Delhivery Ltd Q3 FY23 Earnings Conference Call Insights

Key highlights from Delhivery Ltd (DELHIVERY) Q3 FY23 Earnings Concall

Q&A Highlights:

• [00:19:00] Sachin Salgaonkar with BofA asked about the drivers of 6% QoQ shipment growth in 3Q. Sahil Barua MD said this year’s sales were atypical due to the sale impact coming2Q instead of 3Q. DELHIVERY saw 170 million shipments odd in 3Q and the momentum going into 4Q has been similar with an increased share of wallet with customers.

• [00:20:05] Sachin Salgaonkar with BofA also asked about the shipment outlook for FY23. Sahil Barua MD said DELHIVERY expects e-commerce shipment volumes to grow in the range of 15-20%, though there is potential for higher growth rates depending on how individual players react.

• [00:23:53] Sachin Salgaonkar with BofA queried about thoughts on competition on both PTL and Express. Sahil Barua MD answered that In the PTL space in India, there is significant headroom for growth without any of them trying to compete with each other. In the e-commerce space, even if it were to stay flat, DELHIVERY’s strategy and financials will not change, and they are likely to gain share.

• [00:25:58] Hitesh Goel of CLSA asked about the unit economics of PTL and strategy. Sahil Barua MD said DELHIVERY’s strategy in PTL is to be the most cost-efficient player, and its pricing strategy may differ from Express. The unit economics of PTL are simple, with pickup and delivery, linehaul, and manpower costs all contributing to a GM opportunity of 25-30% and EBITDA margins of 14-20%.

• [00:30:02] Gaurav Rateria at Morgan Stanley asked about lower services EBITDA margins vs. FY22 on similar revenue. Sahil Barua MD answered the reason for change is as a larger proportion of the trucking now is done on 46 foot container trucks vs. last year when it was much smaller.

• [00:38:02] Aditya from Macquarie asked about the Express Parcel volume mix vs. a year ago and its outlook. Sahil Barua MD replied the company does not disclose its Express Parcel volume mix by customer, but it’s highly satisfactory. DELHIVERY is not heavily dependent on any single customer. The company has a high share of wallet with all marketplaces and independent players and are usually the partner of choice.

• [00:39:56] Aditya from Macquarie asked how has the recent uptick PTL volumes improved service margins in Jan. Sahil Barua MD replied that the company can’t comment on margins for Jan. Operating leverage has played out in the business over the last two quarters and should continue as long as volumes remain high. The exact margin may vary depending on where the volume is coming from, but the trend of operating leverage should continue.

• [00:44:02] Sohan Joshi asked when the revenue will get started reflecting in P&L from Transition Robotics.  Sahil Barua MD said that Transition Robotics has developed a fixed wing aircraft capable of delivering a 4 kg payload over 40 kilometers. DELHIVERY has been testing their technology in India with the approval of national and local regulators. The company is evaluating other revenue streams for its IP and looking at other markets to monetize it.

• [00:54:12] Aditya Mongia asked about business mix. Amit Agarwal CFO said that in cross border business there has been a been a decline from INR96 crores of revenue to about INR66 crores. This business has a significantly high proportion of line haul cost as a percentage of revenue, which has led to reduction.