Delhivery Ltd Q1 FY23 Earnings Conference Call Insights

Key highlights from Delhivery Ltd (DELHIVERY) Q1 FY23 Earnings Concall

Q&A Highlights:

• Abhishek Pathak of HSBC asked about the sequential pressure in global e-com volumes and if the company is seeing anything similar in the India e-com space over the short term. Sahil Barua CEO replied that the company is not seeing any slowdown in India. DELHIVERY’s volumes have grown 50% from 1Q22 to 1Q23.

• Hitesh Goel of CLSA asked about gaining market share in the e-commerce space and how much the industry grew in the period. Sahil Barua CEO answered that overall the company grew more than the market from 1Q22 to 1Q23. Including Shopee, the market didn’t grow between 4Q22 and 1Q23.

• Hitesh Goel of CLSA also asked if the one-time integration cost to persist for the year. Sahil Barua CEO said that the company has seen recovery of volumes from all major customers. The overall recovery will play in 2Q23 also. DELHIVERY doesn’t expect the one-time integration cost to persist through the year.

• Hitesh Goel of CLSA enquired if the pricing is expected to remain stable and if DELHIVERY will continue to prioritize market share over pricing in e-com. Sahil Barua CEO answered that the company evaluates pricing at every customer level. And added that DELHIVERY won’t be taking any significant pricing actions through the rest of the year.

• Lokesh Garg from Credit Suisse asked if the company has a meaningful number of parcels now originating from omnichannel merchants. Sandeep Barasia CBO said that D2C, SME and omnichannel is clearly becoming a greater salience on the overall business.

• Vijit Jain from Citi enquired about the same-day delivery offering if there is a pricing differential per parcel vs. conventional offering. Sahil Barua CEO answered that same-day delivery is charged at a premium to regular delivery. The premium varies depending on volume, and the city.

• Vijit Jain from Citi asked about the capex and FCF for 1Q23. Amit Agarwal CFO answered that the total use of cash in 1Q23 was about INR215 crore. Of this, about INR75 crore was attributable to cash flow from operations; about INR225 crore was capex, and ex IPO proceeds, a net drawdown and some receipt of money from a particular investor was about INR85 crore.

• Saurabh Dugar of Motilal Oswal also enquired about the contribution of Spoton on the overall FY23 revenues. Sahil Barua CEO said that the overall part truckload business was at about a quarter of revenues in 1Q22 and 4Q22, which declined to 15% in 1Q23 owing to integration. The company expects that as volumes recover, it will form similar percentage of overall revenue as in FY22.

• Shashank Savla with Somerset Capital asked about one-off costs if the company is having any impact in 2Q23. Sahil Barua CEO answered that a large percentage of claims have been settled with customer in 1Q23 and some will be settled in 2Q23. After that there won’t be significant persistence of one-time integration cost.

• Shashank Savla with Somerset Capital enquired about the guidance for revenue growth or EBITDA margin for FY23 or FY24. Sahil Barua CEO said it’s too early to provide annual guidance. In general, economics of the business is steady; have retained same capacity and as volumes go up, that’s how the margins should look like.

• Alok Deshpande of Edelweiss asked about the typical trend of shipment volumes from 4Q to 1Q over the last 2-3 years. Sahil Barua CEO replied that the shipment volumes are broadly flat, in line with what’s seen historically. However, in this year, industry has de-grown between Q422 and 1Q23.