Delhivery shipments to grow in 18-30% range this year: CEO Sahil Barua

Sahil Barua, Managing Director & CEO, Delhivery

Logistics company Delhivery’s shipment volumes are expected to grow in the range of 18-30 percent in FY23, chief executive officer Sahil Barua told analysts in a post-earnings call. The company's shipment volume had zoomed 101 percent to 58.2 crore packages in FY22 while it had recorded a revenue growth of 63 percent to Rs 7,241 crore.

Although the e-commerce industry, which is Delhivery’s biggest revenue source, is expected to grow slower this year due to macro headwinds, Barua said that he was optimistic about the sector’s long-term prospects as e-commerce penetration continues to be very low in India.

“We continue to see e-commerce growth in tier 2 and 3 markets, more frequency (of usage) in the metros. I don't believe there is a structural alteration to purchasing online, or the ability of e-commerce players to create more categories,” he added.

The Delhivery founder said that one of the main reasons for the slower growth in the first half of FY23 compared to the previous six months was the shutdown of Shopee’s India operations earlier this year.

“The H2 last year was somewhat distorted by the presence of Shopee in the market. So, overall volumes, not just for Delhivery but for the e-commerce industry, were significantly higher. And with Shopee disappearing, while some of that business has become spread out across other e-commerce businesses, a part of that volume has basically disappeared,” said Barua.

“If you see our growth in volumes, we have seen a 6-7 percent growth in Q2 over Q1. We would expect a similar range – slightly higher or slightly lower – in Q3 over Q2,” he added.

The company told analysts that in a period of slow growth it could use its gross margins to defend and take away market share from its peers. With incremental gross margins at around 50 percent, the logistics company said that it is placed better than its peers to pass on benefits of a better cost structure to customers.

“Our cost advantages are not dependent on scale. They are maintained at 160 million or 140 million packages a quarter... The competitive advantages will remain,” said Barua.

Delhivery’s net loss narrowed to Rs 254 crore in the September quarter while revenue rose 22 percent to Rs 1,796 crore, compared to the year-ago period.

Its revenue from express parcel services during Q2 grew 17 percent YoY to Rs 1,125 crore. Express volumes in the quarter jumped 19 percent YoY to 161 million shipments in Q2FY23 from 135 million shipments in Q2.

"Shipment volumes grew by 80 percent during the festive season period over average volumes in prior weeks," the company said. The Part Truckload (PTL) services business continued its steady recovery post integration of the Delhivery and Spoton networks, Delhivery said, adding that revenue from PTL grew to Rs 293 crore in Q2FY23 as against Rs 259 crore clocked in the previous quarter