Key highlights from Delhivery Ltd (DELHIVERY) Q1 FY25 Earnings Concall
- Financial Performance
- Revenue grew by 13% year-over-year and 4.7% quarter-on-quarter.
- EBITDA for the quarter was 4.5%, with adjusted EBITDA at 1.7%.
- Profit after tax reached INR54 crore, down 2.4% for the quarter.
- This included a positive impact of INR39 crore from changing depreciation methods.
- Express Parcel Service
- Volumes grew 0.6% year-over-year and 4.1% quarter-on-quarter.
- The service handled 183 million parcels during the quarter.
- Revenue increased by 6% year-over-year and 5% quarter-on-quarter.
- Growth was seen across all non-large marketplace segments.
- Significant growth seen in the heavy goods category.
- Service EBITDA remained stable at 18%.
- Part Truck Load Business
- Revenue increased by 25% year-over-year.
- The business handled just under 400,000 metric tons of load.
- Service EBITDA improved to 3.2%.
- Growth was driven by both volume increases and yield improvements.
- Supply Chain Services
- Revenue grew by 26% year-over-year.
- The company has a robust pipeline of customers across auto, electricals, and FMCG sectors.
- Service EBITDA margins were 4.4%, slightly below the previous quarter’s 6%.
- The decline in margins was due to increased trucking and manpower costs from sudden demand spikes.
- Infrastructure and Capacity
- The company operated with a steady network and infrastructure.
- No material capacity additions were made during the quarter.
- The customer base expanded from 33,000 to nearly 35,000.
- Team size, partner size, and fleet size improved in line with business growth.
- Express Volume Shipments
- The company delivered growth despite a volatile quarter for the industry.
- Long-term forecast remains steady, with annual e-commerce market growth rates between 15-20%.
- The company’s numbers are expected to be broadly in line with market growth.
- Future performance may depend on platform-level strategies, which remain fluid.
- Quick Commerce Strategy
- The company is launching a new product for rapid in-city delivery for e-commerce companies.
- The company plans to create a network of shared dark store warehousing for multi-tenant use.
- Delhivery believes the actual volume at risk from quick commerce in e-commerce is likely to be small.
- The company will provide dark stores and delivery services for e-commerce companies on a multi-tenant basis.
- The new model focuses on rapid commerce (2-4 hour delivery) rather than sub-30 minute delivery.
- Unit economics for rapid commerce are expected to be positive, unlike ultra-fast delivery for low-value products.
- Dark Store Network
- Delhivery is creating a network of shared dark store warehousing for e-commerce companies.
- The model allows multiple companies to share infrastructure and variable costs.
- The approach helps companies avoid over-inventorizing or underutilizing expensive urban real estate.
- Large quick-commerce companies are not expected to be immediate customers of this service.
- The model is more suitable for companies with diverse SKUs rather than limited shelf space grocery items.
- Express Parcel Growth
- Growth was observed across all categories and client segments in non-marketplace e-commerce.
- The company saw growth in direct-to-consumer, SME, and marketplace segments.
- Consumer-to-consumer shipping via the Delhivery Direct app continues to see steady growth.
- The company is expanding its offline reseller network, similar to a franchise program.
- Market Share Trends
- The most significant market change has been Meesho internalizing some of its logistics.
- There hasn’t been significant interstate movement of market share among 3PLs.
- Delhivery maintains its position as the largest 3PL in the market.
- Depreciation and Capex
- The company experiences seasonality in its capex cycle throughout the year.
- Q1 and Q2 are periods when capex commissioning begins.
- In Q1, the fresh capex was about INR80 crores.
- Last year’s total capex was close to INR550 crores for the full year.
- Depreciation is expected to rise in the second half of the year as capex catches up.
- Quick Commerce Strategy
- Delhivery won’t need to build as many dark stores as quick commerce grocery companies.
- The company already operates 3,450 delivery stations across the country.
- Delhivery doesn’t anticipate building anywhere near 1,000 dark stores or incurring significant capex for this initiative.
- Employee Expenses
- There was no significant increase in employee expenses this quarter, contrary to usual trends.
- Delhivery’s increment cycle ends in March, with Q1 typically reflecting wage inflation costs.
- The company doesn’t anticipate a significant increase in wage costs overall.
- Contract Negotiations
- Delhivery’s yield and overall margins have improved between Q4 and Q1.
- The company aims to link pricing to the volume provided by customers.
- Contracts include protections against adverse mix provided by customers.
- Capital Expenditure
- The company purchased vehicles worth about INR29 crore, including Volvo tractors.
- Automation investments amounted to INR4 crore.
- Plant and machinery investments totaled INR26 crore.
- Additional investments were made in furniture and fixtures.
- PTL Business Growth
- Business has shown strong growth compared to the industry.
- The total spend on PTL in India is estimated to be over 10 billion.
- The company’s network is integrated across PTL and express services.
- Serviceability for PTL is the same as for express services.
- High-density PTL locations are served by 120 freight service centers.
- Expansion strategies include increasing awareness of Delhivery’s PTL services and enhancing direct sales capabilities in tier 1, 2, and 3 markets.
- Margin Expectations
- Express parcel business margins are stable at around 18-20%.
- Delhivery aims to pass on cost savings to customers to drive volume growth.
- PTL business margins are expected to align with express business margins, potentially higher in the future.
- Freight costs have declined year-on-year and sequentially, with further scale benefits expected.