Fundamental Analysis Of Delhivery: We are transitioning towards a ‘Digital India’ and one small aspect to discuss is digital shopping. Physical purchases of even day-to-day necessities nowadays are made through third-party apps with the main motive of getting easy doorstep deliveries without any kind of outdoor hustle.

With such transitions in consumer behavior, it is important to build an infrastructure/network to help the beneficiaries, and here, courier companies play a very vital role. In this article, we are going to do a fundamental analysis of Delhivery Limited being one such courier company.

Fundamental Analysis Of Delhivery - Delhivery Logo

Fundamental Analysis of Delhivery

In this fundamental analysis of Delhivery, we will take a look at the industry overview, company overview, financials of the company, and also future prospects.

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Company Overview

Delhivery Limited, formerly known as Delhivery Private Limited, was incorporated as SSN Logistics Private Limited on 22nd June 2011. It was founded by a bunch of Engineers who are Mr. Sahil Barua, Mr. Mohit Tandon, Mr. Bhavesh Manglani, Mr. Suraj Saharan, and Mr. Kapil Bharati. Currently, the Key Management of the company includes Mr. Sahil Barua (MD and CEO), Mr. Sandeep Barasia (ED and CBO), and Mr. Kapil Bharati (ED and CTO).

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The company is India’s largest fully integrated logistics provider formed with an aim to build an operating system for commerce which would be achieved through a combination of a lot of factors including the infrastructure, logistics operations, cutting-edge engineering, and technological capabilities.

Since the company was established, its team has proven to be successful in fulfilling more than 1.9 billion orders across India. It has built a nationwide network with a presence in each and every state, serving over 18,500 pin codes.

It provided supply chain solutions to a diverse user base of over 26,000 active customers including the e-commerce marketplaces, direct-to-consumer e-tailers, enterprises, and SMEs scattered across various verticals such as FMCG, consumer durables, consumer electronics, lifestyle, retail, automotive and manufacturing segments.

Industry Overview

The size of India’s Courier, Express, and Parcel (CEP) market is approximately USD 6 billion currently and is anticipated to register a CAGR of over 15% during the forecast period of 2023-2028.

Factors such as the growth in the e-commerce segment, higher internet penetration, and the latest technological innovations in the sector have been the driving force for the market to grow at the pace mentioned above. 

The COVID-19 pandemic, on one hand, impacted a lot of industries but, on the other side, on a positive note, led to an acceleration in online purchasing, aiding the growth of the CEP industry and increasing its market share.

There are recent strategic initiatives being taken by major market players like new service launches and acquisitions which could impact operational efficiencies and growth on an overall basis. Mentioning one about Delhivery when it launched a consumer-to-consumer express parcel service during mid of 2021.

Delhivery Limited – Financials

Now that we have got a gist of the company and the sector as a whole, let’s move on to the discussion with respect to the financials helping us to understand the profitability aspects, financial capabilities, etc.

Revenue & Net Profit Growth

Fiscal YearOperating RevenueNet Profit/Loss
2022₹ 6,882– ₹ 1,011
2021₹ 3,647– ₹ 416
2020₹ 2,781– ₹ 269
2019₹ 1,654– ₹ 1,773
2018₹ 1,023– ₹ 692
(figures in crores)

The company’s revenues have consistently increased in the past five years. The company has been reporting negative numbers despite positive operating revenues. The company was able to narrow it during the Covid period, but, has been underperforming since then.

Operating & Net Profit Margins

Fiscal YearOperating MarginNet Profit Margin
2022-7-15
2021-3-11
2020-6-10
2019-98-107
2018-68
(figures in %)

Both the metrics show negative growth with operating and net profit margins getting worse and more negative on a YoY basis. One of the major contributors to the negative results is the increasing employee costs. The company also felt pressure due to increasing interest costs in the last two financial years.

Return Ratios: RoE & RoCE

Fiscal YearROEROCE
2022-25-20
2021-15-10
2020-9-6
2019-346-265
201800
(figures in %)

The above metrics showcase a deep pressure pertaining to the cost efficiencies resulting in such highly negative numbers. The negative net profits sustained by the company as well as negative free cash flows have led to negative return ratios and getting more negative when comparing FY20-21 and FY21-22.

Debt / Equity & Interest Coverage

Fiscal YearDebt/EquityInterest Coverage
20220.06-9.34
20210.11-3.69
20200.08-4.46
20190.02-93.3
2018-0.02-57.41

The debt aspect is the only phase showing some relief in the recent movements during the past two financial years with some reduction in numbers. The interest coverage ratio of the company, on the other hand, indicates issues with respect to the company’s eligibility to make the interest payments.

Future Plans Of Delhivery Limited

Going forward with the future plans of the company, it will continue to specifically focus on cost optimization by getting better at filling its trucks by deploying algorithms and technology on the same.

The company completed the acquisition of Algorhythm Tech at the start of 2023. Its software products will enhance Delhivery’s Supply Chain System (SCS) offering with value-added services and also drive cost optimization in service delivery.

The company added new clients in auto ancillary & parts, healthcare, home furnishing & furniture, beauty & personal care, and construction sectors.

The company, has its objective set, to continue to establish cost leadership in the PTL space as well. The PTL networks, of other courier players in the country, are significantly smaller than Delhivery allowing it to be more efficient as well as gain a competitive advantage over others in the segment.

fundamental analysis of Delhivery – Key Metrics

CMP₹ 325Market Cap (Cr.)₹ 23,669
EPS₹ -13.6Stock P/E0
RoCE-20%RoE-25%
Promoter Holding0%Book Value₹ 129
Debt to Equity0.06Price to Book Value2.52
Net Profit Margin-15%Operating Profit Margin-7%

In Closing

Herein this article, we covered the fundamental analysis of Delhivery Limited evaluating the company profile, its financials, and how the company looks forward to the forthcoming years with respect to its operations and unlocking value in various untapped regions. I hope you were able to gain value from this article which would help you in your investing journey. Happy investing!!

What are your thoughts about the company? Let’s discuss the same in the comments section below.

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