Although it faced challenges in the past, its recent profitability, combined with an innovative business model, has created new opportunities for future growth. As online delivery is poised for significant expansion in the coming years—driven by increased smartphone coverage and rising per-capita income—Delhivery stands to benefit the most.

This article examines how Delhivery’s recent shift to profitability positions it to take advantage of the booming e-commerce sector. With its unique business model and growth-oriented strategies, Delhivery is a company worth watching.

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Delhivery provides various logistics services, including express parcel transportation, part-truckload (PTL) and full-truckload (FTL) freight services, cross-border logistics, and comprehensive supply chain management.

The company serves a diverse clientele of over 33,278 clients across more than 220 countries. Delhivery caters to both business-to-consumer (B2C) and business-to-business (B2B) customers, operating in various sectors such as e-commerce and direct-to-consumer (D2C) businesses.

Delhivery has built an extensive nationwide network covering 18,793 pin codes. The company operates a fleet of 15,065 trucks on a daily basis. Its infrastructure includes 160 processing and 3,506 express delivery centres. Additionally, Delhivery works with 34,422 partner agents, which enhances its operational capacity and provides critical redundancy.

The logistics sector operates on two business models: the hub-and-spoke and point-to-point model. Traditional logistics operations predominantly utilize the hub-and-spoke approach. This model effectively consolidates deliveries from various locations into a central distribution hub, where sorting and processing occur.

The packages are then directed to smaller sorting facilities, reaching specialised delivery centres catering to distinct areas. This method leads to slower delivery times, making this model ideal for less time-sensitive deliveries.

Delhivery employs a point-to-point business model. This approach consolidates shipments at major sorting centres before being sent to their final destinations. This model optimizes efficiency and reduces costs, enabling Delhivery to handle large shipments seamlessly. This model has given Delhivery the leverage to rise the e-commerce boom and become a preferred logistic partner for e-commerce.

Furthermore, it has an asset-light business model, in which it partners with third-party fleet operators instead of owning all its vehicles. This approach enables it to scale operations without heavy capital expenditures.

Also Read: Delhivery expects rapid commerce business to generate ₹80-100 crore by fiscal end

Delhivery operates in a highly competitive sector where technology, network reach, and cost efficiency are crucial for long-term success. The company's greatest competitive advantage lies in its ability to integrate technology into all facets of its operations.

This includes AI-based demand forecasting and real-time tracking, which optimize delivery speed and reduce costs. These capabilities enable Delhivery to compete effectively in a market characterized by thin margins and a strong emphasis on operational efficiency.

Delhivery generates revenue through five business segments. The express parcel segment contributes the most, accounting for 62% of its revenue. Part-truckload (PTL) contributes 19%, supply-chain solutions make up 10%, truckload (TL) adds 7%, and cross-border logistics solutions account for the remaining 2%.

Let’s break down Delhivery’s core business- express parcel and part truckload or PTL.

This primarily includes e-commerce shipments, speed post shipments, and document couriers, with individual parcels weighing less than 40 kg and turnaround times of under three days.

Delhivery is currently the country's fastest-growing third-party express parcel delivery company, with a 21-22% market share. It is one of India's biggest beneficiaries of the e-commerce boom, with Delhivery at the forefront due to its low-cost business model.

This segment is expected to grow significantly as e-commerce penetration increases in India. In 2021, India had 16 crores of online shoppers, and according to Invest India, this number is projected to triple, reaching 50 crores by 2030. This growth will be driven by rising mobile and internet penetration, per-capita income, and formalisation of the Indian economy.

Several other factors, including the rise of emerging business models like direct-to-consumer (D2C), omnichannel retail, and social commerce, are expected to boost digital penetration further.

The D2C sector is still in its early stages, with shipments projected at about 60 crores in 2023. According to market intelligence firm 1Lattice and venture firm Sorin Investments, this is expected to increase to 200 crores by FY27.

In addition, social commerce in India is expected to grow rapidly, reaching a gross merchandise value of $60-70 billion by 2025, up from the current $16-20 billion, as reported by Bain & Company.

This growth will be fueled by platforms like Facebook, Instagram, and WhatsApp, which integrate shopping features to simplify the buying process and enhance user engagement.

Though large e-commerce companies handle 85% of shipping through their logistics (e.g., Amazon Transportation, E-Kart), third-party providers manage the remaining 15%.

Among these, Delhivery generates the highest volume, with the top five marketplaces contributing 39% to its revenue. The balance, 61%, comes from other smaller players, as Delhivery helps smaller companies on the internet scale up and directly reach their customer base.

As online shopping continues to expand, driven by social commerce and D2C marketplaces, the demand for cost-effective logistics providers is expected to increase. Delhivery, with its competitive advantages, attractive pricing, and strong presence in the online delivery sector, stands to benefit significantly from this growth.

The express parcel performance has shown a 12% revenue increase, reaching ₹5,077 crores in FY24, primarily driven by an 11% growth in shipments. The company earns an 18-20% margin in the B2C segment and aims to maintain this level by passing cost benefits on to customers.

Margin here means service Ebitda, which refers to Ebitda generated after accounting for direct variable and fixed costs of operations, excluding corporate overheads.

However, this segment has experienced muted performance in FY25 thus far, primarily due to subdued demand and a slowing economy. In Q3 FY25, revenue from express parcels increased by only 3%, reaching ₹1,488 crores, with shipments growing by just 2%.

To address this challenge, the company is implementing various strategies. To meet the rising demand in the Q-commerce sector, it plans to establish a network of dark stores that can be leased on a multi-tenant model.

The company aims to target customers beyond the 3-4 leading Q-commerce players. Additionally, to improve unit economics, it intends to focus on delivering express parcels within 3-4 hours in metro cities, as opposed to the previous timeframe of 15-20 minutes.

According to Prabudas Lilladhar, Delhivery is well-positioned to benefit from the ongoing e-commerce boom despite rising competition from new-age companies like Expressbees and Shadowfax. As consumption begins to pick up, bolstered by measures such as income tax cuts, a recovery is anticipated, which is expected to benefit Delhivery.

This segment focuses on domestic road transport services for shipments weighing between 40 kg and 1,000 kg, which is insufficient to fill an entire truck. Therefore, shipments from multiple shippers are merged at consolidation centres to create full truckloads before transportation.

It offers Delhivery tactical flexibility by enabling both part truckload (PTL) and express parcel shipments to utilize the same assets and infrastructure. This cross-utilization of assets allows Delhivery to handle 2.5 times more PTL loads than B2C shipments within the same network.

This increases truck usage, which, as per Prabhudas Lilladher, can reach peaks of 75-80%, well above the industry average of 50-55%. It helps the company reduce empty space and optimise fleet efficiency, leading to economies of scale that lower operational costs.

Cross-utilization allows Delhivery to efficiently manage a larger volume of e-commerce shipments without significant fleet expansion. Consequently, the company can handle more shipments while keeping costs in check. These cost savings are then passed on to customers in the e-commerce segment, providing Delhivery with a competitive advantage.

PTL is the second-largest contributor to the company's revenue, representing 18.6% of the total. Although its revenue declined by 32% in FY23 due to weak demand, it rebounded strongly in FY24, achieving a 31% growth to ₹1,517 crore. This recovery was primarily driven by increased freight volume and improved asset utilization.

According to Invest India, the PTL transport method is gaining popularity, with an anticipated annual growth rate of 8-10%. Currently, 55% of the market is dominated by unorganized players, which presents significant opportunities for established companies like Delhivery to increase their market share.

In light of the growing demand for PTL services, Delhivery intensified its focus on this segment last year. The company began building its sales team in tier 2 cities with higher freight volumes. This strategy is now paying off, as shipments are rising due to improved truck utilization.

Delhivery reported industry-leading growth in Q2 FY25 and has positioned itself among the top three players in the PTL segment. However, the margins in this sector remain low due to ongoing network expansion.

It is focusing on B2B areas, including automotive, auto spare parts, wires and cables, and consumer durables, to generate more volume at current capacity with improved utilization. Its PTL revenue grew 22% to ₹462 crore in Q3FY25.

In addition to the previously mentioned areas, the company also operates in supply chain services, which accounts for 10% of its total revenue. There has been a growing demand from consumer durable companies in this sector. The company has acquired new clients and expanded its business with existing ones. As a result, revenue from this segment increased by 29% compared to last year, reaching ₹222 crore in Q3 FY25.

The company is also launching new initiatives to drive growth. It plans to launch third-party shared instant commerce services for e-commerce in major cities. Additionally, it will introduce new products for regional surface and national air shipping to ensure faster deliveries.

The company aims to offer value-added services for SME customers, including address verification, reduction of return-to-origin (RTO) rates, and insurance services, which will enhance profitability in the express business. Furthermore, consumer-to-consumer (C2C) services similar to DTDC will be implemented to drive growth.

Delhivery has experienced impressive revenue growth, with a compounded annual growth rate (CAGR) of 31% over the past three years, reaching ₹8,142 crores in FY24. This increase has been driven by its express parcel, transport logistics (TL), and supply chain services.

Despite this growth, the company continues to operate at a loss at the profit after tax (PAT) level, although it has significantly reduced its loss from ₹1,011 crores to ₹249 crores in FY24.

On a positive note, Delhivery achieved profitability at the Ebitda level, reporting ₹127 crores in Ebitda and a margin of 1.6%, marking an improvement of 7.8% compared to the last year.

The company is concentrating on enhancing its working capital days, reducing them from 73 to 31 days in FY24. It aims to lower this number even further, which will improve cash flow and strengthen overall financial stability. Its cash and cash equivalent stands at ₹5,488 crores as of Q3FY25.

In FY25, the company experienced a significant turnaround in its financial performance. It remains profitable, reporting a PAT of ₹89 crores.

We used the EV/Ebitda multiple to assess the company's valuation, especially since it has recently become profitable. Currently, the share is trading at an EV/Ebitda multiple of 30.1x, about a 30% discount to its median valuation of 43.

Compared to other players in the sector, such as Allcargo and VRL Logistics, Delhivery is trading at approximately a 2x premium to both. Additionally, it is trading at an 87.5% premium compared to the traditional player, Container Corp. of India.

Delhivery's valuation appears high primarily because the company has only recently become profitable. Nuvama believes that Delhivery can maintain a high valuation due to its market leadership in express parcel delivery and its ability to create and scale new segments.

The recent sharp correction in its stock price has made its valuation more reasonable. Nuvama has valued Delhivery at 30x its December 2026 EV/Ebitda and set a target price of ₹400 per share, which is 40% higher than its current market price.

Moreover, since its Ebitda is still relatively low, the EV/Ebitda multiple is elevated, making the stock seem expensive. However, as Delhivery continues to boost its profitability, its Ebitda will increase, which will naturally lead to a decline in its valuation multiple.

This suggests that while the stock may seem pricey now, stronger earnings in the future could make it look more reasonably valued over time.

For more such analysis, read Profit Pulse.

Note: We have relied on data from www.Screener.in and Tijorifinance throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.

The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.

Madhvendra has been a passionate follower of the equity market for over seven years. He is a seasoned financial content writer. He loves reading and sharing his honest opinion about publicly listed Indian companies and macroeconomics.

Disclosure: The writer does not hold the stocks discussed in this article.