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Informist, Friday, Feb. 7, 2025

By Akshay V. Johnson

MUMBAI – Delhivery Ltd. expects the part-truck-load segment to continue its growth, with a margin uptick higher than the express parcel segment. This is largely on account of higher competitive intensity in the express parcel service segment, the company management said at a post-earnings analyst conference call. The company's part-truck-load segment's revenue rose 22% on year to INR 4.62 billion in the December quarter. The segment contributed around 19% of the company's revenues in the December quarter.

The company sees its express parcel segment margin in the range of 17-20% going forward. The industry is reaching a structure where further price discounts do not have to be passed on to the consumers, which will lead to higher margins, the management said. The improvement in the part-truck-load business should help to improve line-haul costs for the express parcel business as well. The management believes it can reach the 17-20% margin range without significant volume growth. 

In the December quarter, the company's consolidated net profits more than doubled on year to INR 249.88 million on revenue of INR 23.78 billion, up 8% on year. This is the third successive quarter where the company has reported a net profit. The profitability trend continued in the December quarter despite headwinds in the overall industry and the continuation of muted growth in online commerce volumes, management said.

The company opened its dark store network during the December quarter and the volumes have been pretty reasonable, reaching close to 500 orders per day, the management said. These orders are primarily from standalone business-to-consumer brands. The breakeven point for these dark stores is much lower than the breakeven point for the broader e-commerce industry, the management said. The company estimates 700–800 orders per dark store per day to be the breakeven level. In the near term, the company expects to set up 50 dark stores in 8 major cities, the management said.

The overall e-commerce growth so far in 2024-25 (Apr-Mar) has moderated, with muted volume growth, the management said. It expects e-commerce headwinds to continue but believes it already has a strong market share. More investments in marketing and consumer acquisition will help drive more category growth in the e-commerce space. If the investments continue the pace, the management believes volume growth in e-commerce will come back.

Delhivery does not see the externalisation of operations by first-party players in the logistics space as a threat as third-party players such as the company are much more cost-efficient. With first-party players externalising their operations, there is always a chance of them prioritising their deliveries over external ones. Moreover, first-party players are currently operating with losses and act as a drag on their company's overall business, the management said.

The company's sales volume for the December quarter was aided by the e-commerce segment due to festivals. The December quarter is the peak quarter for the e-commerce business due to these festivities, the management said.

Shares of the company closed at INR 315.10 on the National Stock Exchange, down 2.1% from the previous close.  End

Edited by Saji George Titus

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