Largest 3rd party express parcel player: Express parcel logistics is all about optimizing last-mile costs, as they form the largest cost component. Higher drops per trip drive cost efficiency. The larger the market share, the greater the pin-code coverage, the better the in-house route optimization technology, and the higher the efficiency. As the largest player in this industry, Delhivery benefits from these cost efficiencies.
Unorganised to organised shift in PTL business: The PTL (Partial Truckload) business in India is largely unorganized and dominated by local/regional players. However, customers often suffer from mediocre service levels and delivery delays. With the implementation of GST, pan-India players have an advantage over local operators due to better cost efficiencies and superior service levels. Delhivery has demonstrated strong execution post the initial challenges following the Spoton acquisition. Growing at double digits while the industry remains largely flat reinforces Sahil Barua’s point that Delhivery can continue gaining market share regardless of overall industry growth.
Integration of PTL and EP network: If its current plans to integrate the PTL and Express Parcel businesses succeed, the cost benefits due to higher utilization levels will lead to strong operating leverage playing out at scale.
Opportunity: Logistics in India has historically been inefficient, presenting a strong case for a technology-driven, pan-India, cost-efficient player. Delhivery has a good opportunity to be that player.
The company has already demonstrated strong execution in the Express Parcel business, achieving 15%+ Service EBITDA margins
They have learned through their failures post Spoton acquisition and have shown consistent improvement in PTL margins.
Companies like Amazon have tech to get robots into their supply chain. No wonder opex players like Delhivery are getting slaughtered. This plane jane company has no technical moat
I don’t think, robots will be used for logistics(atleast within next 10 years). In Amazon warehouse, yes they can use robots. Delhivery is in Express parcel delivery, Truck load logistics - this segments cannot be replaced so easily with robots/drones.
American workers are much costlier than Indian workers …right ? Have you done any cost analysis whether replacing Indian workers with robots will bring any cost benefits or its just a we must do what amazon has done thingy ?
As anticipated, Delhivery using cash on books for inorganic expansion in Express parcel segment. Its best bet is growing its market share through similar inorganic expansions in the future resulting in economics of scale, lower costs and higher margins. Apart from this, from a product differentiation point of view, not sure how 1 logistics player is different from another.
Just 6 months back it was about to bring this to IPO with staggering valuations at 7000 crores now they sold it to 1400 crores. 80% discount. One sould be cautious while applying IPO as most of the IPO are came with very high valuations. As usual retail investors are the jokers always. I am still puzzeled how come anchor investors agreed for such a discount?. what’s cooking inside ?
It’s business as usual. Time was against them. They already raised 320million$ (~2700 crs). IPO was supposed to be the exit.
A lot of things went wrong for Ecomm express.
Meesho insourcing logistics - client concentration - ~50% revenue came from meesho.Considering their revenue was around 2600crores, it must have reduced to 1300crores
unfortunate demise of the ceo back in 2023
failed ipo attempts twice.
Im guessing valuation was at 1x sales (they are still loss making)
For DELHIVERY, this acquisition can enhance tier 2 and tier 3 (meesho is/was primarily tier 2 and tier 3)
Post the recent acquisition, Delhivery released FAQs answering queries on their profitability and how Ecom’s PAT loss will affect Delhivery’s P&L consolidation.
