Delhivery Integrates Ecom Express Volumes, Reports 67% Increase in Q1 Profit
Delhivery has successfully integrated over half of Ecom Express’s volumes onto its platform, marking a significant shift in the logistics landscape. Following the regulatory approval and completion of the acquisition for ₹1,369 crore, the company has implemented a new pricing strategy aimed at eliminating unsustainable contracts. CEO Sahil Barua emphasized the importance of sustainable pricing in logistics, highlighting the rising costs of wages, rentals, and fleet operations. The integration has not only streamlined operations but also strengthened client relationships, setting the stage for future growth.
Acquisition and Integration Details
Delhivery’s acquisition of Ecom Express, finalized in July after receiving regulatory approval in June, has led to a comprehensive restructuring of its operations. The company has rationalized its network, retaining seven facilities for long-term use. This strategic move aims to enhance efficiency and service delivery. Barua noted that the previous pricing strategies, which often involved contracts below cost, have been eliminated. Clients are now benefiting from volume-linked discounts, ensuring a more sustainable pricing model. This shift is crucial in an industry where operational costs are consistently rising, making it imperative for logistics providers to adopt viable pricing strategies.
Growth in Express Parcel Volumes
The integration has resulted in a notable increase in express parcel volumes, which rose by 14% year-on-year, reaching 208 million in the June quarter. Barua reported that volumes in July were significantly higher than in June, with expectations of continued growth due to the upcoming festive season. Additionally, part-truckload (PTL) freight tonnage saw a 15% year-on-year increase, totaling 4.58 lakh tonnes. Although the company experienced flat sequential volumes during a traditionally weak quarter, PTL margins improved to 10.7%, reflecting a 750 basis point increase from the previous year. This growth is attributed to increased demand for deliveries to quick commerce dark stores and mother warehouses.
Financial Performance and Future Initiatives
Delhivery’s financial performance for the June quarter showed promising results, with a profit after tax of ₹91 crore, a 67% increase from ₹54 crore the previous year. Revenue from services grew by 6%, reaching ₹2,294 crore, while the EBITDA margin rose to 6.5%, up from 4.5%. The company also invested ₹14 crore in new initiatives, including Delhivery Direct, an intra-city pickup and delivery service, and Delhivery Rapid, which offers sub-2-hour delivery. Furthermore, Delhivery is preparing to launch an economy cross-border shipping product aimed at small exporters, indicating its commitment to expanding service offerings.
Board Changes and Future Outlook
In a separate development, Delhivery announced the appointment of Yashish Dahiya, chairman of PB Fintech, and Dr. Padmini Srinivasan from IIM Bangalore as independent directors. This move comes as part of a planned transition, with long-serving board member Srivatsan Rajan set to step down in September. The changes in the board are expected to bring fresh perspectives and drive the company’s strategic initiatives forward. As Delhivery continues to adapt to market demands and enhance its service offerings, it remains focused on sustainable growth and maintaining strong client relationships in the competitive logistics sector.
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