Delhivery alleges that IPO-bound rival Ecom Express used incorrect numbers in DRHP

Ecom Express, which is backed by Warburg Pincus, Partners Group, and British International Investment, plans to raise Rs 2,600 crore via its IPO

Logistics unicorn Delhivery has alleged in an exchange filing that its initial public offering (IPO)-bound rival Ecom Express has misrepresented numbers with regards to the two companies’ shipment volumes, profitability and capacity metrics in its draft red herring prospectus (DRHP).

For example, Delhivery counts a shipment — even if it is not delivered to the destination and returned to origin — only a single shipment. But, Ecom Express counts it as two shipments as the to and fro transportation are billed separately.

For this reason, Delhivery’s FY24 shipment volume of 740 million is not a like-to-like comparison with Ecom Express’ 514 million. As the IPO-bound company made this comparison in its DRHP, it may seem to investors that Delhivery has a less significant lead over the former.

When accounted for an industry average of 14-18 percent of shipments being returned to origin, the adjusted shipment number for Ecom Express would be in the vicinity of 450 million, according to Delhivery’s filing with the exchanges.

This would also impact the cost per shipment comparison (CPS) made between the two companies by Ecom Express in its DRHP, according to Delhivery. The cost per shipment is calculated as costs directly attributable to operations which is computed as total costs less corporate overheads and costs attributable to warehousing services, further divided by total number of shipments handled for the period/financial year, according to Ecom.

“Shipment volume used in the denominator of CPS calculation is not like-to-like – peer likely double-counts RTO shipments, thereby overstating volumes and understating CPS. Peer’s CPS will increase by ~Rs 7 (~15%) when adjusted for shipment volumes comparable to Delhivery,” the SoftBank-backed listed logistics company said in its exchange filing.

Delhivery also said that it is incorrect to compare the ‘Service EBITDA’ of the two companies — a non-statutory metric —- as its exact calculation is defined internally. As such, Ecom Express would not know how Delhivery defined its corporate costs.

In the exchange filing, Delhivery also said that it is incorrect to compare any two shipments of the two companies as their customer mix and hence their average weight of shipments are different.

“Per shipment metrics hugely vary depending on shipment profile – weight profile for Delhivery and peer will be significantly different due to different client mix. Peer has Top customer concentration of 52% of revenue (vs. 16% for Delhivery) resulting in Delhivery’s average weight per parcel being ~2x of the peer,” it said.

Ecom Express, which is backed by Warburg Pincus, Partners Group, and British International Investment, plans to raise Rs 2,600 crore via its IPO. It filed a draft red herring prospectus with the capital markets regulator SEBI on August 15.

The IPO is a combination of fresh issuance of shares worth Rs 1,284.5 crore and an offer-for-sale (OFS) of up to Rs 1,315.5 crore by promoters and investors.