DELHIVERY – One stop solution for shipping and parcel delivery

Dabur India Q1 FY2025 Analysis: Key takeaways!!

Business Outlook:

• Delhivery had a steady and profitable start to the fiscal year, with revenue growth of 13% Y-o-Y and improved profitability across core businesses.
• Express Parcel service maintained stable EBITDA margins at 18%, while Part Truckload (PTL) business saw continued improvement in service EBITDA margins to 3.2%.
• Supply Chain Services (SCS) business grew 26% Y-o-Y, driven by a seasonally strong quarter for air conditioning customers.

Strategic Initiatives:

• Delhivery is launching a network of shared dark store warehousing to cater to the growing quick commerce opportunity, providing multi-tenant fulfillment and rapid local delivery services.
• The company is also expanding its franchise network to deepen its reach and capture SME volumes across India.
• Delhivery is focusing on integrating its PTL and Express networks to drive synergies and improve cost efficiencies.

Trends and Themes:

• The e-commerce industry is seeing a shift, with some players like Meesho insourcing a portion of their logistics.
• The PTL market in India is highly fragmented, presenting an opportunity for Delhivery to capitalize on the industry’s movement towards formalization.
• Demand for integrated supply chain services, including B2C and B2B offerings, is on the rise.

Industry Tailwinds:

• The continued growth of e-commerce and the need for reliable, high-quality logistics services.
• Increasing focus on supply chain optimization and integration among businesses.
• Ongoing shift from unorganized to organized players in the logistics industry.

Industry Headwinds:

• Volatility in the e-commerce industry, with some players insourcing logistics operations.
• Potential pricing pressure from traditional logistics players in the D2C segment.
• Uncertainty around the long-term strategy of key customers like Meesho.

Analyst Concerns and Management Response:

• Analysts were concerned about the impact of Meesho’s insourcing on Delhivery’s volumes and market share. Management highlighted that Delhivery remains a reliable and cost-effective partner for all its customers, and the company is focused on diversifying its customer base and expanding its service offerings.

Competitive Landscape:

• Delhivery maintains its position as the largest 3PL player in the market, with a strong integrated network and a diversified customer base.
• The company is differentiating itself through its technology-enabled solutions, multi-tenant fulfillment capabilities, and ability to provide end-to-end supply chain services.

Guidance and Outlook:

• Delhivery expects continued growth in its steady-state volumes, in line with the overall e-commerce market growth of 15-20% annually.
• The company is confident about its ability to maintain stable EBITDA margins in the Express Parcel business and improve margins in the PTL and SCS segments.

Capital Allocation Strategy:

• Delhivery is focused on optimizing its existing network and infrastructure, with no significant capacity additions planned in the near term.
• The company is investing in technology and automation to drive operational efficiencies and improve profitability.

Opportunities & Risks:

• Opportunities: Expanding its presence in the PTL market, capitalizing on the quick commerce opportunity, and leveraging its integrated network to cross-sell services.
• Risks: Volatility in e-commerce volumes, potential pricing pressures, and uncertainty around the strategies of key customers.

Customer Sentiment:

• Delhivery continues to maintain a strong relationship with its diverse customer base, with the number of customers increasing from 33,000 to 35,000 in the quarter.

Top 3 Takeaways:

1. Delhivery’s diversified business model, with strong performance across Express Parcel, PTL, and SCS segments, positions the company well to navigate industry challenges.
2. The company’s strategic initiatives, such as the dark store network and franchise expansion, demonstrate its ability to identify and capitalize on emerging opportunities.
3. Delhivery’s focus on operational efficiency, technology integration, and a customer-centric approach suggest a positive long-term outlook, despite some near-term industry headwinds.