Brief Introduction
Delhivery is a leading logistics and supply chain services company in India that provides a range of services including last-mile delivery, warehousing, express logistics, freight forwarding, reverse logistics, and cross-border services. It was founded in 2011 by Sahil Barua, Mohit Tandon, Bhavesh Manglani, Suraj Saharan, and Kapil Bharati.
Delhivery has a wide network of more than 100,000 delivery partners who use their own vehicles to deliver packages to customers’ doorsteps. The company’s technology platform optimizes the delivery routes, minimizes delivery times, and ensures high levels of customer satisfaction. Delhivery’s warehousing services include fulfillment centers, distribution centers, and cross-docking facilities.
Q4 FY23 Updates
Financial Highlights & Results

Detailed Results:
- The company reported Total Income for Q4 FY23 of ₹1,934.21 Crore down from ₹2,127.02 Crore year on year, a decline of 9%.
- The company achieved revenues of 1,860 crores across business lines, which represents a growth of 2% over quarter 3.
- Total Expenses for Q4 FY23 of ₹2,107.61 Crore down from ₹2,254.37 Crore year on year, a decline of 6.5%.
- Consolidated Net Loss of ₹158.67 Crore, from the loss of ₹119.86 Crore in the same quarter of the previous year.
- The Earnings per Share is -₹2.14, widens from -₹2.01 in the same quarter of the previous year.
- The customers have over 27,000 active customers.
- 57% of the company’s revenue comes from customers who use more than two of their services; and the company continues to be very adequately capitalized with over 5,500 crores in cash and cash equivalents.
- The company did 180 million shipments in quarter 4.
- The company had a 17% volume growth in quarter 4 year on year, adjusted for Shopee volumes for the same time last year.
- On the PTL business, revenues have grown from 277 crores in quarter 3 by about nearly 20% to 328 crores in quarter 4
- In freight tonnage has increased from 258,000 tons of freight to 318,000 tons of freight in quarter 4.
- The truckload business has grown 8% quarter on quarter from 102 crores of revenue to 110 crores of revenue approximately.
- The supply chain services business has also grown 6% quarter on quarter from 178 crores to 188 crores of revenue.
- The cross-border services business has declined 14% between quarter 3 and quarter 4, from 66 crores of revenue to 57 crores of revenue.
- For financial ’22, it had an adjusted EBITDA of 1%. For FY23, the company will report an adjusted EBITDA of negative 5.6% for the year in sum.
- The incremental revenue in the transportation business, which includes both express and PTL, is approximately 29 crores from quarter 3 to quarter 4. The incremental gross profit in the transport business, however, is 41 crores.
- Adjusted EBITDA for the company stands at 6 crores after considering share-based payment expenses and lease rent.
Investor Conference Call Highlights
- The management stated that the company did 180 million shipments in their core express parcel business in quarter 4, which represents a 5.6% growth over the seasonally high quarter 3 period.
- The PTL business continues to recover strongly. The company delivered about 318,000 metric tons of freight, which represents nearly a 24% growth quarter on quarter from quarter 3 to quarter 4.
- Infrastructure has remained stable at about 18 million square feet. The total number of gateways and automated sort centers now stands respectively at 94 gateways and 24 automated sort centers, 174 processing centers as well. Freight service centers continue to stand at 140.
- Network service levels have improved significantly, with a rise from 89% to 93% compared to the same quarter of the previous year. This improvement is measured based on internal turnaround times.
- The management feels that Profitability improvement is driven by three factors – Operating leverage in core transportation business, Customer contract evaluation and opening up of internal and third-party demand to brokers and fleet owners through their Full Truckload Exchange called Orion.
- The express business continues to be 63% of total revenues.
- The truckload business, the supply chain services business, and the cross-border business, together have seen 6% to 8% growth quarter on quarter and form about 20% of our total revenues.
- The management stated that yield per parcel has decreased due to two main factors: a shift in the type of shipments towards lighter items and a decrease in the average weight of parcels in their network. This decrease in yield is not because of a change in pricing.
- Yields in the air freight business have declined by close to 20%, leading to a decline in revenue overall; and the ocean freight business was affected seasonally by the Chinese New Year.
- There’s also been a decrease in transport fixed costs between quarter 3 and quarter 4 of approximately 9 crores. This leads to a total increase in transport service EBITDA of about 50 crores.
- There’s also been a 17 crores swing in service EBITDA of the non-transport businesses, though quarter 3 was impacted by a 12 crores provision that we had to make in the supply chain services business.
- The management stated that the entry of SHEIN into India and the development of the ONDC (One Nation One Domain One Challenge) platform are seen as positive developments for the industry.
- The management informed that Delhivery has made a minority investment in Vinculum, an omnichannel SaaS company, to enhance their order and warehouse management capabilities. The investment in Vinculum will allow Delhivery to offer enhanced value propositions to direct-to-consumer brands and increase transportation volumes.The combination of Vinculum, Algorhythm , and Delhivery’s capabilities will enable smarter inventory management and reordering processes.
- Delhivery has seen improvements in freight costs, particularly in line-haul expenses, which have contributed to the overall improvement in volumes. The increased use of tractor-trailers, which are more efficient and cost-effective, has positively impacted line-haul costs.
- The management states that the average realizations have come down to 65, primarily due to seasonality and changes in the mix of cargo weight, with heavy shipments decreasing in Q4 compared to Q3.
- Factors contributing to the decrease in average realizations include the shift in heavy shipments and a decline in package weights in Q4 compared to Q3.
- While the e-commerce industry has experienced slower growth, Delhivery expects growth to continue between 15% and 20% year-on-year, driven by players like SHEIN and Ajio, as well as Reliance’s aggressive participation in e-commerce.
- Delhivery plans to continue with its capex investment plans, targeting a level between 6% to 7% of revenue for the current financial year.
- Delhivery has voluntarily churned out less profitable customers in the PTL business throughout the fiscal year. This has resulted in a gap in volumes compared to the previous year. Approximately one-third of the volume decline is attributed to churned customers.
- The management stated that the yield reduction mentioned is primarily a seasonal phenomenon, with factors such as the shift in heavy cargo and package weight decline in quarter 4 compared to quarter 3. However, in the previous year’s quarter 4, the yield reduction may not have been visible due to the distortionary factor of a specific customer. The seasonal trend from quarter 3 to quarter 4 is a common occurrence in their data over the past 11 years.
- The management mentioned that the drop in PTL (Part Truckload) realization of almost 4% quarter-on-quarter is mainly due to mix shift. The mix across different segments, such as major accounts, SMEs, retail, and aggregators, can impact yields.
- The management explained that the increase in unbilled receivables is due to the integration of SpotOn’s billing system with Delhivery’s billing system. This integration process took longer than expected, leading to an extended billing cycle.
- The management informed that the current corporate overheads are at about 10.7% of revenue, but in the long term, they expect corporate overheads to settle between 3.5% and 4.5% of revenue, possibly up to 5%.
- The management explains regarding the ESOP (Employee Stock Ownership Plan) expense, the annual performance cycle determines the grant, and it is part of Delhivery’s compensation philosophy and retention policy. The May grant covers eligible employees who meet certain performance criteria. In this cycle, 1.99 million stock options were issued, which is consistent with historical trends.
- The management explained the complexity of utilization across Delhivery’s network, considering infrastructure, pickup and delivery stations, trucks, and hubs. Aggregate utilization is not a meaningful construct as it varies depending on individual hubs and their lifecycle. Trucks typically have a utilization range of 60% to 100%, while hubs vary between 80% and slightly over 100%.
- The management stated that that investments typically include parcel sortation systems (cross-belt sorters and bag sortation systems), facility design, automation, furniture, fixture, electrification, and IT enablement. Delhivery leases the land and building for such facilities.
- The management stated that the top five customers accounted for less than 40% of the company’s revenue, indicating a decrease in customer concentration over time.
- The company plans to allocate around 25% to 33% of its capital expenditure (capex) on Volvo installations and trailers. Approximately 10% to 15% of capex will be invested in the supply chain services business. The remaining capex will be split between automation (50%) and IT equipment and facility enablement (50%).
- Delhivery has plans to set up new facilities, including a Bhiwandi mega-facility and a Bangalore mega-facility. These facilities will consolidate existing operations and introduce new automation technologies.
Analyst’s ViewDelhivery provides a full range of Logistics services, including delivery of express parcels and heavy goods, PTL freight, TL freight, warehousing, supply chain solutions, cross-border Express, freight services, and supply chain software. The company also offers value-added services such as e-commerce return services, payment collection and processing, installation & assembly services, and fraud detection. Delhivery is focused on improving their M&A integration process, managing risks effectively, and maintaining their position as a leading logistics company in the face of competition. Delhivery remains focused on maintaining market rates of growth, gaining market share, and leveraging their competitive advantages to grow faster than the market in some years. The company expects to gain market share and continue expanding capacity to handle increased volumes. The industry is experiencing a shift towards third-party logistics, driven by growth outside of large marketplaces and the cost-effectiveness of working with third-party partners.
Q3 FY23 Updates
Financial Highlights & Results

Detailed Results:
- The company delivered about 1,822 crores of revenue in Q3FY23, which was growth 1.5% vs of quarter 2 when of about 1,780 crores of revenue.
- Sequentially from the last year, revenue is lower by about 170 crores, driven largely by the PTL business.
- Incremental gross margins were 50%.
- EBITDA margins improved from minus 7% in quarter 2 to minus 3.7% in quarter 3.
- The company delivered about 170 million shipments, which is about 5.6% growth quarter-on-quarter in their e-commerce express delivery business.
- 26,000 customers continue to depend on Delhivery for multiple services, with over 58% of the company’s revenue coming from customers who use two or more of our services across business lines.
- The company continued to cover the entire country with 18,510 pin codes under direct coverage of Delhivery.
- The company has about 26,845 active customers who continue to buy services from them across business lines.
- The company has 17.9 million square feet of real estate in Q3FY23 as per plan, with 92 gateways; 22 automated sort centers; 172 processing centers; 2,750 express delivery centers; and 150 freight service centers.
- The team size continues to remain about 52,800 people across the country.
- Short shipments have dropped from 0.2% when the integration began to nearly 0.05% as of January.
- On express parcel, between quarter 2 financial ’23 and quarter 3, the company has seen growth quarter-on-quarter of about 7%.
- On the PTL side, revenues have declined from quarter 3 of last year and from quarter 2 of this year. The company closed quarter 3 at 277 crores of revenue versus 293 crores in the previous quarter.
- Freight tonnage has been at 258,000 tons for quarter 3 versus 286,000 tons for quarter 2.
- The truckload business has grown to 102 crores of revenue in Q3FY23 versus 103 crores in Q2FY23. The business has grown 33% over the last year.
- The supply chain services business has grown to 178 crores in Q3FY23, more or less flat versus quarter 2; but 33% again higher than the same period last year.
- The cross border services businesses declined year-on-year and sequentially from 96 crores of revenue to 66 crores of revenue.
- Service EBITDA has grown from 86 crores to 139 crores. So service EBITDA margins have improved from 4.8% in Q2FY23 to 7.6% in Q3FY23.
- Corporate overheads have dropped from 12% to 11.3% as of quarter 3.
- The incremental gross profit that we’ve seen in transportation is 58 crores.
- The total freight, handling and servicing cost as a percentage of revenue has declined by nearly 6%, from 83.2% in quarter 1 to 77.4% in quarter 3.
- Line haul, which is the company’s trucking expense, has reduced from 37% in quarter one, to 33.4% in quarter 3.
- Manpower expenses have dropped from 13.8% to 11.7%.
- There are three categories of expenses that are added back. The first is, 5 crores of finance cost on borrowings. The second is lease adjustments due to AS 116, where the company expends the leases versus capitalizing them, which has a net impact of 5 crores. And an add-back of non-cash recurring costs, which include depreciation and amortization, which stood at 157 crores for quarter 3; and ESOP expenses which have declined from 95 crores in quarter 3 last year, to 67 crores this year.
- The cash PAT has now improved to positive 1.8% as of Q3FY23.
- The adjusted cash PAT was 34 crores for this quarter.
- There is a cost schedule as well that has been given where the expected cost of time-based stock options that have been granted will cost about 143 crores in FY24.
Investor Conference Call Highlights
- The management stated their objectives for this quarter. The first was to continue on the operational and financial integration of SpotOn, which was a PTL network that they acquired last year. And the second was to maintain and grow market share in their two critical transportation verticals and set te=hem up well for quarter 4 and beyond.
- The company was able to achieve both the objectives stated above
- The management stated that the operating leverage in the business has remained intact, while service standards have improved.
- The company delivered 258,000 tons of truckload freight in Q3FY23.
- The company operates about 18 million square feet of logistics infrastructure.
- The management stated that through their partnerships with FedEx, Aramex and other global players, they continue to allow Indian customers of theirs to access the rest of the world.
- The management stated that the network footprint optimization has continued in quarter 3.
- The management expects to continue to drive capacity utilization across their operations, especially in the mid-mile operation.
- The management stated that tonnage continues to remain below the numbers that they were at in Q4FY22.
- The company’s network service levels, as experienced by customers, continue to be in the 95% range.
- The management stated that they continue to add new clients that are key verticals that they operate in, which are auto and auto spare parts; healthcare; home furnishing; beauty and personal care; and consumer electronics.
- The auto, industrial and consumer segments have stayed somewhat flat sequentially, owing to seasonality in the underlying business, but have grown 33% from the same time last year.
- The management informed that they completed the acquisition of Algorhythm Technologies in January 2023. Algorhythm has a suite of supply chain software products, which will enhance their SCS offering with inventory management and transport optimization solutions.
- The management told the revenue breakup. Express continues to be their major business, form 66% of revenues; PTL is today 15% of revenues; and their newer businesses, which include their supply chain services, truckload services and cross border form the remainder, which is about 20%.
- The management stated that there has been an increase in network speed, an increase in service precision, and an improvement in service quality, as evidenced by the reduction in network shortages.
- The management believes that the reason for the increase in truckload business is seasonality.
- The management states that the reason for decline in cross border services business is driven by a compression of yields in both the air freight and the ocean freight markets globally. Another reason is that volumes in the ocean freight business have grown significantly over this financial year. And there has been a shift away from air freight volumes toward ocean freight volumes in the same period.
- The management states that the key driver of adjusted EBITDA continues to be massive incremental gross margins in the transportation business.
- The management stated that there was a little atypical between quarter 2 and quarter 3, because the sale impact came in because of which the 6% Q-o-Q shipment growth in 3Q even adjusted for Shopee, appears to be slower than historical trend.
- The management expects that the ecommerce volumes should grow in sort of the 15% to 20% range. They also think that if some of the inflationary pressures ease, and depending on how individual players react, there can be growth rates which are higher than that as well.
- The management explained that as the PTL volumes continue to grow, their overall unit economics will get significantly better. And the fundamental reason is because their mid-mile utilizations of the hubs and the trucks will improve drastically as volumes go up.
- The management informed that they do a significant portion of their business from large enterprises, where rates are not 14 to 20 rupees per kilo.
- The management explained the unit economics of the PTL business. There are fundamentally two large costs. The first is pickup and delivery costs, which typically will range for most players between about 15% to 20% of yield; and there is line haul, which is the trucking cost, which will typically be anywhere from 35% to 40% depending on the specifics of the load that they carry. Outside of which, there are the costs of handling the load, which is the manpower costs, which will again typically be in the range of about 5% to 7% for most players.
- The management states its views that this creates a gross margin opportunity between 25 and 30% in the PTL business. And then depending on the underlying infrastructure strategy, could yield EBITDA margins in the range of anywhere from 14% at the lower end to 20% at the upper end.
- The management stated that one of the major reasons for the lower service EBITDA margins is, they do a larger proportion of their trucking now on 46-foot container trucks compared to the same time last year when it was much, much smaller.
- The management expects that the incremental margins will remain high, because the trucks will essentially be able to absorb the excess load that’s coming in.
- The management continues to see 50% incremental margins across the network.
- The management predicts that they are probably at least a quarter or two away before incremental margins start normalizing because they have, this year, expanded their overall fleet of tractor-trailers; and they continue to run their mega facilities in Tauru, Bhiwandi and Bangalore and have expanded some capacity.
- The management stated that their competitors do not have a current or a future ability to meet their cost structure. The competitor’s inability to meet their cost structure is not driven by a lack of volume. It is driven by an underlying structure of the network, and so Delhivery’s costs are not achievable. In that situation, we really don’t have any need to price any lower than we are at this point in time.
- The management stated that on PTL volumes, the start of October was muted for the quarter because there was unseasonal rain in Gurgaon. And as a precautionary measure at their Tauru facility, they had taken down the total amount of load that was being transacted both with Tauru as an origin, as well as with Tauru as a cross-docking or destination location.
- The management stated that in a logistics business, service quality and cost per shipment are the top process level KPIs/priorities.
- The management stated that in e-commerce, the shipment volume and count may be high, but the tonnage is very low. So the movement to the larger facilities and the larger truck sizes is really driven by the freight business.
- The company is evaluating other possible revenue streams for the IP that they have created. And they will look at other markets to see whether this IP can be monetized.
- The management informed that in quarter 3, there is a 12 crore write-off that they have taken. It’s a conservative provision that they have made in quarter 3 for one of their customers who is not in the transportation segment. So it doesn’t affect the PTL and the express businesses in any way.
- The management stated that one of the important structural changes that they have made are, of course, to bolster the infrastructure across their key hubs as these hubs have gotten consolidated. There is a significant improvement in service quality as they consolidate locations.
- The management stated that their technology systems and their monitoring have been significantly upgraded in the last four months. In the express space, for instance, they have seen misrouting of parcels reduced by nearly 40% with a new data science tool that they launched in the later part of last quarter.
- The management stated that the 59 crores higher revenue they have generated in their express parcel and PTL business combined in quarter 3 versus quarter 2, no meaningful incremental line-haul cost was incurred for this revenue. Now that is getting driven from improved utilization of trucks and a higher portion of tractor-trailers in the network.
- The management stated that there is a very significant shift that is happening away from unorganized players towards organized players. The top 10 players form less than 20% of the market.
- There has been a shift from non-express part truckload to express part truckload. As the quality of roads has improved; as the average form factor of trucking has improved; as people have invested in Grade A infrastructure and automation, again, not just Delhivery, multiple players in this space, there has been a shift from non-express to express which is again a good news for the organised players.
- The management stated that since their capacity utilizations are significantly higher, a decline in volumes is not necessarily going to immediately translate into a drop or a reduction in their cost-per-shipment because they will adjust capacities accordingly.
- The management explained that vehicle rental cost is a combination of intra-city vehicle that is hired to either pick up goods from customer doorstep or to deliver goods to the consignee; and to deliver goods to the consignee and for movement of goods between the various facilities of Delhivery; plus it also includes payments to agents and vendors who do deliveries for us on a per-parcel basis.
- The management stated that they have seen about 29 crore of improvement in the last quarter,from cost optimization measures. This has included two or three things. One of them actually has been prevention of revenue leakage, which comes from weights.
- The management thinks that one of the advantages that they have because they do dynamic routing is, we have the ability to route consignments through weight-capturing locations. And so that has also had an impact on our yield.
- The management stated that they have the cost structure that allows them to pass on efficiency gains to customers while maintaining extremely healthy gross margins at a business line level and at a client level. So they will not push up realizations because they have no need to.
- The management informed that after adding the cash payout or the rent paid out against the capitalized leases to the rent as well, then the total rent for the quarter has increased on a year-on-year basis from 118 crores rupees about 134 crores rupees.
- The management stated that primarily the rent is getting increased on two counts. One is an annual inflation in rent, which typically ranges between 6 and 9% for our facilities. And the remaining bit is about expansion of offices.
- The management stated that highway infrastructure has improved, so they do see improvement in service time and therefore, improvement in utilization of their vehicles. As an example, wear and tear and damage of the trucks reduces as the quality of expressways increases.
- The management stated that the PTL business does not see seasonality in February. Typically, there is an annual seasonality where March, obviously, is the big month because it’s year end and quarter end, but there’s also an intra-quarter seasonality where the end of the month is significantly larger than the first two weeks of the month.
Analyst’s View
Delhivery continues to have a leading market share as an independent third-party logistics player in this space. They continue to operate one of the largest networks in the country. Corporate costs remaining broadly constant going forward can be foreseen.
Most of the fixed costs of the business have also scaled as volumes have grown between quarter 1 and quarter 3. So overall, the profitability trend has been positive in quarter 2 and in quarter 3. And going forward, this trend can be expected to continue.
The shift that is happening away from unorganized players towards organized players.So that’s one big shift that is positive and the headroom for growth is massive, not just for Delhivery but for all organized large-scale players who have the ability to invest and build capacity will continue to gain share.,. We are not limited by growth in the market.
On the LTL side, as volumes continue to grow, margins in that business will keep improving. Since the company runs a highly-efficient fleet of trucks, which is the 46-foot tractor-trailer truck and their ability to actually fill those trucks up to their maximum axle load limit, there is an opportunity for them to gain supernormal margins even by sheer design of their trucking. So that’s something that can be seen as a positive movement.