Delhivery Limited — Q3 FY25 earnings call

Call held 7 Feb 2025

Management summary

Delhivery reported a strong Q3 FY25, driven by the festive season, with significant quarter-on-quarter and year-on-year revenue growth. The company continued its trend of profitability, achieving a 1% PAT margin and 4.3% EBITDA margin. Key segments like Express Parcel and Part Truckload showed robust performance, with management addressing margin dynamics and competitive landscape.

Highlights

  • Revenue from services: ₹2,378 crores, up 8.6% QoQ and 8.4% YoY.

  • Express e-commerce parcel delivery: 206 million packages, up 11.2% QoQ and 2.4% YoY.

  • Part Truckload (PTL) freight: 412,000 tons, up 17% YoY.

  • Overall EBITDA: ₹102 crores, representing a 4.3% margin.

  • PAT: ₹25 crores, representing a 1% margin.

  • Cash and cash equivalents: ₹5,488 crores on the balance sheet.

  • Express Parcel service EBITDA margin: improved from 15.1% to 15.6% QoQ.

  • PTL service EBITDA margin: improved from 2.9% to 3.8% QoQ, highest in 11 quarters.

Key financials

  1. Revenue from Services ₹2,378 Cr +8.4%YoY
  2. Overall EBITDA ₹102 Cr
  3. EBITDA Margin 4.3%
  4. PAT ₹25 Cr
  5. PAT Margin 1%
  6. Adjusted EBITDA ₹45 Cr
  7. Adjusted EBITDA Margin 2%
  8. Cash and Cash Equivalents ₹5,488 Cr
  9. Total Expenses ₹2,451 Cr +7%YoY

What they filed

Q1 FY27: revenue up 28.3%, net profit down 31.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,020 2,204 2,040 2,128 2,382 +18%2,633 +19%2,672 +31%2,730 +28%
EBITDA52 109 122 159 154 +196%236 +117%238 +95%175 +10%
Net profit19 38 -20 114 61 +221%74 +95%80 +500%78 −32%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹2,370 Cr Total
  • Express Parcel ₹1,488 Cr 62.8%
  • Part Truckload (PTL) ₹462 Cr 19.5%
  • Supply Chain Services ₹222 Cr 9.4%
  • Truckload ₹155 Cr 6.5%
  • Cross Border Services ₹43 Cr 1.8%

Capital allocation

high confidence
  • Capex 5.6 % of revenue
    I think this year we will end up with CapEx as a percentage of revenue being 5.6% or lower.
  • Liquidity Cash ₹5,488 Cr Company continues to be well-capitalized.
    The company continues to be well-capitalized. We hold Rs. 5,488 crores of cash and cash equivalents on the balance sheet.

Guidance & targets

Margin

  • Express Parcel Service EBITDA Margin Margin · long term · High confidence 17% to 20%
    I think for the Express Parcel business, service EBITDA margins will remain in the 17% to 20% range.

    — SAHIL BARUA

Growth

  • Part Truckload (PTL) Business Volume Growth Growth · next financial year · High confidence 25% to 30%
    Our own ambition internally is certainly to grow the business overall at nearly 25% to 30% in the next financial year.

    — SAHIL BARUA

Capex

  • CapEx as percentage of revenue Capex · FY25 · High confidence 5.6% or lower
    I think this year we will end up with CapEx as a percentage of revenue being 5.6% or lower.

    — SAHIL BARUA

  • Long-term CapEx as percentage of revenue Capex · long term · High confidence 3.5% and 4%
    over the long term we expect CapEx to settle at between 3.5% and 4% of revenue

    — SAHIL BARUA

Revenue

  • Rapid Commerce Revenue Contribution Revenue · through the financial year · Medium confidence Rs. 80 crores and Rs. 100 crores
    I expect that this business will add maybe somewhere between Rs. 80 crores and Rs. 100 crores of revenue to Delhivery through the financial year

    — SAHIL BARUA

Capacity

  • Rapid Commerce Dark Stores Capacity · High confidence 50 dark stores
    We expect to set up 50 dark stores in the top eight cities.

    — SAHIL BARUA

What to watch in Q4 FY25

Express Parcel Service EBITDA Margin Recovery

Next quarter (Q4 FY25) and beyond
Current 15.6% in Q3 FY25
Target 17% to 20%

Why it matters

Crucial for overall profitability and achieving long-term margin targets for the core business.

I think broadly Q4 will be normative to Q4s that we have had in the past... So overall, I don't think we'll see anything structurally very different in Q4.

Risks & concerns

  • Erosion of Profit Pool in Express Parcel Industry

    medium

    Insourcing by players like Meesho has eroded the profit pool for the Express Parcel industry, leading to cumulative losses for other 3PLs, though Delhivery's share of the profit pool has increased.

    Management acknowledged

  • Fleet Cost Inflation in Q3

    medium

    An unanticipated bump in overall fleet sourcing costs, particularly for intra-city fleet in key metro cities, due to high demand during the peak season, impacted Q3 margins.

    Management acknowledged

  • Muted Overall E-commerce Growth

    medium

    The overall e-commerce market growth has moderated in the current financial year, with volume growth being fairly muted for larger marketplaces.

    Management acknowledged

  • Competitive Pricing by Other 3PLs

    medium

    Some other 3PLs took aggressive price actions to boost volumes for a short period, leading to unsustainable pricing and increased losses for them.

    Management acknowledged

Q&A highlights

7 direct
Express Parcel steady-state margins and impact of insourcing. Direct
I think for the Express Parcel business, service EBITDA margins will remain in the 17% to 20% range.

Asked by SACHIN SALGAONKAR

PTL margin improvement trend and pace. Direct
I think PTL margins actually will improve at a faster rate.

Asked by SACHIN SALGAONKAR

Rapid commerce scaling, D2C contribution, and market size. Direct
I expect that this business will add maybe somewhere between Rs. 80 crores and Rs. 100 crores of revenue to Delhivery through the financial year and the margin structure will broadly be similar to the Express Parcel business as a whole.

Asked by SACHIN SALGAONKAR

Reasons for muted Express Parcel EBITDA and overall e-commerce growth. Direct
some of our fixed investments, especially one of them being the Bangalore Hoskote facility coming live and redundant facilities being there.

Asked by GAURAV RATERIA

Impact of Valmo/ATS/Instakart externalization and entry barriers in logistics. Direct
I don't fundamentally believe that it changes our answer on an integrated network being better and being the right network. Our speed metrics suggest that, our quality metrics suggest that. Our return rates are lower. Our cost per shipment is lower.

Asked by LOKESH MARU

Explanation for fleet cost increase in Q3. Direct
the overall demand for vehicles of a specific kind, intra-city fleet in the major cities... increased quite a lot. And as a consequence of that, supply was limited and overall pricing of the fleet went up compared to what we'd expected.

Asked by MUKESH SARAF

Overall Express Parcel market growth rate. Direct
I think overall e-commerce growth has certainly moderated, Aditya. There's no question in this financial year.

Asked by ADITYA MONGIA

2 min read 7 chapters

Detailed narrative

Q3 FY25 Performance Overview

Delhivery reported a robust Q3 FY25 with revenue from services reaching ₹2,378 crores, marking an 8.6% quarter-on-quarter and 8.4% year-on-year growth. The company achieved an overall EBITDA of ₹102 crores (4.3% margin) and a PAT of ₹25 crores (1% margin), continuing its profitability trend despite industry headwinds. Cash and cash equivalents stood strong at ₹5,488 crores on the balance sheet.

Segmental Performance and Profitability

The Express Parcel business generated ₹1,488 crores in revenue, delivering 206 million packages, with its service EBITDA margin improving to 15.6%. The Part Truckload (PTL) business grew 22% YoY in revenue to ₹462 crores, handling 412,000 tons of freight, and achieved its highest service EBITDA margin in 11 quarters at 3.8%. Supply Chain Services also showed strong growth, with revenues up 30% YoY to ₹222 crores and returning to profitability with a ₹5 crore service EBITDA.

Express Parcel Business Dynamics

While the Express Parcel business saw marginal growth in service EBITDA, its margins were slightly depressed compared to the previous year due to fixed cost build-up from new facilities like Bangalore Hoskote and an unanticipated bump in fleet sourcing costs. Management expects margins to return to the 17-20% range, driven by PTL growth improving line haul costs and a shift to fixed fleet contracts. Total shipments grew 11% QoQ to 206 million.

Part Truckload (PTL) Business Growth and Margins

The PTL business continued its strong performance, with management targeting 25-30% volume growth for the next financial year. Despite sharing network costs with the Express Parcel business, PTL margins improved to 3.8%, driven by better yields and utilization. The company noted December was its highest month ever for freight tonnage since the Spoton integration, with 147,000 tons of freight.

Rapid Commerce and D2C Strategy

Delhivery has launched its two-hour rapid commerce service in three cities (Bangalore, Hyderabad, Chennai) with plans for 50 dark stores in top eight cities. This segment is expected to contribute ₹80-100 crores in revenue this financial year, with margins similar to Express Parcel. The D2C and SME segments are growing rapidly (30% YoY for D2C, 50% YoY for SME), becoming a more material portion of volumes for Delhivery.

Infrastructure and Operational Efficiency

Infrastructure expanded to 20.6 million square feet, including temporary capacity for peak season. The company operates 112 major gateways, 45 automated sort centers, and 130 freight service centers. CapEx as a percentage of revenue is expected to be 5.6% or lower for FY25, with a long-term target of 3.5-4% for maintenance and upgrades, indicating sufficient capacity for future growth and rising capacity utilization.

Competitive Landscape and Industry Consolidation

Management believes the Express Parcel industry is heading towards a reckoning, with other 3PLs experiencing cumulative losses due to unsustainable pricing and insourcing by large e-commerce players. Delhivery's integrated network is positioned for superior cost and service metrics, and management anticipates industry correction or consolidation, which would be favorable for the company, potentially leading to increased pricing or volumes.

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