Delhivery limited and its operation:
Founded in 2011, Delhivery Pvt Ltd is a leading logistics and supply chain services company in India. The company has a strong nationwide network extending beyond 2825+ cities. Delhivery has over 83 warehouses across India enabling faster deliveries. The company is a specialist in four major categories of logistics. These are Shipping, Freight services, Special services, Warehousing Services, and Commerce services.
Key Product/ Services:
Delhivery offers the full suite of logistics services such as express parcel delivery, heavy goods delivery, part-truckload freight, truckload freight, warehousing, supply chain solutions, cross-border express and freight services, and supply chain software. This is an ISO-certified company. The company fulfilled over 1 billion orders to more than 19000 pin codes in India by April 2021. Delhivery claims to be the largest and fastest-growing fully integrated logistics player in India by revenue as of Fiscal 2021.
Delhivery has launched the same-day delivery services across 15 countries in India. This will enable D2C brands to deliver their webstore orders on the same day the order is received. Delhivery is planning to add more such services to retail its customers and to attract more customers from its competitor.
The company is founded by Sahil Barua (Indian Institute of Management, Bangalore), Mohit Tandon (Indian Institute of Technology, Kanpur), Bhavesh Manglani (Indian Institute of Management, Calcutta), Suraj Saharan (Indian Institute of Technology, Bombay), and Kapil Bharati (Indian Institute of Technology, Delhi)
The management team consists of 11 members including people from multiple backgrounds such as technology, accounts, management, etc. The team in Delhivery limited follows a highly customer-centric approach with a long-term customer partnership.
Sahil Barua (CEO) has been the managing director, founder, and CEO of the company since its inception in 2011. He has a strong background in consulting at Bain & Company. Salil holds a bachelor’s degree in mechanical engineering from the National Institute of Technology, Karnataka. He is a post-graduate diploma in management from IIM, Bangalore.
Kapil Bharati (Executive Director and CTO) a mechanical engineer from the Indian Institute of Technology, Delhi
Ajith Pai is the Chief Operating Officer at Delhivery. He holds an engineering degree from the National Institute of Technology, Karnataka and PGDM student from IIM Bangalore.
Delhivery is recently listed on Indian stock exchanges – BSE and NSE at ~INT 495, a two percent premium over its issue price of Rs 487.
June 30, 2021
|Total Income (INR Millions)||13,640.11||38,382.91||29,886.29||16,948.74|
|Total Expenses (INR Millions)||14,935.91||42,127.04||32,574.31||34,781.78|
|Total Loss for the period / year||-1,295.80||-3,744.13||-2,688.02||-17,833.04|
Total revenue of Delhivery has increased over the last three years. In FY20, the company reported a growth of above 76% y-o-y against FY19. In FY21 the company reported a growth of 28% over FY20. Experiencing continuous increase in annual revenue. However, the company has been incurring losses over the last three years reported. The loss of the company has declined in FY20 and FY21, the company has not yet reached breakeven.
Over 95% of its revenue comes from its India operation. Approximately 60% of the Delhivery’s revenue comes from the e-Commerce business. The logistics firm has reached the INR 5,170 crore revenue milestone in the nine months ended FY22. With the e-commerce business in India growing, the company is expecting to achieve break-even in FY22.
The Express parcel segment is the major contributor to the total revenue with 69.9% in FY21.
Revenue from part truckload (PTL) services is 10.5% of the total revenue in FY21. The acquisition of Spoton Logistics Private Ltd, an express PTL freight service provider in India, will help Delhivery to scale up its PTL freight services business. Spoton delivered 758,730 tonnes of freight in FY21.
Delhivery revenue from supply chain services is 10.70% of the total revenue in FY21. The cross-border services contributed 2.6%. This has increased from 0.5% in FY19 to 2.6% in FY21. The revenue from these services increased to 6.8% of the total revenue for the three months ended June 30, 2021.
Major Funding Activities:
Delhivery raised $413 million in a Series F round led by SoftBank Vision Fund, Carlyle Group, and Fosun International. The valuation of the company rose to $1.5 billion. Delhivery became a Unicorn in the year 2019. FedEx India acquired a minority stake in Delhivery on a fully diluted basis along with certain minority investor rights. FedEx invested $100 million in the company. In June 2021, Delhivery raised $275 million in its Series H round led by Fidelity Management and Research Company. With this round of funding, Delhivery is valued at over $3 Bn. In a series round I, the company has raised $76.4 million in funding from Addition, the firm founded by the startup investor Lee Fixel.
In August 2021, Delhivery acquired Spoton Logistics – a Bengaluru-based logistic firm- to strengthen its business-to-business (B2B) vertical. Delhivery has invested an amount of $20 million to $30 million in warehousing automation products maker Falcon Autotech. This will boost its warehousing capacity.
Partnership and Alliance:
Delhivery partnered with Aramex – a UAE-based logistic company- in March 2019. With this, the company expanded its operations in the Middle East and North Africa. This helps Delhivery to provide reciprocal access to Aramex customers to its India network. In July 2021, the company established an alliance with FedEx. This helps Delhivery to expand its coverage in the North American and European markets.
Came up with Initial public offering (IPO):
Delhivery came up with IPO in 2022 and listed both the exchanges in India. According to the DHRP report, Delhivery will utilize the net proceeds from the IPO to fund organic growth. The company is planning to invest up to INR2,500 crore. The company is planning to invest INR 1250 crores in the inorganic growth of the company.
Delhivery is planning to invest the above fund in a span of five years from the listing of the Equity Shares. The company is planning to scale up its existing business lines and develop new adjacent business lines, improve network infrastructure, and upgrade its proprietary logistics operating system.
India is the 6th largest economy globally. Indian economy is poised to be the 3rd largest by 2030. According to the IMF report, Indian GDP is expected to grow at ~9% between 2020-25 driven by private consumption. Private consumption in India is expected to increase from US$1.6 trillion in 2019 to US$2-2.5 trillion in 2025.
The Indian logistics sector is expected to grow by 9% from US$216 billion in FY 2020 to US$365 billion by FY 2026. This growth will be driven by economic growth, a favorable regulatory environment, and push in transportation, etc. Per capita, logistic spending in India is ~US$280 in 2020 as against ~US$1540 in China and ~US$4860 in the US. This indicates a huge opportunity for growth in this sector in India.
Organized players in the Indian logistic industry accounting for ~3.5% in FY 2020. This contribution is expected to reach 12.5-15.0% in FY 2026, indicating a CAGR of approximately 35%. Organized players will get the most benefit out of this growth momentum.
Delhivery is focusing on asset-light and data-centric models. The company is leasing 0.5 million square feet of warehousing hubs. The company owns only 300 trucks out of 8000 trucks it operates. That reduces the operating cost of the company.
Ecom Express – a leading end-to-end logistics solution provider – is a close competitor in terms of the scale of operation and funding in private space. Ecom express has a similar business model to Delhivery.
It is good to keep investing in fundamentally strong logistic companies. Delhivery’s market share is ~0.5% of the total addressable $250 billion logistics industry in India. Delhivery is fundamentally a strong company with a growth outlook in terms of organic and in-organic. Our suggestion is to invest in this company for the long-term benefit of the growing logistic industry in India.