% 42%
38%
0.0 0.0
FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24

Source: Redseer, Company Data, Equirus Source: Redseer, Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Growth drivers for 3PL

Over the years, businesses have increasingly outsourced their logistics to 3PL providers, driven by the
desire to focus on core activities and maximize profits through enhanced logistics solutions. Key growth
drivers include comprehensive pan-India network coverage, diversification of business models, and the
rise of ONDC. With ~60% of demand originating from tier 2+ cities, the role of 3PL B2C logistics
providers is set to expand significantly as they broaden their service offerings.

This apart, 3PL B2C e-commerce logistics players are also likely to benefit from the following.

Seasonal demand peaks: The seasonal nature of B2C e-commerce shores up shipment demand during
peak periods like Diwali sales, driven by festive discounts and sales. Captive logistics providers often
depend on 3PL partners to handle these demand spikes effectively.

Supply chain unbundling: A notable market trend is the unbundling of supply chains. Captive players
With ~60% of demand originating are increasingly outsourcing parts of their logistics operations to 3PL providers, leveraging their
from tier 2+ cities, the role of 3PL B2C expertise for various stages of the value chain. Major horizontal platforms are collaborating with local
logistics providers is set to expand logistics and warehousing providers for efficient order and delivery management.
significantly
Ancillary monetization: 3PL providers benefit from high-quality customer intelligence, enabling them to
generate additional revenue through the monetization of ancillary services. The regular and recurring
data they collect enhances their ability to capitalize on these opportunities.

3PL B2C e-commerce – growth opportunities

Expect a 24-26% CAGR over FY24-FY29E

As per Redseer, the 3PL B2C logistics market measures Rs 100bn-130bn (US$ 1.2-1.6bn) as of FY24.
This is projected to rise to Rs 340bn- 380bn (US$4.2-4.6bn) by FY29, growing at a 24-26% CAGR.

Exhibit 35: 3PL B2C e-commerce logistics market size - by value

B2C e-commerce logistics market size by value (Rs bn)

400

350

300

250
3PL e-commerce market on a strong,
upward trajectory 200

150

100

50
43 115 360
0
FY20 FY24 FY29E

Source: Redseer, Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Rising B2C e-commerce activity in tier 2+ cities – a tailwind for 3PL players

Strong growth projected for B2C e-commerce in tier 2+ cities: As per Redseer, B2C e-commerce GMV
growth is increasingly coming from tier 2+ cities. In FY21, these cities contributed ~42% to overall
GMV, and by FY24, their share grew to 55%. This segment has seen the fastest growth, with a
significant increase in the online shopper base. Consequently, the contribution of tier 2+ cities to B2C
e-commerce shipments rose from 56% in FY21 to 62% in FY24. This is further expected to grow at a
35% CAGR till FY29, with the share touching 70-80%.

Exhibit 36: Tier 2+ cities expected to account for 70-80% of the shipments by FY29E

Metro Tier-1 Tier 2+

18.0
16.0
14.0
12.0
10.0
In bn

8.0
6.0
4.0
2.0
0.0
FY21 FY22 FY23 FY24 FY29E

Source: Redseer, Company Data, Equirus

Market to expand slower than earlier

According to industry estimates, India's e-commerce GMV, B2C e-commerce shipments, and 3PL B2C
Tier 2+ cities to practically drive B2C e-commerce logistics market is expected to grow at a healthy rate, though at a slower pace compared
e-commerce shipments by FY29 to previous years. Exhibit 39 outlines growth rates for these parameters during FY20-FY24 and the
projected growth for FY24-FY29E.

Exhibit 37: Growth rate comparison – past vs future

Particulars FY20-FY24 FY24-FY29E

India's e-commerce GMV 31% 21%

India's B2C e-commerce shipments 33% 28-32%
India's 3PL B2C e-commerce logistics market 24-34% 24-26%
Source: Redseer, Industry Estimates, Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Competitive analysis
India’s B2C express parcel (3PL + captive) landscape is dominated by few players including Delhivery,
Xpress Bees, Ecom Express, Amazon Transportation Services, Ekart (Flipkart) and Meesho (Valmo)

Revenues: The combined revenues of top-5 players grew at a 30% CAGR over FY19-FY23, with
Xpressbees leading at a 46% CAGR, followed by Delhivery at 35%. In FY24, Delhivery’s express parcel
shipment revenues grew by 12% yoy, while Ecom Express saw a modest 2% increase.

EBITDA margins: While EBITDA margins were negative across the board, recent trends show margins
turning positive.

Working capital: Net working capital days have been largely negative or minimal for most players.
Over FY19-FY23, revenue growth for Delhivery’s higher net working capital is due to its diverse revenue streams, including PTL, supply chain
Xpressbees was the highest at a 46% solutions, FTL, and cross-border services, while peers primarily focus on express parcels and
CAGR followed by Delhivery at a 35% warehousing.
CAGR
Net asset turnover: Delhivery’s net asset turnover is lower than peers due to capital investments in its
46-foot container trucks, whereas competitors largely operate leased fleets.

Leverage and liquidity: Most players, including Delhivery, have strong liquidity, except for Ecom
Express. Peers are generally well-funded to withstand industry downturns.

Exhibit 38: Express parcel shipment – market share by revenues

Market share (Revenue) FY19 FY20 FY21 FY22 FY23
Delhivery B2C 15% 17% 16% 18% 17%
Xpress Bees 6% 7% 6% 8% 9%
Ecom Express 11% 11% 10% 9% 10%
Amazon Transportation Services 22% 26% 26% 20% 17%
Ekart (Flipkart) 47% 41% 42% 45% 48%

3PL 31% 34% 33% 35% 35%

Captive 69% 66% 67% 65% 65%

Market share among 3PL players (Revenues) FY19 FY20 FY21 FY22 FY23
Delhivery B2C 47% 49% 49% 51% 48%
Xpress Bees 19% 19% 19% 23% 25%
Ecom Express 34% 32% 31% 26% 27%
Source: Redseer, Ecom Express DRHP, Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Exhibit 39: Comparison of B2C express parcel players (3PL + captive)

Revenue (Rs mn) FY19 FY20 FY21 FY22 FY23 FY24 Receivable Days FY19 FY20 FY21 FY22 FY23 FY24
Delhivery B2C 13,731 19,289 25,505 41,911 45,522 50,770 Delhivery (all segments) 47 79 60 53 48 64
Xpress Bees 5,410 7,573 10,059 18,556 24,319 NA Xpress Bees 69 56 72 62 46 NA
Ecom Express 10,059 12,355 16,291 20,919 25,539 26,092 Ecom Express 43 38 45 64 37 38
ATS 20,669 29,509 40,524 45,714 45,433 NA ATS 36 29 30 32 29 NA
Ekart (Flipkart) 44,222 46,968 65,820 1,03,412 1,27,874 NA Ekart (Flipkart) 34 11 35 44 45 NA

Revenue Growth % FY19 FY20 FY21 FY22 FY23 FY24 Payable Days FY19 FY20 FY21 FY22 FY23 FY24
Delhivery B2C NA 40% 32% 64% 9% 12% Delhivery (all segments) 35 36 44 44 40 36
Xpress Bees 100% 40% 33% 84% 31% NA Xpress Bees 68 57 56 63 45 NA
Ecom Express 78% 23% 32% 28% 22% 2% Ecom Express 30 25 34 40 27 33
ATS 31% 43% 37% 13% -1% NA ATS 53 40 36 29 28 NA
Ekart (Flipkart) 78% 6% 40% 57% 24% NA Ekart (Flipkart) 69 85 104 87 79 NA

Gross Margins % FY19 FY20 FY21 FY22 FY23 FY24 Inventory Days FY19 FY20 FY21 FY22 FY23 FY24
Delhivery (all segments) 24% 21% 24% 25% 22% 27% Delhivery (all segments) 5 2 3 1 1 1
Xpress Bees 3% 14% 19% 20% 17% NA Xpress Bees 0 0 0 0 0 NA
Ecom Express 49% 52% 51% 46% 46% 47% Ecom Express 0 0 0 0 0 0
ATS 33% 32% 34% 38% 38% NA ATS 0 0 0 0 0 NA
Ekart (Flipkart) 27% 10% 7% 14% 26% NA Ekart (Flipkart) 0 0 0 0 0 NA

Employee Cost (Rs mn) FY19 FY20 FY21 FY22 FY23 FY24 Net working capital Days FY19 FY20 FY21 FY22 FY23 FY24
Delhivery (all segments) 3,446 4,909 6,109 13,133 14,000 14,368 Delhivery (all segments) 17 45 18 10 9 29
Xpress Bees 682 971 1,185 1,744 3,046 NA Xpress Bees 1 (1) 16 (2) 1 NA
Ecom Express 2,817 3,763 4,577 5,136 6,640 6,033 Ecom Express 13 12 11 24 10 5
ATS 2l324 3,141 4,302 5,208 6,034 NA ATS (17) (11) (5) 2 1 NA
Ekart (Flipkart) 5l213 6,425 7,806 10,251 11,326 NA Ekart (Flipkart) (35) (74) (69) (42) (33) NA

Employee Cost as % of Sales FY19 FY20 FY21 FY22 FY23 FY24 Net Block FY19 FY20 FY21 FY22 FY23 FY24
Delhivery (all segments) 21% 18% 17% 19% 19% 18% Delhivery (all segments) 4,888 7,756 11,301 31,124 30,181 33,822
Xpress Bees 13% 13% 12% 9% 13% NA Xpress Bees 180 147 217 1,116 1,850 NA
Ecom Express 28% 30% 28% 25% 26% 23% Ecom Express 324 1,731 4,440 3,951 6,779 5,493
ATS 11% 11% 11% 11% 13% NA ATS 1,760 7,157 13,091 18,058 18,206 NA
Ekart (Flipkart) 12% 14% 12% 10% 9% NA Ekart (Flipkart) 6,425 12,195 31,640 65,913 68,428 NA

EBITDA Margins (Rs mn) FY19 FY20 FY21 FY22 FY23 FY24 Net asset turnover FY19 FY20 FY21 FY22 FY23 FY24
Delhivery (all segments) -8% -6% -3% -3% -6% 2% Delhivery (all segments) 9.4 3.4 3.6 3.2 2.2 2.4
Xpress Bees -22% -12% -3% 1% -5% NA Xpress Bees 30.0 51.6 46.4 16.6 13.1 NA
Ecom Express -12% -26% 8% 4% -2% 0% Ecom Express 31.1 7.1 3.7 5.3 3.8 4.8
ATS 1% 5% 6% 7% 7% NA ATS 11.7 4.1 3.1 2.5 2.5 NA
Ekart (Flipkart) -6% -23% -18% -8% 7% NA Ekart (Flipkart) 6.9 3.9 2.1 1.6 1.9 NA

PBT Margins FY19 FY20 FY21 FY22 FY23 FY24 Networth FY19 FY20 FY21 FY22 FY23 FY24
Delhivery (all segments) -18% -10% -10% -11% -15% -3% Delhivery (all segments) 33,883 31,704 28,368 59,574 91,771 91,446
Xpress Bees -22% -14% -6% -1% -7% NA Xpress Bees 942 622 6,111 11,932 12,157 NA
Ecom Express -13% -31% 3% -3% -13% -10% Ecom Express -14,219 6,111 9,737 8,781 4,770 2,560
ATS -1% -1% -2% -2% -2% NA ATS 6,341 6,303 6,266 9,802 17,663 NA
Ekart (Flipkart) -7% -33% -29% -19% -3% NA Ekart (Flipkart) 5,750 -9,940 6,068 24,273 21,220 NA

PAT Margins FY19 FY20 FY21 FY22 FY23 FY24 Net D/E FY19 FY20 FY21 FY22 FY23 FY24
Delhivery (all segments) -18% -10% -10% -10% -14% -3% Delhivery (all segments) (0.5) (0.0) 0.0 0.0 (0.0) (0.0)
Xpress Bees -22% -14% -6% -1% -7% NA Xpress Bees (1.1) (1.1) (0.8) (0.9) (0.7) NA
Ecom Express -13% -25% 3% -2% -14% -10% Ecom Express (0.8) (0.4) (0.7) (0.3) 0.6 1.5
ATS -1% -2% -2% -2% -2% NA ATS (0.7) (0.5) (0.1) (0.2) (0.6) NA
Ekart (Flipkart) -7% -33% -29% -19% -3% NA Ekart (Flipkart) (0.5) 0.9 (0.8) (0.3) (0.4) NA
Source: Redseer, Ecom express DRHP, Industry Data, Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Expect a 12% revenue CAGR over FY24-FY27E; margins at ~18%

Shipments

From FY19 to FY22, Delhivery's shipment volumes grew at a robust 58% CAGR, 148mn in FY19 to
582mn in FY22, driven by the booming B2C e-commerce and D2C markets in India. However, FY23
growth slowed to 14%, reaching 663mn shipments, impacted by Shopee’s exit from India.

In FY24, while Meesho’s rapid growth in B2C e-commerce was notable, the scaling of its in-house
Meesho handles ~30-35% of its logistics arm, Valmo, began to impact 3PL players. As a result, though 9MFY24 shipment volumes
volumes captively, while further grew 17% yoy, 4QFY24 saw a 2% decline yoy, bringing overall FY24 growth to 12%. Currently,
insourcing unlikely Meesho handles around 30-35% of its volumes captively, with further insourcing unlikely; this implies
that incremental growth is expected to benefit 3PL providers.

Despite disruptions from Shopee’s exit and Meesho’s insourcing over the past two years, these issues
now appear resolved. We thus expect Delhivery’s shipments to grow at a 12% CAGR over FY24-FY27E.

EBITDA and EBITDA margins

Delhivery's service EBITDA margins for the B2C express parcel segment have remained steady at
16-18% between FY19-FY24. We expect margins to remain steady at 18% going forward with any
additional cost savings likely to be passed on to customers.

Exhibit 40: Shipment volumes to grow 11% CAGR over FY24-FY27E Exhibit 41: Revenues to grow at a 12% CAGR over FY24-FY27E

Shipment Volumes (mn) Growth yoy % Revenues (Rs bn) Growth yoy %

1200 120.0% 80 70%

70 60%
1000 100.0%
60
50%
800 80.0%
50
40%
600 60.0% 40
30%
30
400 40.0%
20%
20
200 20.0% 10%
10
0 0.0% 0 0%
FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus Source: Company Data, Equirus

Exhibit 42: Realisation to remain stable Exhibit 43: Service EBITDA margin to remain ~18%

Realisation (per shipment) Service EBITDA (Rs bn) Service EBITDA margin (%)

100 14 20%
90 18%
12
80 16%
70 10 14%
60 8 12%
50 10%
40 6 8%
30 4 6%
20 4%
2
10 2%
0 0 0%
FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E FY19 FY20 FY21 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Delhivery’s PTL surge puts legacy players on backfoot

Race to the top: Delhivery's journey to top-3 in PTL

Launch in 2016: After achieving significant scale in its express parcel network and establishing a full-
fledged surface line-haul network, Delhivery in 2016 launched PTL freight services focussed on the
B2B express segment.

Growth phase (FY19-FY21): With network expansion, customer addition, and cross-selling PTL services
to existing customers, freight volumes increased at 75% CAGR over FY19-FY21 to 374k tonnes.
However, the segment has faced margin challenges during this phase amid rapid expansion; EBITDA
margins stood at -79%/-36%/-6% during FY19/FY20/FY21.

Spoton acquisition: To further scale-up the PTL freight services business, provide benefits of synergies
between its B2C and B2B express businesses to customers, and further enhance its end-to-end supply
chain capabilities, Delhivery acquired Spoton Logistics in Aug’21. As of Mar’21, Spoton has a network
presence across 13,087 pin codes with 2.85m sqft of infrastructure, and it has registered volumes of
759k tonnes in FY21. Post acquisition of Spoton, Delhivery has become the #3 PTL player in India in
terms of revenues, with an ~8.3% market share of the organised PTL market. Post acquisition, together
with Spoton, Delhivery had over 7,700 active customers across industries such as consumer durables,
auto, lifestyle, fashion, ecommerce, FMCG and retail.

Initial teething issues post Spoton acquisition: In the first two quarters following the acquisition,
Delhivery focused on integrating customer-facing operations, streamlining customer service processes,
and merging teams to create a consistent training framework across the organization. Subsequently,
Delhivery phased out Spoton’s systems and began transitioning to a unified network. At a certain point,
Delhivery made a strategic decision to reduce specific client volumes where integration with Spoton
was highly specialized or involved freight types that Delhivery was not optimally equipped to handle.
As a result of these integration challenges, Delhivery experienced a ~50% loss in combined tonnage
during 1QFY23.

Latest trends

Outperformed peers: Delhivery has outperformed its B2B express/PTL peers across parameters over
last 6 quarters.

Volume: Post integration related issue and degrowth of volume in FY23, Delhivery has bounced back
strongly and registered volume growth of ~30%/~20% during FY24/1HFY25 while its peers have
registered marginal volume growth (highest growth of 10%).

Revenue: With peers have struggled to grow their volumes in FY24 and 1HFY25, Delhivery’s PTL
segment has outpaced its peers and reported a revenue growth of 31%/26% in FY24/1HFY25.

EBITDA: Delhivery's PTL segment has seen lower EBITDA margins compared to traditional logistics
players, impacted by rapid growth and network expansion, as well as integration challenges following
the Spoton acquisition. Despite these pressures through FY23, Delhivery has implemented measures
to improve margins, achieving the strongest margin gains over the past five quarters among peers.
However, its margins still lag behind traditional PTL players, indicating significant potential for future
expansion. Currently as of 1HFY25, Delhivery reported PTL segment EBITDA margin/EBITDA per KG
of 3.1% / Rs 0.34/KG, still lowest in the industry.

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Exhibit 44: Comparison of B2B surface express players

Sales (Rs mn) FY20 FY21 FY22 FY23 FY24 1HFY25 EBITDA (Rs mn) FY20 FY21 FY22 FY23 FY24 1HFY25
TCI Express 10320 8440 10815 12410 12538 6045 TCI Express 1213 1343 1747 1945 1872 716
Gati 11594 10119 12423 14689 14790 7320 Gati 482 329 357 723 540 390
Safexpress 17620 19353 24285 31099 NA NA Safexpress 1761 3230 3317 6060 NA NA
Delhivery 2307 3842 13460 11565 15170 9090 Delhivery -820 -229 NA -2370 -460 280
VRL Logistics 17239 15927 21636 26485 28886 15267 VRL Logistics 2301 2664 3745 4017 3935 2199

Sales growth (%) FY20 FY21 FY22 FY23 FY24 1HFY25 EBITDA (per KG) FY20 FY21 FY22 FY23 FY24 1HFY25

TCI Express 1% -18% 28% 15% 1% -3% TCI Express 1.44 1.94 2.02 1.96 1.87 1.48
Gati -6% -13% 23% 18% 1% -3% Gati 0.53 0.42 0.37 0.64 0.43 0.63
Safexpress 12% 10% 25% 28% NA NA Safexpress NA NA NA NA NA NA

Delhivery 64% 67% 250% -14% 31% 26% Delhivery -3.37 -0.61 NA -2.15 -0.32 0.34

VRL Logistics 2% -8% 36% 22% 9% 10% VRL Logistics 0.75 1.04 1.16 1.03 0.92 1.02

Volume ('000 MT) FY20 FY21 FY22 FY23 FY24 1HFY25 EBITDAM (%) FY20 FY21 FY22 FY23 FY24 1HFY25

TCI Express 840 691 863 993 1000 485 TCI Express 11.8% 15.9% 16.2% 15.7% 14.9% 11.8%

Gati 904 781 962 1133 1249 616 Gati 4.2% 3.3% 2.9% 4.9% 3.7% 5.3%

Safexpress NA NA NA NA NA NA Safexpress 10.0% 16.7% 13.7% 19.5% NA NA

Delhivery 243 373 1579 1101 1429 826 Delhivery -35.5% -6.0% NA -20.5% -3.0% 3.1%

VRL Logistics 3068 2560 3227 3912 4276 2163 VRL Logistics 13.3% 16.7% 17.3% 15.2% 13.6% 14.4%

Volume growth (%) FY20 FY21 FY22 FY23 FY24 1HFY25 EBITDA margin FY20 FY21 FY22 FY23 FY24 1HFY25

TCI Express 0% -18% 25% 15% 1% -1% TCI Express 13 bps 416 bps 24 bps -48 bps -74 bps -308 bps

Gati -7% -14% 23% 18% 10% -1% Gati -160 bps -91 bps -38 bps 205 bps -127 bps 168 bps

Safexpress NA NA NA NA NA NA Safexpress 22 bps 670 bps -303 bps 583 bps NA NA

Delhivery 99% 53% 323% -30% 30% 20% Delhivery 4300 bps 2958 bps NA NA 1746 bps 611 bps

VRL Logistics 6% -17% 26% 21% 9% 6% VRL Logistics 117 bps 338 bps 58 bps -215 bps -154 bps 79 bps
Source: Company Data, Equirus

Consistent sequential margin improvement with significant upside potential

Following the acquisition of Spoton, Delhivery faced integration challenges and a loss in market share,
leading to margin compression due to lower volumes. However, after overcoming these hurdles, the
PTL segment has shown steady sequential improvement in service EBITDA margins. While still below
industry standards, there remains considerable room for further enhancement. With Delhivery’s unique
network supporting both B2C parcel express and PTL loads, and improving utilization levels, we expect
margins to continue inching up. In the long run, Delhivery aims for PTL service EBITDA margins to
reach ~18%, on par with its B2C express parcel segment. The following chart illustrates the service
EBITDA margin trends for the segment:

Exhibit 45: Steady rise in PTL service EBITDA margins

EBITDA margin
10.0%
2.2% 3.2% 3.0%
-1.8%
0.0% -4.9%
-8.0% -8.5%
-10.0%
-17.9% -17.3%
-20.0%

-30.0%

-40.0% -42.8%

-50.0%
1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

2QFY25

Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Shared infrastructure and network to bring efficiency

Delhivery’s network operates as a dense, dynamic mesh, making it efficient, fast, and agile in
responding to changes in volumes, shipment profiles and environmental conditions. The mesh structure
allows it to reduce overall touchpoints in the journey of shipments through the network, reducing
handling and improving precision, while also allowing it to utilize multiple feasible trans-shipment paths
in periods of volatility.

In the mesh network, to attain better turnaround time and service levels, the shipment gets directly
As of Sep’24, Delhivery had: routed for the destination without going to the hub. For the mesh network to be successful, there must
• 119 gateways be sufficient capacity utilization for the truck to be directly routed to final destinations.

• 45 automated sort centres Delhivery has designed the PTL service around shared linehaul operations with the express parcel
business. This enables it to build larger, automated gateways, operate larger trucks, including tractor-
• 124 freight service centres trailers, and enhance capacity utilization in mid-mile operations. Shared network allows it to offer e-
• 3,645 express delivery centres commerce equivalent turnaround times and direct reach across the entire network to PTL freight
customers.
• 159 processing centres
As of Sep’24, Delhivery’s network infrastructure included 119 gateways, 45 automated sort centres,
124 freight service centres, 3,645 express delivery centres and 159 processing centres.

Expect 20% revenue over FY24-FY27E; margins to reach 10%

With integration issues resolved, Delhivery’s focus on expanding its sales force, adding new customers,
boosting B2B visibility, and benefiting from the shift from unorganized (>80% currently) to organized
players (<20% currently) is expected to drive 20% revenue CAGR from ~Rs 15.2bn in FY24 to ~Rs
26.3bn by FY27E. Volumes are projected to grow at a 17% CAGR over the same period.

As revenues increase and infrastructure costs remain stable, utilization levels should rise, driving margin
improvement. Delhivery is targeting ~18% service EBITDA margins in the long run, while we expect
margins to reach ~10% by FY27E (vs. -3% in FY24 and 3.1% in 1HFY25).

Exhibit 46: Revenue to grow at 20% CAGR over FY24-FY27E Exhibit 47: Margin improvement to continue

Revenues (Rs mn) EBITDA margin (%)

30000 20.0%
7% 10%
10.0% 4%
25000 0.0%
-10.0% -3%
20000 -6%
Spoton -20.0%
acquisition -30.0% -20%
15000 -40.0%
-36%
-50.0%
10000 -60.0%
-70.0%
5000 -80.0%
-90.0% -79%
FY25E

FY26E

FY27E
FY19

FY20

FY21

FY23

FY24

0
FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Delhivery's SCS growth surpasses peers, though on a modest base

SCS market growth to outdo overall logistics market growth

The SCS market has the following three segments: 3PL, 4PL, and integrated supply chain solutions.

The SCS market (much more organised than the overall logistics market) is projected to grow faster
(22% CAGR) than the logistics market (6% CAGR) between FY22-FY27E. This is due to the type of
services offered, which require large-scale service providers with deep knowledge of complex logistics
management.

Penetration of SCS in the total logistics market has increased from 3.6% in FY20 to 5% in FY22. This
is further projected to become ~7.3% of the total logistics market by FY27E.

Exhibit 48: India’s SCS market growth to outpace overall logistics market growth

Source: TVS SCS RHP, Company Data, Equirus

Growth drivers for SCS market:

• Industry players becoming more integrated and end-to-end.

• Increasing complexity of supply chains as the manufacturing industry grows rapidly.

• Large potential to unlock efficiency improvement at the manufacturing end of supply chain.

• Demand from end users for sophisticated needs (fast-paced, flexible) across industries.

• Need for data insights and other value-added services provided by supply chain solutions.

• Extensive industry knowhow of supply chain solution players and their capabilities to provide
insights across the supply chain

• Increasing favourable policy support for developing supply chain services (PM Gati Shakti,
and National Logistics Policy).

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

SCS segment to grew 20% revenue/21% EBITDA CAGR over FY24-FY27E

Service offerings: Delhivery offers comprehensive supply chain solutions, combining its strengths in
warehousing, transportation, infrastructure, network, and advanced data science. These integrated
services improve the speed, reliability, and cost-efficiency of customers' supply chains. Designed to be
modular and flexible, Delhivery's solutions enable customers to select from various fulfilment and
transportation models.

Delhivery’s warehousing services include management, in-warehouse processing, and order fulfilment,
optimizing inventory and delivery timelines. Powered by its proprietary WMS, Godam, Delhivery
supports multi-tenant, multi-channel operations for efficient end-to-end (E2E) supply chain solutions.
Integrated transportation services span PTL, TL, cross-border freight, intra-city distribution, and express
parcel delivery.

The acquisition of Primaseller Inc. in 2021 enabled Delhivery to help D2C and omnichannel retailers
integrate online and offline channels, ensuring a reliable order-to-delivery experience for end
consumers.

Revenue/EBITDA to grow at an 20%/21% CAGR over FY24-FY27E: As India's logistics industry evolves
from basic transportation and warehousing to integrated supply chain solutions and value-added
services, Delhivery’s SCS segment stands to benefit significantly. We project Delhivery’s SCS segment
revenue to grow at a CAGR of ~20%, increasing from ~Rs 7.8bn in FY24 to ~Rs 13.5bn by FY27E.

With revenue growth, Delhivery's SCS segment is expected to see service EBITDA margins rise to ~7.0%
by FY27E. We project a 21% CAGR in service EBITDA, increasing from ~Rs 530mn in FY24 to ~Rs
1020mn by FY27E.

Exhibit 49: Revenue to grow at 18% CAGR over FY24-FY27E Exhibit 50: Margin to remain range bound

Revenues (Rs mn) EBITDA (Rs mn) EBITDA margin (%)

16000 1500 10.0%

3.2%
14000 5.0%
6.8% 6.0% 7.0%
1000 5.0% 0.0%
12000
-5.0%
10000 500
-10.0%
8000
-15.0%
6000 0
-20.0%
4000 -25.0%
-500 -23.0%
2000 -23.0%
-30.0%
0 -1000 -30.6% -35.0%
FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E FY19 FY20 FY21 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Delhivery’s SCS segment outperforms established SCS peers

Though on a smaller base, Delhivery has outpaced its peers in the SCS segment in terms of revenue
growth. From FY19 to FY24, Delhivery's revenue grew at a 43% CAGR, rising from ~Rs 1.3bn in FY19
to ~Rs 7.7bn in FY24, compared to the ~7-8% CAGR growth of its peers during the same period. In
1HFY25, Delhivery’s revenues further surged 23% yoy, again outperforming peers.

This strong growth reflects Delhivery’s increasing presence in the SCS segment and its growing
competitive edge. The table below highlights the revenue trajectory of Delhivery and its peers in the
SCS segment over FY19 to 1HFY25:

Exhibit 51: Revenue and growth comparison – SCS players

CAGR
Revenues (Rs mn) FY19 FY20 FY21 FY22 FY23 FY24 1HFY25
FY19 – FY24
Delhivery - SCS 1,320 2,149 3,901 5,510 7,817 7,760 43% 4,560
Growth yoy% 62.8% 81.5% 41.3% 41.9% -0.7% 23%
Mahindra Logistics - SCM 34,659 31,035 31,446 39,387 48,677 51,779 8% 22,560
Growth yoy% -10.5% 1.3% 25.3% 23.6% 6.4% 8%
TCI - SCS 10,241 9,490 9,711 10,639 13,405 15,347 8% 8,515
Growth yoy% -7.3% 2.3% 9.6% 26.0% 14.5% 13%
TVS SCS - India ISCS 15,136 16,182 13,314 16,166 20,270 21,270 7% 10,210
Growth yoy% 6.9% -17.7% 21.4% 25.4% 4.9% -6%
Source: Company Data, Equirus

While Delhivery initially reported losses due to its smaller base, Delhivery has steadily improved margins
as revenues have grown. Over time, we expect the SCS segment to achieve mid to high single-digit
margins. The following table compares Delhivery’s margins with its peers:

Exhibit 52: Revenue and growth comparison – SCS players

Margins (%) Parameter FY19 FY20 FY21 FY22 FY23 FY24 1HFY25

Delhivery - SCS Service EBITDA margin -23.0% -30.6% -23.0% NA 3.2% 6.8% 0.4%

Mahindra Logistics - SCM EBIT 7.6% 8.1% 7.5% 6.2% 3.2% -0.5% -0.4%

TCI - SCS EBIT 6.9% 6.0% 6.3% 6.1% 6.1% 6.5% 5.9%

TVS SCS - India ISCS Adjusted EBITDA margin 9.3% 7.5% 6.8% 7.8% 8.9% 10.2% 10.3%
Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Full-truck load freight – Aggregators market going forward

Market overview

Full truckload freight (TL), the largest segment of road transportation, refers to the delivery of a full
truck/trailer load of freight, moving directly from shipper to consignee.

The TL market has been historically fragmented (unorganised players have ~99% market share) and
plagued with information asymmetries and intermediary costs. Over 85% of fleet owners operate fleets
of less than 20 trucks, and therefore depend on a network of brokers and transporters (broker-cum-
fleet-owners) who match demand and supply of truckload freight locally.

New-age, technology-enabled logistics providers are disrupting this market as follows:

A. New-age players provide transportation management systems to customers and mobile

applications to suppliers of fleet capacity. This ensures real-time visibility and more efficient
matching of demand-supply, and reduction of overhead costs through digitization of previous
offline processes.

B. Analysis of current and historical performance data of fleet owners, more accurate demand
forecasting and real-time supply visibility enable new-age players to provide better pricing
estimates as well as working capital financing to fleet owners at lower costs.

These benefits are expected to push up the share of organised players going forward.

Delhivery’s presence
Delhivery’s Orion platform connects
Truck aggregator platforms facilitate the matching of demand and supply for truckload freight. In full
shippers with fleet owners/truckload
truckload scenarios, optimization opportunities are limited, with the primary benefit being better pricing
capacity suppliers nationwide
through visibility of empty lanes and profitable return trips. Accurate return consignment predictions
allow truck vendors to offer competitive pricing. Traditionally managed through brokers, this demand
visibility is now being transitioned to digital platforms.

Delhivery’s Orion platform enhances this process by connecting shippers with fleet owners and
truckload capacity suppliers nationwide through a centralized bidding and matching engine. Orion
enables shippers to post both spot and long-term freight requirements, which registered agents and
fleet owners can bid for using our in-house application, **Axle**. Loads are then matched to available
capacity based on price and service quality. The Orion platform manages all operational and financial
processes in real-time, including job creation, bidding, matching, tracking, document management,
and transactions.
To further improve its engagement with truckload capacity suppliers, Delhivery acquired Roadpiper
Technologies, a digital freight broker specializing in fleet owner management, load matching, and
pricing applications.

Delhivery’s TL segment has achieved a 13.6% revenue CAGR from FY20 to FY24. We project a 11.0%
revenue CAGR for the segment from FY24 to FY27E.

Exhibit 53: Revenue to grow at 11% CAGR over FY24-FY27E

Revenues (Rs mn)

9000
8000
7000
6000
5000
4000
3000
2000
1000
0
FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Cross-border services – Expanding global reach

Delhivery’s journey in cross-border services

In 2018, Delhivery launched door-to-door and port-to-port express parcel services to and from India,
addressing the growing demand for cross-border e-commerce. By late 2019, it entered cross-border
air cargo services.

The company’s global shipping platform, ‘Starfleet’, follows a ‘string of pearls’ strategy, integrating
global networks and airlines, offering shippers single-window visibility into express and freight shipping.
‘Starfleet’ provides international air cargo services through charter and block space agreements with
major airlines across key trade corridors, including the US, Europe, and China. Delhivery has forged
strategic alliances with global leaders Aramex and FedEx, offering reciprocal access to customs
clearance, pickup, and delivery services. The 2019 Aramex partnership expanded coverage across the
Middle East and North Africa, while the 2021 FedEx alliance extended reach into North America,
Europe, Australia, and Asia. Domestically, partners like SpiceJet and Indigo facilitate air cargo
operations.
Strategic partnerships with Aramex,
FedEx, and Teamglobal for cross- In Sep’24, Delhivery enhanced its ocean freight capabilities through a partnership with Teamglobal
border services Logistics, expanding less than container load services to over 120 countries and integrating inland part
truckload shipping within India for seamless cargo solutions. Their cross-border services are available
to existing and retail customers alike.

Worst behind; expect an 15% revenue CAGR over FY24-FY27E

Following the post-COVID spike in ocean and air freight rates, Delhivery's cross-border services
generated ~Rs 3.2bn in FY22. However, with rate normalisation, revenues declined by 7.1% in FY23
and 48.3% in FY24.

With freight rates stabilising and cargo volumes increasing, Delhivery is poised for recovery. We
anticipate an 15% revenue CAGR from FY24 to FY27E, aided by strategic partnerships with Aramex,
FedEx, and Teamglobal.

Exhibit 54: Revenue to grow at 8% CAGR over FY24-FY27E

Revenue (Rs mn) Freight rate

3500 normalisation impact

3000

2500

2000

1500

1000

500

0
FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Tech-Driven logistics solutions at Delhivery

Delhivery has effectively managed its dynamic mesh networks and increasing load complexity through
tech-enabled logistics solutions. The company has invested in a robust tech team, developing over 80
in-house applications to offer customized, dynamic solutions. Its distributed architecture allows rapid
scaling and flexibility, with independent teams working on various services for faster deployment.

Delhivery’s tech stack, comprising 80+ applications, covers every aspect of the supply chain—order,
warehouse, and transportation management, billing, remittance, tracking, and supply chain analytics.
These seamlessly integrate with customer systems, enabling a streamlined and efficient process.

To enhance operational efficiency, Delhivery collects and analyses vast quantities of transaction data,
Delhivery collects and analyses vast including location, product, shipper and consignee details, and performance data. This data, gathered
data in real time, setting it apart from from handheld devices, IoT systems, and automated equipment, is enriched with traffic and weather
traditional logistics players inputs, enabling real-time optimisation through machine learning and big data analytics. This sets
Delhivery apart from traditional players, minimizing human intervention while optimizing critical
business decisions.

Key tech-driven operational benefits:

• Dynamic routing algorithms maximize trip efficiency

• Network simulation tools forecast cost and service impacts of route changes

• Load forecasting enables proactive deployment of service recovery interventions

• Location intelligence addresses unstructured addresses and unpredictable travel times

• Fraud detection identifies high-risk orders through data from over a billion deliveries

Delhivery’s modular, service-agnostic architecture supports interoperability, cross-utilization of

resources, and the ability to scale new products rapidly. The company’s technology solutions could
evolve into SaaS offerings, unlocking new growth avenues globally.

While the Indian supply chain sector is still in early stages of tech adoption, Delhivery’s approach
positions it to continue growing revenue streams as these solutions mature.

Exhibit 55: Big data stack – Data is collected, enriched, processed, analysed, and fed to build algorithms to improve operational efficiency

Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Streamlining logistics with tech tools

Transportation management system (TMS): Delhivery’s TMS tracks shipments and assets in real-time
across its network, including partner operations. The system identifies optimal shipment paths based
on factors like size, weight, transport mode, and speed. It integrates seamlessly with customer systems
for data exchange, billing, and cash management.

Mid-mile system: This system manages in-facility operations such as sorting, consolidation, loading,
unloading, and transshipment. It provides detailed shipment traceability, capacity planning, and
performance monitoring. Integrated with automated sortation and material handling systems, it ensures
efficient in-facility processes with real-time tracking and mobile applications for operational teams.

Last mile & dispatch system: Delhivery’s last-mile system manages goods at service centres, sorts
shipments, dispatches consignments, and tracks parcel statuses. Field agents use a dispatch app for
route planning, consignee communication, and performance tracking. Station managers access
automated reports and performance scorecards to plan for future loads and manage capacity.

Warehouse management system (WMS): Delhivery’s proprietary WMS, “Godam,” manages order
26ulfilment across various channels. Integrated with Delhivery’s transportation services and external
logistics providers, Godam optimizes inventory placement, order allocation, and aggregation in real-
time. Its multi-tenant architecture provides global inventory visibility and control.

Orion: TL Brokerage: The orion platform connects shippers with truckload suppliers in real-time
through reverse bidding via the “Axle” app. Orion includes a freight matching engine, real-time
tracking, proof of delivery, and transaction management integrated with financial modules.

Partner management toolkit: The Partner Management Toolkit streamlines the registration,
onboarding, and management of third-party agents, including franchisees, business partners, and
delivery agents. Through the partner web portal, partners gain access to operational and customer-
facing applications, along with real-time visibility into service contracts, performance, and earnings.
The “Axle” and “Roadpiper” mobile apps offer truckload partners real-time order visibility, enable
bidding and contract management, and facilitate financial transactions. These apps also provide tools
like price guidance and advance truck availability sharing to help partners improve their win rates.

Customer portals: Delhivery offers web-based customer portals for seamless registration, self-
onboarding, and management of fulfilment and shipping accounts. Customers can handle key tasks
such as order creation, pickup slot booking, tracking, escalation management, billing, cash remittance,
and claims management. These portals are being consolidated into a Unified Customer Portal (UCP),
providing access to all services through a single interface. The UCP will also feature value-added
services, including online channel integration, returns prediction, fraud detection, and customized
shipping notifications.

Supply chain solutions products: Telescope, Delhivery’s supply chain visibility tool, provides enterprises
with a customizable, end-to-end view of their entire supply chain. By integrating customer ERPs with
Delhivery’s WMS and TMS systems, along with a proprietary analytics engine, Telescope enables real-
time, data-driven decisions on inventory placement, order aggregation, optimal order-to-inventory
allocation, and selection of transportation modes and partners. Through Primaseller, Delhivery offers
multi-channel integrations (online and offline), order management, and inventory virtualization, widely
used by D2C and omni-channel retailers.

Consumer applications: In Jun’021, Delhivery launched Delhivery Direct, offering door-to-door

domestic shipping for individual consumers. Through the Direct web portal, users can check shipping
rates, book, and track consignments easily from home. A mobile app is also being developed to enable
consumers to register, track current and past orders, and customize deliveries with slot preferences,
geo-location, address details, and specific instructions.

Netplan & location stack: Delhivery’s ‘Netplan’ product, combined with its location stack, maps
unstructured addresses to delivery centers, identifies optimal facility locations, and minimizes shipment
distances, helping manage costs amid shifting demand patterns.

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Financial Analysis
Expect 14% consolidated revenue CAGR over FY24-FY27E
Delhivery achieved a remarkable revenue CAGR of 59% from FY15 to FY21, growing from ~Rs 2.2bn
to ~Rs 36.5bn. This sustained growth was driven by the expanding B2C e-commerce sector in India,
the introduction of new services, and strategic acquisitions.

However, growth moderated in FY23, with a mere 5% increase, primarily due to the exit of key customer
Shopee from the Indian market and integration challenges with Spoton, resulting in lost market share.
In FY24, Delhivery rebounded, reporting a 13% yoy revenue increase, bolstered by strong performance
across most sectors, except a decline in cross-border services attributed to falling freight rates.

With integration issues resolved and freight rates stabilizing, we project a 14% revenue CAGR for
Delhivery from FY24 to FY27E, anticipating revenues will rise from ~Rs 81.4bn in FY24 to ~Rs
121.4bn by FY27E.

Exhibit 56: Consolidated revenues to grow at 14% CAGR over FY24-FY27E

Revenues (Rs bn)

140

120

100

80

60

40

20

FY27E
FY25E

FY26E
FY18
FY15

FY16

FY17

FY19

FY20

FY21

FY22

FY23

FY24
Source: Company Data, Equirus

We anticipate that the current revenue distribution will persist over the next few years, with ~80% of
revenues coming from express parcels and part truckload services. Meanwhile, other segments,
including FTL, supply chain services, and cross-border services, are expected to contribute ~20% of
total revenues. The chart below illustrates the segment-wise revenue contribution from FY19 to FY27E.

Exhibit 57: Express parcels and PTL to continue to contribute ~80% of the consolidated revenues

Express parcel Part truck load Truck load Supply chain Cross border

100.0%
90.0% 8%
80.0%
8% 11% 20%
70.0% 16% 19% 21% 21% 22%
60.0%
50.0%
40.0% 83%
70% 70%
30.0% 63% 63% 62% 59% 59% 58%
20.0%
10.0%
0.0%
FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Consolidated EBITDA margins to inch up to 8.6% by FY27E

During expansion phase, Delhivery faced significant EBITDA losses, reporting margins of -31%, -61%,
-78%, and -67% for FY15 through FY18. However, as revenues grew and operating leverage
improved, aided by IndAS impact, margins, though still negative, showed signs of recovery, reaching
-8%, -6%, -3%, -3%, and -6% in FY19 to FY23.

In FY24, Delhivery achieved a milestone with its first positive EBITDA margin of ~2%, signalling
operational stabilization. With acquisitions completed and a robust infrastructure in place, we
anticipate positive operating leverage and margin improvement in its B2B PTL segment to drive EBITDA
margins up to 8.6% by FY27E.

The following chart illustrates the trend in EBITDA and EBITDA margins from FY15 to FY27E.

Exhibit 58: Margin improvement to continue

EBITDA (Rs bn) EBITDA margin (%)

12 8.6% 20.0%
10 10.0%
8 -8.3% 0.0%
6.5%
6 1.6% 4.6% -10.0%
-6.2% -3.1% -2.5% -6.3% -20.0%
4 -31.4%
-30.0%
2
-40.0%
0
-50.0%
-2 -60.0%
-4 -61.0% -78.5% -70.0%
-6 -66.7%
-80.0%
-8 -90.0%

FY25E

FY26E

FY27E
FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24
Source: Company Data, Equirus

As operating leverage coming into play, we anticipate employee and other expenses (incl. ESOP costs)
to decrease as a percentage of revenues, from ~2.5% in FY24 to ~1.7% in FY27E. Excluding ESOP
costs, employee and other expenses are expected to decline from ~2.2% in FY24 to ~1.7% in FY27E.

Exhibit 59: Gross margins trend Exhibit 60: Employee and other expenses to reduce as a % of sales

Gross Margin (%) Employee and other expenses (% of sales - incl. ESOP cost)

30.0% Employee and other expenses (% of sales - excl. ESOP cost)

3.5% 3.3%
25.0%
2.8% 2.8%
3.0% 2.7% 2.7%
20.0%
3.0% 2.5%
2.5% 2.2%
15.0%
2.6% 2.0%
2.5%
2.4% 2.4%
10.0% 2.0% 2.2% 1.7%
2.1%
1.9%
1.5%
24.4%

21.3%

23.5%

25.1%

21.5%

26.7%

26.9%

26.1%

26.1%

5.0% 1.7%

0.0% 1.0%
FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Consolidated PAT to improve significantly

During its expansion and acquisition phase, Delhivery consistently reported losses since inception till
FY24. Recently, however, the company has achieved quarterly profitability. With stable organic revenue
growth and positive operating leverage expected in the coming years, we project strong profitability for
Delhivery with FY27E PAT estimated at ~Rs 7.4bn. The following chart illustrates Delhivery’s profitability
trend from FY15 to FY27E:

Exhibit 61: Delhivery to witness strong profitability

Reported PAT (Rs bn)

10 7.4
4.3
5 2.1

0
-0.7
-5 -3.2 -2.7 -2.5
-4.2
-6.4 -6.9
-10
-10.1 -10.1
-15

-20 -17.8
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus

Strong liquidity position

Despite consistent EBITDA and PAT losses, Delhivery has maintained a healthy liquidity position,
bolstered by PE fund infusions from promoter stake sales and its IPO. As of March 2024, the company
reported cash and cash equivalents (incl. current investments) of ~Rs 46.8bn, while gross debt stood
at ~Rs 1.3bn. We expect Delhivery's improving profits to sustain its healthy liquidity position, providing
a strong foundation for future growth.

Exhibit 62: Strong liquidity position Exhibit 63: Comfortable leverage

Gross debt (Rs bn) Net Debt (Rs bn) Gross debt / equity (x) Net debt / equity (x)

10.0 0.3
0.0 0.2

-10.0 0.1
0.0
-20.0
-0.1
-30.0
-0.2
-40.0
-0.3
-50.0 -0.4
-60.0 -0.5
-70.0 -0.6
FY25E

FY26E

FY27E

FY25E

FY26E

FY27E
FY21

FY22

FY23

FY24

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

Source: Company Data, Equirus Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Stable working capital cycle

After peaking at 65 days in FY21, non-cash working capital days have decreased to 38 days in FY24.
Debtor days remain ~60 days, while inventory days are minimal at 1 day, and creditor days are ~40
days. We anticipate this trend to continue, with slight improvements expected.

Exhibit 64: Non-cash working capital cycle to improve marginally

Debtor days Inventory days Payable days Non-cash WC days

70

60

50

40

30

20

10

0
FY21 FY22 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus

Capex (percentage of revenues) to decline; asset turnover to improve

With most capabilities and infrastructure in place, we expect capex as a % of revenue to decrease from
~5.8% in FY24 to 4.1% by FY27E. Additionally, with lower capex and slower growth in fixed assets
compared to revenues, asset turnover is expected to improve. Gross asset turnover is projected to rise
from 1.6x in FY24 to 1.8x in FY27E, while net asset turnover is expected to increase from 2.4x to 2.8x
over the same period.

Exhibit 65: Capex as a % of revenues to decline Exhibit 66: Asset turnover to improve

Capex as a % of revenues Gross asset t/o (x) Net asset t/o (x)

12.0% 4.0
3.5
10.0%
3.0
8.0%
2.5
6.0% 2.0
1.5
4.0%
1.0
2.0%
0.5
0.0% 0.0
FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E FY19 FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E

Source: Company Data, Equirus Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Valuation & View

India’s e-commerce market offers huge, untapped potential
India’s e-commerce market has demonstrated strong growth, expanding at a ~31% CAGR from FY20
to FY24, with a GMV of ~Rs 5,100bn. It is projected to grow at a ~21% CAGR over the next five
years, reaching Rs 12,500-13,500bn by FY29. Despite this, B2C e-commerce penetration remains
low at ~7% of the total retail market, compared to 31% for China and 16% for USA. Additionally,
India’s per capita B2C e-commerce spend (~Rs 3,700) pales in comparison to China (~Rs 78,000)
and USA (~Rs 2,90,000).

B2C e-commerce shipments in India surged by 33% between FY20 and FY24, reaching ~4.4bn
shipments, and are expected to grow at 28-32% CAGR to hit 15-17.5bn by FY29. This growth
outpaces GMV expansion, highlighting logistics as a key driver. India’s ~3 shipments per capita stand
in stark contrast to China (~78) and the USA (~62), reflecting untapped potential.

Delhivery to maintain leadership across segments

The 3PL B2C logistics market, valued at Rs 100bn-130bn (US$ 1.2-1.6bn) in FY24, is poised to grow
at a 24-26% CAGR, reaching Rs 340-380bn (US$ 4.2-4.6bn) by FY29.

We expect Delhivery to maintain leadership across key segments while continuing to gain market share
and enhance profitability. We project a 14% revenue CAGR over FY24-FY27E. In terms of margins,
leveraging scale and operating efficiency, we anticipate EBITDA margins to jump from 1.6% in FY24
to 8.6% by FY27E. Given Delhivery's rapid growth, market share gains from established players in B2B
segment, and its transition to profitability, we believe its premium valuations (over traditional logistics
players) will sustain.

The stock is currently trading at P/E of 142x/69x/39x and an EV/EBITDA of 57x/35x/22x on

FY25E/FY26E/FY27E earnings respectively. We initiate coverage with LONG and a Mar’26 TP of Rs
459 set at 27x one-year fwd. EV/EBITDA.

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Key Risks
E-commerce dependency: Majority of the Delhivery’s revenue comes from e-commerce clients. Any
slowdown in this sector or challenges with major platforms like Flipkart, Amazon, and Meesho could
significantly impact revenue growth and profitability. Loss of scale would hurt margins, making
profitability harder to maintain.

Concentration risk: The reliance on a few key clients increases the risk of revenue volatility if any of
these customers reduce their business or terminate contracts given that the top few customers contribute
significant revenues for Delhivery.

Competitive pressure: Delhivery faces significant competitive pressure in the logistics sector, particularly
within the e-commerce space. Aggressive pricing from existing rivals can erode margins and
profitability. Additionally, the expansion of in-house logistics operations by major e-commerce
platforms like Flipkart (Ekart), Amazon (ATS) and Meesho (Valmo) intensifies competition, potentially
diminishing Delhivery’s share in the third-party logistics market.

Funding constraints impacting e-commerce growth: Reduced funding for e-commerce companies may
dampen the growth of the sector, limiting demand for express parcel services, which forms a significant
portion of Delhivery’s revenue.

Cost management and profitability risks: Delhivery operates an asset-light model, leasing its entire
logistics infrastructure and renting most of its trucks from third-party partners. Facility leases are subject
to annual rent escalations, while vehicle rental prices fluctuate with diesel costs, introducing cost
volatility. Despite recently achieving breakeven, Delhivery’s profitability remains unstable. Aggressive
pricing strategies could further impact realizations in the express segment, and managing costs across
diverse business segments, along with delayed breakeven in loss-making areas, poses ongoing
financial challenges.

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Company Background
A comprehensive logistics solutions provider
Delhivery, founded in 2011, is one of India's leading logistics and supply chain companies. Established
as a hyperlocal express delivery service provider for offline stores, Delhivery has evolved into a
Services provided: comprehensive logistics solutions provider with a network of over 18,775 pin-codes. The company has
established numerous gateways – automated sort centres, freight service centres, express delivery
• Express parcel delivery
centres, processing centres and warehouses – thus handling a significant volume of shipments daily.
• PTL freight
• TL freight Delhivery aims to meet overall (rather than mono-line) customer requirements, with supply chain
• Supply chain solutions reliability and efficiency. The company provides a full range of logistics services, including express
• Cross-border services parcel delivery, heavy goods delivery, partial truckload (PTL) freight, truckload (TL) freight,
warehousing, supply chain solutions, cross-border express and freight services. It also offers value-
added services such as e-commerce return services, payment collection and processing, installation
and assembly services, and fraud detection. Delhivery believes that this wide range of service offerings
leads to a higher wallet share and customer retention.

The integrated approach allows Delhivery to exploit network and infrastructure synergies, reduce
dependence on any single business line and reduce the effect of cyclicality in customer businesses
operations. Express parcel business sees festival and sale-driven volatility that is offset by part-truck
load (PTL) business. This ultimately leads to lower costs and greater reliability due to company’s ability
to operate with higher fixed capacities, balance network inefficiencies (like PTL or truckload backhaul)
and share infrastructure and operational costs across business lines.

Enviable customer base, strong technological backbone

Delhivery has a diverse base of 38,044 active customers across e-commerce, consumer durables,
electronics, lifestyle, FMCG, industrial goods, automotive, healthcare and retail. This customer base
includes most of the key e-commerce players and major D2C brands in India.

Delhivery's services are supported by its robust technological backbone, which includes proprietary
logistics software, data analytics, and AI. This enables real-time tracking, route optimization, and
efficient resource management, ensuring timely deliveries and cost-effective operations. The tech
platform integrates various stakeholders in the supply chain, from shippers and carriers to end
Covers 38,044 active customers customers, facilitating seamless communication and coordination. The company has attracted sizeable
across 18,775 pin-codes investments from notable investors, including SoftBank, Carlyle Group, and Tiger Global.

Exhibit 67: Delhivery’s widespread coverage

Particulars FY19 FY20 FY21 FY22 FY23 FY24 2QFY25
Pin-code reach 13,485 15,875 16,677 18,074 18,540 18,793 18,775
Countries served 42 42 42 220+ 220+ 220+ 220+
No. of active customers 4,867 7,957 16,741 23,613 27,253 33,278 38,044
Infrastructure (in million sq. ft.) 6.0 9.9 12.2 18.2 18.0 18.8 18.5
Gateways 73 83 88 123 94 111 119
Automated sort centres 17 21 19 21 24 29 45
Sorters count NA NA NA NA NA NA 66
Freight service centres 84 103 95 267 141 129 124
Express delivery centres 1,744 2,030 2,098 2,961 2,880 3,506 3,645
Processing centres 138 156 129 178 174 160 159
Team size 23,639 30,634 33,242 60,373 57,307 63,713 73,748
Partner agents 5,191 9,782 19,844 34,360 34,987 34,422 41,656
Fleet size – daily average 3,116 3,694 5,095 9,120 11,105 15,065 16,357
Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Exhibit 68: Key Milestones

Year Particulars

• Incorporation of the Company as a logistics services provider

2011
• Launch of Transportation Management System

• Launch of Warehouse Management System

2013
• Commencement of fulfilment business

2014 • Launch of Netplan, network design tool

• Launch of Addfix, address resolution engine

2015 • Launch of automated sorters in the network

• Commencement of self-managed express surface line-haul network

• Commencement of part truckload services (PTL service offering)

2016
• Launch of ‘Constellation’, partner managed last mile delivery network

• Commencement of Truckload services (TL service offering)

2018 • Commencement of cross border service offering

• PaaS (Platform as a Service) soft launch in Sri Lanka and Bangladesh

• Commencement of Supply Chain Services

• Acquisition of Aramex’s India assets

2019 • Entered into partnership with UPS

• Launch of tractor trailers in the network

• Opened the Delhivery USA office

• Acquisition of Roadpiper Technologies Private Limited

2020 • Launch of 3 mega trucking terminals in Tauru (Haryana), Bhiwandi (Maharashtra) and
Bengaluru (Karnataka)
• Acquisition of the business of Primaseller Inc.

• Entered into a strategic alliance with FedEx

2021 • Acquisition of Spoton Logistics Private Limited

• 1 billion express parcel shipments delivered since incorporation

• Acquisition of Transition Robotics, Inc. by Delhivery Robotics LLC

• Investment in Falcon Autotech Private Limited

2022
• Listing on stock exchanges
Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Key Management Profile

Exhibit 69: Board of Directors
Sr. No. Name Designation Profile
Mr. Kapoor holds a bachelor’s degree in commerce from the University of Delhi and was conferred a doctorate in
Chairman and
philosophy by the Amity University, UP. He is a fellow member of the Institute of Chartered Accountants of India and
Deepak Non-Executive
1 the Institute of Company Secretaries of India. He has been certified as a Fraud Examiner by the Association of
Kapoor Independent
Certified Fraud Examiners. He was previously associated with PricewaterhouseCoopers as Chairman and Chief
Director
Executive Officer.
Managing Director Mr. Barua holds a bachelor’s degree in mechanical engineering from the National Institute of Technology Karnataka,
2 Sahil Barua and Chief Surathkal, and a post-graduate diploma in management from IIM, Bangalore. He has previously been associated
Executive Officer with Bain & Company India Private Limited as Consultant.
Ms. Sundararajan is a 1982 batch Kerala Cadre officer of the IAS. She superannuated on 31 July 2019 as Chairman
Aruna Non-Executive of the Digital Communications Commission, and the Secretary (Telecom), GoI. Prior to this, she served as the
3 Sundararaja Independent Secretary, Ministry of Electronics and Information Technology (MeitY) and as the Secretary to the Ministry of Steel,
n Director GoI. In 1988, she established and headed the Kerala government’s IT Department, amongst the first states to do so
in the country.
Non-Executive Mr. Sobti holds a bachelor’s degree in electrical engineering from Jabalpur University and a diploma in corporate
Romesh
4 Independent laws and secretarial practice from the Indian Law Institute. He was previously associated with IndusInd Bank Limited
Sobti
Director as Managing Director and Chief Executive Officer.
Non-Executive Mr. Gupta holds a bachelor’s degree in technology (honours) in chemical engineering from the IIT, Kharagpur, and
Saugata
5 Independent a post graduate diploma in management from the Indian Institute of Management, Bangalore. He is the Managing
Gupta
Director Director and Chief Executive Officer of Marico.
Mr. Rajan is currently an Advisory Partner at Bain & Company in San Francisco. Prior to this he was a Partner at Cota
Capital, an early-stage venture fund in San Francisco. He has over 25 years of experience with Bain & Company
with stints in Boston, India and San Francisco. He has served as the Managing Partner for Bain & Company India
Non-Executive
Srivatsan and as Chairman for its India operations. He is an investor in and advisor to many startups and funds and is also the
6 Independent
Rajan chair of the Advisory Board of Akshaya Patra in India and the Vice-Chair of Akshaya Patra USA. He serves on the
Director
Advisory Boards of Central Square Foundation and The Convergence Foundation and is the Chair of the Advisory
Boards of ILSS and The Udaiti Foundation. He is an MBA from the Wharton School of Business, where he was a
Palmer Scholar. He has a PG management degree from IIM, Calcutta.
Mr. Bharati holds a bachelor’s degree in technology (mechanical engineering) from the IIT, Delhi. He has previously
Executive Director
7 Kapil Bharati served as Founder and Chief Technology Officer at Athena Information Solutions Private Limited and as Senior
and CTO
Manager Technology at Sapient and Publicis Sapient.
Source: Company Data, Equirus

Exhibit 70: Key Managerial Personnel

Sr. No. Name Designation Profile
Managing Mr. Barua holds a bachelor’s degree in mechanical engineering from the National Institute of Technology Karnataka,
1 Sahil Barua Director and Chief Surathkal and a post-graduate diploma in management from the Indian Institute of Management, Bangalore. He has
Executive Officer previously been associated with Bain & Company India Private Limited as Consultant.
Mr. Bharati holds a bachelor’s degree in technology (mechanical engineering) from the IIT, Delhi. He has previously
Executive Director
2 Kapil Bharati served as Founder and Chief Technology Officer at Athena Information Solutions Private Limited and as Senior Manager
and CTO
Technology at Sapient and Publicis Sapient.
Mr. Saharan is the co-founder of Delhivery and has been associated with it since 2011. He was the COO of the company
Chief People
3 Suraj Saharan and the head of new ventures division prior to becoming Chief People Office. He holds a bachelor’s degree in technology
Officer
from the IIT, Bombay. He was previously associated with Bain & Company India and ICICI Lombard Insurance Company.
Mr. Pai has been involved with the company since 2013. Prior to becoming the COO, he was CFO for five years at
Chief Operating Delhivery. He holds a bachelor’s degree of engineering in mechanical engineering from the National Institute of
4 Ajith Pai
Officer Technology Karnataka, Surathkal and a post-graduate diploma in management from IIM, Bangalore. He was previously
associated with the Lodha Group as Associate Vice President - Procurement.
Mr. Agarwal has been associated with the company since 2012. He holds a master’s degree (five-year integrated
Chief Financial
5 Amit Agarwal programme) in science (chemistry) from IIT, Kanpur. He was previously associated with ACE Group (as a consultant)
Officer
Inductis India (as a senior analyst) and Insight Guru Inc. He has cleared the three levels of the CFA programme.
Mr. Rawat is a qualified CS and a fellow member of the Institute of Company Secretaries of India. She holds a bachelor's
degree in law from Government Law College, Mumbai University and a PGDBA Finance from Welingkar Institute of
Company Management Development and Research. She has more than 17 years of experience in corporate law and compliance.
Madhulika Secretary and Prior to taking a role in Delhivery, she was associated with Restaurant Brands Asia, Yes Bank, Imagicaaworld
6
Rawat Compliance Entertainment, Reliance MediaWorks, SI Group India, and Monsanto India. In her previous roles, she has handled
Officer various corporate law assignments including representing before Stock Exchanges, Ministry of Corporate Affairs,
Securities and Exchange Board of India. She has successfully handled 3 Public Issues, various fund-raising projects,
private equity & acquisition transactions, as well as due diligence exercises.
Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Strategic acquisitions
Delhivery, in alignment with its strategy to enhance customer service, has actively pursued investments,
acquisitions, and strategic initiatives. These efforts have been pivotal in helping the company gain scale
and acquire new capabilities, positioning it competitively in the logistics industry.

Exhibit 71: Delhivery’s list of acquisitions

Year of Purchase consideration
Company Name Acquisition rationale
acquisition (Rs bn)
Expansion of cross border express
Aramex India 2019 0.27 service and to enlarge the
customer base
Building direct relationships with
Roadpiper Technologies 2020 0.04
fleet owners for TL business
Acquisition of web services
business to enhance services
Primaseller Inc 2021 0.04
offered to enterprise customers
and for DTC business
FedEx Express
Expansion of cross border express
Transportation and Supply 2021 1.86
service
Chain Services (India)
Spoton Logistics 2021 15.22 To strengthen PTL capabilities
To strengthen capabilities in
Transition Robotics, Inc. 2021 0.04 designing of unmanned aerial
vehicles
Investment to strengthen
Falcon Autotech 2021 2.52 capabilities in automation
technology
To enhance supply chain solutions
with value-added services and
Algorhythm Tech 2022 0.15 optimize service delivery costs
using Algorhythm Tech's SCM
software
Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

ESG Analysis
Environment:
Environment – Average – The company has not been able to improve its environmental performance
y-o-y and it has no future targets set. However, it has been taking steps to improve it and may yield
better results in future.

Category Unit FY23 FY24 Observation Target

Negative -
Energy intensity per
3.98 Intensity No Target
rupee of turnover 8.99
increased
Renewable Energy
consumption of total ~1% ~1% Very Low No Target
energy consumed
Positive -
Water intensity per rupee Intensity
0.0009 0.0008 No Target
of turnover marginally
decreased
Total Scope 1 and 2 Negative -
GHG emissions per MtCO2e/million 1.37 2.57 Intensity No Target
rupee of turnover increased
Positive -
Total Scope 3 emissions Intensity
tCO2e/Crore 7.69 7.08 No Target
per rupee of turnover marginally
decreased
Negative as
Waste Intensity per rupee
MT/Mn 9.9 23.3 Intensity No Target
of turnover
increased
Negative - Very
Total waste recovered ~2% ~6%
low
Negative – Very
Total waste disposed of ~98% ~94%
high

Key Positive

• Energy Efficiency

o Initiatives to measure Carbon Footprint - In FY24, the company adopted the GLEC (Global
Logistics Emissions Council)-certified methodology for measuring its carbon footprint. This
GLEC framework serves as the foundation for ISO 14083, which focuses on the
quantification and reporting of GHG emissions resulting from transport chain operations.

o Increase in Renewable Energy – In FY23, the company increased its installed solar power
capacity from 1.5 MW in FY23 to 4.6 MW by FY24. More than 50% of the total sanctioned
capacity of 8 MW across 15 facilities is now operational, generating about four times the
output of FY23. Plans are underway to operationalize an additional 1 MW.

o Added fuel-efficient trucks to reduce emissions - The company has continued to add higher
form factor, fuel-efficient 46-ft tractor trailers to its fleet. These trucks are 17% to 44% more
fuel efficient per kilogram per kilometer compared to traditional industry trucks. In FY24, a
joint effort with vendors led to the addition of 191 tractors, increasing the total fleet from 562
to 753 by the end of FY24. Consequently, the share of mid-mile loads carried by 46-ft tractor
trailers surpassed 70%.

o Reduction in logistics intensity - Logistics intensity decreased by approximately 20%, from

229.1 gCO2e/tonne-kilometre in FY23 to 184 gCO2e/tonne-kilometre in FY2

o Focus on deploying CNG/EV/LNG powered vehicles - At the end of FY24, the company had
a combined fleet of 1,634 vehicles that ran on CNG or EVs.

• Increase in Sustainable Sourcing and Supplier evaluation - In FY24, the company increased the
share of sustainably sourced inputs to 55%, up from 43% in FY23. Initiatives included
communicating the supplier code of conduct and sustainable sourcing policy to all suppliers,
incorporating these documents and a conflict-of-interest clause into supplier agreements and
onboarding forms effective April 1, 2023, and regularly monitoring adherence to these policies.
Major vendors, accounting for 75% of annual expenditure, are evaluated on ESG parameters.

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

• Significant increase in Capex for sustainability - In FY24, 30.20% of capital expenditure (capex)
investments were directed towards specific technologies aimed at improving environmental and
social impacts, compared to 9.89% in FY23. The FY24 capex initiatives included the induction of
fuel-efficient 43-46 ft tractor trailers, electric trucks, and rooftop solar installations, all contributing
to a reduction in overall logistics intensity compared to FY23.

• Independent assessment of environmental parameters – carried out by an external agency, Sangti

Solution Pvt. Ltd.

• Waste management

o Plastic waste

o Flyers: Suppliers are required to use 20% recycled material in the production of flyers and to
comply with regulations regarding single-use plastics.

o Bags: Polypropylene (PP) woven bags are reused 2-3 times for shipping. At the end of their
lifecycle, these bags are sent to authorized scrap dealers for treatment in accordance with
established norms.

o E-waste Disposal - E-waste is disposed of exclusively through authorized scrap dealers, who
provide a green certificate upon disposal.

o Other Waste Disposal - including wood, iron, metals, paper, and tires, are sent to vendors
for recycling.

o Registration for Extended Producer Responsibility (EPR) – The company aims to get registered
as Brand Owner in Q3 of FY24.

• Water & Effluents

o Usage of water limited to human consumption purpose.

Social:
Social – Below average performance as it lacks in diversity, H&S, and human rights parameters.

Category Observation Targets Set

Diversity Below Average NA

Health and Safety Below Average NA
Human Rights Below Average NA
Employee Development Average NA
Summary Average

Diversity – Below Average – Women representation is low in the company across all employment level.

Category FY23 FY24 Observation

Total Women Employees 6.6% 8% Low

Total Women Workers 6% 9% Low
Women in BoD 10% 11% Low
Women in KMPs 11% 0% Low

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Health & Safety – Below Average: Although there has been a slight reduction in safety incidents y-o-y,
a significant number of incidents still occur, coupled with low training coverage.

Category FY23 FY24 Observation

Health & Safety Training

Employees 33% 16% Satisfactory

Workers 38% 38% Satisfactory
Health & Safety Incidents
Lost Time Injury Frequency Rate (per one-million-
person hours worked
Employees 0.75 0.56 Declining
Workers 2.46 1.21 Declining
Work-related injuries 0 0 Satisfactory
Employees 130 115 Declining
Workers 795 394 Increasing
No. of fatalities
Employees 3 7 Increasing
Workers 19 19 Neutral
High consequence work-related injury
Employees 51 79 Increasing
Workers 187 189 Increasing
H&S Complaints
Employees 8 12 Increasing
Workers 2 3 Increasing
Health & Safety Assessment
Health & Safety practices Assessment 100% 100% Satisfactory
Working Conditions Assessment 100% 100% Satisfactory

Human Rights – Below Average – Major concern is high number of sexual harassment complaints
reported in both FY23 and FY24.

Category FY23 FY24 Observation

Human rights training (Employees) 99% 82% Moderate
Human rights training (Workers) 4% 69% Moderate
Sexual Harassment complaints 36 50 Poor
Wages complaints 58 74 Poor
Human Rights assessment 100% 100% Satisfactory

Employee Development –Average - While the return-to-work and retention rates are positive, there are
concerns regarding the high turnover rate and low coverage for skill upgradation among workers.

Category FY23 FY24 Observation

Skill upgradation for employees 54% 76% Moderate
Skill upgradation for workers 22% 23% Low
Turnover rate of employees 42% 36% Poor
Turnover rate of workers 32% 32% Poor
Return to work rate 93% 94% Satisfactory
Retention Rate 92% 93% Satisfactory

• One Incident of Cyber-attack in FY24 - On May 2, 2023, the company’s main website
([Link]) experienced a DDoS attack; however, after enhancing the WAF rules,
the number of requests per minute decreased, and there was no impact on its services.

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Governance:
Governance – Moderate performance based on strong representation of ID, and Chairperson is
Independent. However, employee complaints is increasing y-o-y.

Key Positive observations

• ESG Governance – The CSR & Sustainability Committee is responsible to oversee

sustainability matters which is chaired by an Independent Director.

• The Chairman and Managing Director positions are held by distinct individuals, ensuring a
clear separation of interests and eliminating potential conflicts.

• The Chairperson is an Independent Director.

• No Penalties - No bribery or corruption charges against the Board of Directors, Key

Managerial Personnel, employees, or workers reported by any law enforcement agency.

• Independent Directors – Strong representation of IDs on the board (75% as of July 5, 2024).
They have attended majority of board meetings and are not overloaded with directorships as
none of them holds more than 5 directorships in other companies.

• Audit Committee – consists of 4 members of which 3 are independent directors including the
chairperson.

• Nomination & Remuneration Committee - consists of 3 members of which all are

independent directors including the chairperson.

Key Negative observations

• Auditor changed - The company appointed S R Batliboi and Associates LLP as the auditor in
FY23 and again appointed in Deloitte Haskings for FY24 and FY25. Generally, auditor
should be rotated once every 5 years.

• Rise in Customer Complaints – In FY24, 40 customer complaints were registered as

compared to 14 in FY23. All of them are legal cases filed against the company.

• Rise in Employee/Workers Complaints - In FY24, 779 customer complaints were registered

as compared to 536 in FY23.

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Company Snapshot
How we differ from consensus
Particular (Rs Mn) Equirus Consensus % Diff Comment

FY25E 90,881 92,882 -2%

Sales FY26E 1,05,284 1,07,591 -2%

FY27E 1,21,445 1,24,736 -3%

FY25E 4,220 3,986 6%

EBITDA FY26E 6,830 7,227 -5%

FY27E 10,440 10,754 -3%

FY25E 2,112 1,826 16%

PAT FY26E 4,258 3,743 14%

FY27E 7,411 6,000 24%

Key Estimates
Key Assumptions FY24 FY25E FY26E FY27E

Express parcel revenues 50,770 53,563 61,597 70,837

PTL segment revenues 15,170 18,969 22,444 26,326
SCS revenues 7,760 9,545 11,454 13,515
Other revenues 7,715 8,805 9,790 10,766
Total revenues 81,415 90,881 1,05,284 1,21,445
Reported EBITDA 1,266 4,220 6,830 10,440
Reported EBITDA margins 1.6% 4.6% 6.5% 8.6%
Adjusted EBITDA 760 2,136 4,165 6,755
Adjusted EBITDA margins 0.9% 2.3% 4.0% 5.6%
Reported PAT (2,492) 2,061 4,258 7,411
PAT margins -3% 2% 4% 6%

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Comparable valuation
P/E EV/EBITDA P/B RoE Div Yield
Mkt Cap Price Target
Company Reco. CMP
Rs. Mn. Target Date
FY24A FY25E FY26E FY24A FY25E FY26E FY24A FY25E FY26E FY24A FY25E FY26E FY25E

DELHIVERY LONG 393 2,91,652 459 Mar-26 -116.2 141.5 68.5 194.3 57.1 34.8 3.2 3.1 3.0 -2.7% 2.2% 4.5% 0.0%

CCRI ADD 835 5,08,456 900 Mar-26 41.1 37.3 31.6 24.7 22.3 19.1 4.3 4.1 3.9 10.7% 11.0% 12.6% 1.5%

GDL LONG 88 44,149 118 Mar-26 17.2 18.8 16.8 12.4 12.1 10.8 2.4 2.1 2.0 13.8% 11.7% 12.2% 2.1%

VRLL ADD 541 47,334 551 Mar-26 53.4 37.6 31.6 12.7 10.4 9.0 5.0 4.6 4.2 9.2% 12.7% 13.9% 1.0%

TCIEXP REDUCE 848 32,550 886 Mar-26 24.7 29.0 26.5 17.3 19.9 17.8 4.6 4.1 3.7 20.3% 15.1% 14.7% 0.9%

MLL REDUCE 388 27,974 408 Mar-26 -47.8 369.4 45.6 13.4 10.4 8.5 5.7 5.8 5.3 -10.0% 2.5% 12.8% 0.6%

TVS SCS LONG 185 81,758 212 Mar-26 -194.5 101.4 41.5 12.3 10.9 8.7 4.4 4.2 3.8 -8.0% 4.3% 9.9% 0.0%

TRPC LONG 1,175 90,009 1397 Mar-26 25.7 21.7 19.1 22.1 19.7 17.4 4.4 3.9 3.4 18.9% 19.5% 19.5% 0.7%

AEGIS ADD 775 2,72,148 897 Mar-26 47.8 46.1 35.0 29.4 27.1 21.8 7.0 6.4 5.8 15.8% 15.1% 17.8% 0.9%

BLUEDART NR 7,788 1,84,788 NR NR 61.5 59.6 41.9 22.1 20.5 17.0 13.5 11.4 9.4 23.6% 21.9% 25.3% 0.6%

ALLCARGO
NR 96 14,052 NR NR 85.3 47.8 31.9 22.5 15.4 10.8 2.0 NA NA 2.3% 1.9% 4.7% 0.0%
GATI

ALLCARGO
NR 54 53,365 NR NR NA 58.0 30.6 14.5 12.1 9.8 2.1 2.1 2.0 5.6% 2.6% 4.2% 1.7%
LOGISTICS

GUJARAT
LONG 191 92,313 252 Dec-25 26.1 19.7 17.9 14.5 12.4 11.4 4.4 4.3 4.1 17.0% 22.1% 23.5% 4.3%
PIPAVAV PORT

ADANI PORTS
ADD 1,242 26,82,893 1738 Sep-25 33.1 25.9 23.8 19.3 16.5 14.7 4.9 4.2 3.6 16.5% 18.0% 16.9% 0.5%
AND SEZ

JSW INFRA NR 320 6,71,476 NR NR 54.3 48.7 41.4 32.1 29.0 24.5 8.2 7.0 6.0 19.2% 15.3% 15.2% 0.3%

Price to earning chart Price to book chart EV-EBITDA chart

80000 4.0 300

3.5 250
60000
200
3.0 +1δ
40000 +1δ 150
2.5
20000 100
2.0 50
Avg Avg
0 +1δ
Avg
-1δ 1.5 0
May-22 May-24 May-22 May-24
-20000 1.0 -50
-1δ -100 -1δ
-40000 0.5
-150
0.0
-60000 -200
May-22 May-24

Source: Company Data, Equirus Source: Company Data, Equirus Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Quarterly performance
Y/E Mar (Rs mn) 1QFY24A 2QFY24A 3QFY24A 4QFY24A 1QFY25A 2QFY25A 3QFY25E 4QFY25E

Revenue 19,298 19,417 21,945 20,755 21,723 21,897 24,220 23,041

COGS 14,381 14,421 15,718 15,187 15,795 16,381 17,535 16,701
Employee Cost 3,532 3,666 3,597 3,572 3,328 3,493 3,517 3,503
Other Expenses 1,515 1,486 1,536 1,537 1,629 1,450 1,639 1,690

EBITDA (130) (156) 1,094 459 971 573 1,528 1,148

Depreciation 1,673 1,712 1,826 2,004 1,194 1,313 1,444 1,582
EBIT (1,803) (1,868) (732) (1,545) (224) (740) 85 (435)
Interest Exp. 195 196 222 271 282 305 318 330
Other Income 1,013 1,012 1,308 1,193 1,099 1,196 1,220 1,266
Profit before Tax (986) (1,052) 354 (623) 593 151 987 501
Tax Expenses (27) (21) 117 (22) (14) (16) 0 0
Profit After Tax (959) (1,031) 236 (601) 607 166 987 501
Minority Interest 0 0 0 0 0 0 0 0
Profit/(Loss) from Associates 64 2 (42) 63 (12) (64) (35) (38)
Recurring PAT (895) (1,029) 195 (538) 595 102 952 463
Exceptional Items 0 0 78 147 51 0 0 0
Reported PAT (895) (1,029) 117 (685) 544 102 952 463
Other comprehensive income. (2) 14 16 14 (7) 13 0 0
PAT after comp. income. (897) (1,016) 133 (670) 537 115 952 463
FDEPS (1.2) (1.4) 0.3 (0.7) 0.8 0.1 1.3 0.6

Cost items as % of sales

RM expenses 74.5 74.3 71.6 73.2 72.7 74.8 72.4 72.5

Employee expenses 18.3 18.9 16.4 17.2 15.3 16.0 14.5 15.2
Other expenses 7.9 7.7 7.0 7.4 7.5 6.6 6.8 7.3

Margin (%)

Gross Margin 25.5 25.7 28.4 26.8 27.3 25.2 27.6 27.5
EBITDA Margin (0.7) (0.8) 5.0 2.2 4.5 2.6 6.3 5.0
PAT Margin (4.6) (5.3) 0.9 (2.6) 2.7 0.5 3.9 2.0

YoY Growth (%)

Sales 10.5 8.1 20.3 11.6 12.6 12.8 10.4 11.0

EBITDA (94.9) (88.7) 0.0 242.5 0.0 0.0 39.8 150.1
EBIT (58.6) (44.7) (73.9) (32.5) (87.6) (60.4) 0.0 (71.9)
PAT (77.6) (59.5) 0.0 (56.8) 0.0 0.0 713.2 0.0

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Key Financials (Consolidated)

Income Statement
Y/E Mar (Rs mn) FY21A FY22A FY23A FY24A FY25E FY26E FY27E
Revenue 36,465 68,823 72,253 81,415 90,881 1,05,284 1,21,445
COGS 27,883 51,523 56,711 59,707 66,413 77,772 89,761
Employee Cost 6,109 13,133 14,000 14,368 13,841 13,761 13,769
Other Expenses 3,610 5,889 6,058 6,074 6,408 6,920 7,474

EBITDA (1,137) (1,722) (4,516) 1,266 4,220 6,830 10,440

Depreciation 3,546 6,107 8,311 7,216 5,533 6,114 6,770
EBIT (4,684) (7,830) (12,828) (5,949) (1,314) 717 3,670
Interest Exp. 886 995 888 885 1,235 1,425 1,647
Other Income 1,918 1,561 3,049 4,527 4,781 5,117 5,538
Profit before Tax (3,652) (7,264) (10,666) (2,307) 2,232 4,408 7,561
Tax Expenses 0 (183) (453) 47 (30) 0 0
Profit After Tax (3,652) (7,080) (10,214) (2,355) 2,262 4,408 7,561
Minority Interest 0 0 0 0 0 0 0
Profit/(Loss) from Associates 0 (32) 136 87 (150) (150) (150)
Recurring PAT (3,652) (7,113) (10,078) (2,268) 2,112 4,258 7,411
Exceptional Items (505) (2,997) 0 (224) (51) 0 0
Reported PAT (4,157) (10,110) (10,078) (2,492) 2,061 4,258 7,411
Other comprehensive income. 0 0 0 0 0 0 0
PAT after comp. income. (4,157) (10,110) (10,078) (2,492) 2,061 4,258 7,411
FDEPS (7.1) (11.9) (14.1) (3.1) 2.8 5.7 10.0
DPS 0 0 0 0 0 0 0
BVPS 309 307 570 124 126 132 142

YoY Growth (%) FY21A FY22A FY23A FY24A FY25E FY26E FY27E
Sales 31.1 88.7 5.0 12.7 11.6 15.8 15.3
EBITDA (33.9) 51.4 162.2 0.0 233.2 61.9 52.9
EBIT 9.5 67.2 63.8 (53.6) (77.9) 0.0 412.2
PAT 54.6 143.2 (0.3) (75.3) 0.0 106.6 74.0

Key Ratios
Profitability (%) FY21A FY22A FY23A FY24A FY25E FY26E FY27E
Gross Margin 23.5 25.1 21.5 26.7 26.9 26.1 26.1
EBITDA Margin (3.1) (2.5) (6.3) 1.6 4.6 6.5 8.6
PAT Margin (10.0) (10.3) (13.9) (2.8) 2.3 4.0 6.1
ROE (13.8) (23.0) (13.3) (2.7) 2.2 4.5 7.3
ROIC (14.3) (16.2) (15.7) (6.5) (1.4) 0.7 3.6
Core ROIC (20.4) (26.1) (28.6) (13.6) (3.0) 1.7 8.1
Dividend Payout 0.0 0.0 0.0 0.0 0.0 0.0 0.0

CAGR (%) 1 year 2 years 3 years 5 years 7 years 10 years

Revenue 12.7 8.8 30.7 37.5 40.8 0.0
EBITDA (128.0) 0.0 (203.6) (198.3) (180.4) 0.0
PAT (75.3) (50.4) (15.7) (32.5) (12.6) 0.0

Valuation (x) FY21A FY22A FY23A FY24A FY25E FY26E FY27E

P/E (55.6) (32.9) (27.9) (127.7) 138.1 68.5 39.4
P/B 1.3 1.3 0.7 3.2 3.1 3.0 2.8
P/FCFF 0.0 0.0 0.0 0.0 0.0 0.0 0.0
EV/EBITDA (259.1) (171.4) (65.0) 231.3 69.4 42.9 28.1
EV/Sales 8.1 4.3 4.1 3.6 3.2 2.8 2.4
Dividend Yield (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Balance Sheet
Y/E Mar (Rs mn) FY21A FY22A FY23A FY24A FY25E FY26E FY27E
Equity Capital 16 642 729 737 737 737 737
Reserves 28,352 58,932 91,043 90,710 92,770 97,029 1,04,440
Net Worth 28,368 59,574 91,771 91,446 93,507 97,765 1,05,177
Total Debt 3,013 3,531 1,989 1,256 1,256 1,256 1,256
Other long term liabilities 6,758 6,739 6,167 9,217 11,067 13,146 15,427
Minority Interest 0 0 0 0 0 0 0
Account Payables 4,422 8,345 7,874 7,974 9,648 10,311 11,894
Other Current Liabilities 3,417 4,319 4,093 4,637 5,365 6,297 7,331
Total Liabilities 45,978 82,508 1,11,893 1,14,530 1,20,843 1,28,776 1,41,085
Gross Fixed Assets 15,510 38,776 43,082 50,199 55,479 61,389 68,247
Acc. Depreciation 4,977 8,236 13,117 16,663 19,313 22,102 25,202
Net Fixed Assets 10,534 30,540 29,965 33,537 36,166 39,287 43,045
Capital WIP 768 584 215 286 286 286 286
long term investments 4,206 6,295 6,125 9,981 9,981 9,981 9,981
Others 1,956 2,382 3,540 3,589 3,010 2,045 2,359
Inventory 259 253 194 164 183 212 245
Receivables 5,946 9,903 9,436 14,297 14,963 17,623 21,326
Loans and advances 264 89 62 40 40 40 40
Other current assets 6,472 12,122 11,835 5,849 4,400 3,756 4,152
Cash & Cash Equivalents. 15,573 20,341 50,521 46,788 51,814 55,546 59,652
Total Assets 45,978 82,508 1,11,893 1,14,530 1,20,843 1,28,776 1,41,085
Non-Cash WC 6,516 10,485 10,205 8,560 5,815 6,730 8,755
Cash Conv. Cycle 17.8 9.6 8.9 29.1 22.1 26.1 29.1
WC Turnover 5.6 6.6 7.1 9.5 15.6 15.6 13.9
Gross Asset Turnover 2.4 1.8 1.7 1.6 1.6 1.7 1.8
Net Asset Turnover 3.2 2.2 2.4 2.4 2.5 2.7 2.8
Net D/E (0.4) (0.3) (0.5) (0.5) (0.5) (0.6) (0.6)

Days (x) FY21A FY22A FY23A FY24A FY25E FY26E FY27E

Receivable Days 60 53 48 64 60 61 64
Inventory Days 3 1 1 1 1 1 1
Payable Days 44 44 40 36 39 36 36
Non-cash WC days 65 56 52 38 23 23 26

Cash Flow
Y/E Mar (Rs mn) FY21A FY22A FY23A FY24A FY25E FY26E FY27E
Profit Before Tax (4,157) (10,293) (10,531) (2,444) 2,031 4,258 7,411
Depreciation 3,546 6,107 8,311 7,216 5,533 6,114 6,770
Others 1,236 6,867 2,440 130 (3,546) (3,692) (3,891)
Tax paid (182) (132) (716) (328) 30 0 0
Change in WC (395) (4,954) 222 151 3,398 164 (2,211)
Operating Cashflow 48 (2,405) (273) 4,724 7,446 6,845 8,080
Capex (2,486) (7,246) (6,007) (4,684) (3,729) (4,226) (4,968)
Change in Invest. 14,636 (15,920) 25 (2,512) 0 0 0
Others 755 1,322 1,049 2,400 4,781 5,117 5,538
Investing Cashflow 12,905 (21,844) (4,933) (4,796) 1,051 891 570
Change in Debt 666 (2,977) (1,203) (735) 0 0 0
Change in Equity 98 33,977 39,372 (23) 0 0 0
Others (2,231) (1,983) (2,785) (2,903) (3,472) (4,004) (4,543)
Financing Cashflow (1,467) 29,018 35,385 (3,661) (3,472) (4,004) (4,543)
Net Change in Cash 11,485 4,769 30,179 (3,732) 5,026 3,732 4,106
Source: Company Data, Equirus

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 Delhivery Ltd (DELHIVERY IN) India Equity Research | Initiating Coverage

Rating & Coverage Definitions: Registered Office:

Absolute Rating Equirus Securities Private Limited
• LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap >Rs 5 Unit No. A2102B, 21st Floor, A Wing, Marathon Futurex,
billion and ATR >= 20% for rest of the companies N M Joshi Marg, Lower Parel,
• ADD: ATR >= 5% but less than Ke over investment horizon Mumbai-400013.
• REDUCE: ATR >= negative 10% but <5% over investment horizon Tel. No: +91 – (0)22 – 4332 0600
• SHORT: ATR < negative 10% over investment horizon Fax No: +91- (0)22 – 4332 0601
Relative Rating
Corporate Office:
• OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon
3rd floor, House No. 9,
• BENCHMARK: likely to perform in line with the benchmark
Magnet Corporate Park, Near Zydus Hospital, B/H Intas Sola Bridge,
• UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon
S.G. Highway Ahmedabad-380054 Gujarat
Investment Horizon
Tel. No: +91 (0)79 - 6190 9550
Investment Horizon is set at a minimum 3 months to maximum 18 months with target date falling on
last day of a calendar quarter Fax No: +91 (0)79 – 6190 9560

2024 Equirus Securities Private Limited. All rights reserved. For Private Circulation only. This report or any portion hereof may not be reprinted, sold or redistributed without the written
consent of Equirus Securities Private Limited
Analyst Certification
I, Jainam Shah/Shreyans Mehta, author to this report, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or
companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in
this report.
Disclosures
Equirus Securities Private Limited (ESPL) having CIN: U65993MH2007PTC176044 is registered in India with Securities and Exchange Board of India (SEBI) as Research Analyst (Reg. No.
INH000001154), Stock Broker:(Reg. No. INZ000251536), RA: INH000001154, DP: (Reg. No. IN-DP-324-2017) NSE Mem id: 13017|BSE Mem id: 3309|DP ID:84500| having its
Registered office at A 2102 B, A wing, 21st Floor, Marathon Futurex, N. M. Joshi Marg, Lower Parel, Mumbai-400013.. There are no disciplinary actions taken by any regulatory authority
against ESPL for Research Analyst activity. ESPL is a subsidiary of Equirus Capital Private Limited (ECPL) which is registered with SEBI as Category I Merchant Banker and provides investment
banking services including but not limited to merchant banking services, private equity, mergers & acquisitions and structured finance.
As ESPL and its associates are engaged in various financial services business, it might have: - (a) received compensation (except in connection with the preparation of this report) from
the subject company for investment banking or merchant banking or brokerage services or any other product or services in the past twelve months;(b) managed or co-managed public
offering of securities for the subject company in the past twelve months; or (c) received a mandate from the subject company; or (d) might have other financial, business or other interests
in entities including the subject company (ies) mentioned in this Report. ESPL & its associates, their directors and employees may from time to time have positions or options in the company
and buy or sell the securities of the company (ies) mentioned herein. ESPL and its associates collectively do not own (in their proprietary position) 1% or more of the equity securities of
the subject company mentioned in the report as the last day of the month preceding the publication of the research report. ESPL or its Analyst or Associates did not receive any compensation
or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ESPL nor Research Analysts have
any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or
brokerage service transactions. ESPL has not been engaged in market making activity for the subject company.
The Research Analyst engaged in preparation of this Report:-
(a) has not received any compensation from the subject company in the past twelve months; (b) has not managed or co-managed public offering of securities for the subject company in
the past twelve months; (c) has neither received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months
nor received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
(d) has not received any compensation or other benefits from the subject company or third party in connection with the research report; (e) might have served as an officer, director or
employee of the subject company; (f) is not engaged in market making activity for the subject company.
This document is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction,
where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ESPL and affiliates to any registration or licensing requirement within
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This document has been prepared solely for information purpose and does not constitute a solicitation to any person to buy, sell or subscribe any security. ESPL or its affiliates are not
soliciting any action based on this report. The information and opinions contained herein is from publicly available data or based on information obtained in good faith from sources
believed to be reliable, but ESPL provides no guarantee as to its accuracy or completeness. The information contained herein is as on date of this report, and report and is subject to
change or modification and any such changes could impact our interpretation of relevant information contained herein. While we would endeavour to update the information herein on
reasonable basis, ESPL and its affiliates, their directors and employees are under no obligation to update or keep the information current. Also, there may be re gulatory, compliance, or
other reasons that may prevent ESPL and its group companies from doing so. This document is prepared for assistance only and is not intended to be and must not alone be taken as the
basis for an investment decision. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the
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responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. ESPL/its
affiliates do and seek to do business with companies covered in its research report. Thus, investors should be aware that the firm may have conflict of interest.
A graph of daily closing prices of securities is available at [Link] and [Link] (Choose a company from the list on
the browser and select the “three years” period in the price chart).

Disclosure of Interest statement for the subject Company Yes/No If Yes, nature of such interest

Research Analyst’ or Relatives’ financial interest No

Research Analyst’ or Relatives’ actual/beneficial ownership of 1% or more No

Research Analyst’ or Relatives’ material conflict of interest No

Standard Warning: Investment in securities market are subject to market risks. Read all the related documents carefully before investing. |
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of
returns to investors.
Compliance/Grievance Officer: Naman Shah | Tel. No. 079-61909561|email: [Link]@[Link] | [Link] |

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