Summary
Delhivery Limited - Q3 FY26 Earnings Call Summary Saturday, January 31, 2026, 06:00 P.M. IST
Event Participants
Executives 5 Navneet Kumar, Sahil Barua, Vani Venkatesh, Varun Bakshi, Vivek Pabari
Analysts 9 Abhishek Banerjee, Achal Lohade, Aditya Bhartia, Aditya Mongia, Alok Deora, Gaurav Rateria, Krupa Shankar, Sachin Dixit, Sachin Salgaonkar
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Services | ₹2,798 crores | +18% YoY / +10% QoQ; Driven by record volumes in Express and PTL segments. |
| Service EBITDA | ₹421 crores | 15.1% margin; Milestone of crossing ₹1,000 crores in cumulative 9M FY26 profits. |
| Adjusted EBITDA | ₹147 crores | Significant expansion; Q3 standalone EBITDA equals total EBITDA for entire FY25. |
| Profit After Tax (PAT) | ₹110 crores | 3.8% margin; excludes Ecom Express integration costs. Reported PAT was ₹40 crores post-integration. |
| Express Parcel Volume | 295 million shipments | +43% YoY; Record festive season performance with sustained volumes in Nov/Dec. |
| PTL Freight Volume | 507k metric tons | +23% YoY; Highest-ever quarterly tonnage despite industry volatility. |
| PTL Service EBITDA Margin | 11.0% | +100 bps QoQ; Improvement driven by network utilization and yield management. |
| Express Service EBITDA Margin | 18.1% | Consistent performance within the 16-18% target range despite small parcel mix. |
| Net Working Capital | 15 days | Continued efficiency in collections and creditor management. |
| Cash & Cash Equivalents | ₹5,000+ crores | Management noted comfortable liquidity for organic and inorganic growth. |
Geographic & Segment Commentary
- Express Parcel: Revenue grew 24% YoY to ₹1,839 crores, accounting for two-thirds of total revenue. Volume growth of 43% significantly outpaced the estimated market growth of 15-18%, indicating major market share gains following the Ecom Express acquisition. Strategic focus remains on maintaining high service quality during spikes and leveraging utilization-indexed pricing.
- Part Truckload (PTL): Revenue reached ₹588 crores (+25% YoY) with yields growing faster than volumes (+23%). The company expanded its sales force to 60+ locations (from 6 previously) to target retail SMEs. Management expects Q4 to be a strong seasonal quarter for freight.
- Supply Chain Services (SCS): Revenue was flat at ₹171 crores as the company intentionally exited unprofitable portfolios, including Quick Commerce mother warehouses. Segment margins improved dramatically from 2.1% to 13% YoY. New mandates with a large engineering firm and a luxury home brand are expected to drive future growth.
- Cross-Border: Revenue stood at ₹33 crores. The company launched “Delhivery International,” an air economy product for SMEs, which is profitable from day one and utilizes partnerships with carriers like Air India.
Company-Specific & Strategic Commentary
- Ecom Express Integration: Integration costs are trending lower than the ₹300 crore estimate, expected to settle around ₹150-160 crores. Facilities have been consolidated ahead of schedule, contributing to immediate margin accretion.
- Technological Automation: Implementation of “auto-docking” and real-time capacity management algorithms reduced truck turnaround times and improved mid-mile efficiency. The company is also piloting autonomous VTOL drones for medical deliveries and scaling its “TransportOne” SaaS footprint.
- Pricing Strategy: Management emphasized “utilization-indexed pricing” over simple price hikes. By offering discounts on underutilized lanes in real-time, the company aims to improve overall network density while remaining the lowest-cost provider in the market.
- Board Reconstitution: Long-standing directors Deepak Kapoor and Saugata Gupta are stepping down after completing their tenures, marking a transition from a founder-led startup to an institutionalized board structure.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Express Volume Growth | 15-20% (Long-term) | Assumes moderate e-commerce growth; could exceed 20% if 3PL outsourcing increases. |
| Adjusted EBITDA Margin | 10-11% (Steady state) | Driven by corporate overhead reduction to 7% and PTL margin expansion to 16-18%. |
| Capex | 4.0-4.5% of revenue | Medium-term target; slight near-term pull-forward for LNG trucks and tractor trains. |
| Free Cash Flow (FCF) | Breakeven at 6% Adj. EBITDA | Expected as capex intensity declines and working capital remains lean at ~15 days. |
| ROIC (Tangible Assets) | 25-30% | Based on achieving 3x asset turns and excluding cash/ROU assets from the denominator. |
Risks & Constraints
| Risk | Context |
|---|---|
| Client Concentration & Insourcing | Large e-commerce marketplaces fluctuating between captive vs. outsourced logistics. Delhivery mitigates this through a diversified base where no single client dominates. |
| Labor & Regulatory Costs | Implementation of the new social security labor code for gig workers. Delhivery has already internalized these costs, potentially creating a “compliance moat” against smaller rivals. |
| Integration Complexity | Residual risks from folding Ecom Express assets into the core network. Management noted Q4 will see the final ₹25-30 crores of residual integration spend. |
Q&A Highlights
Integration & Cost Synergies
- Question: Where were the positive surprises in Ecom Express integration costs? (Sachin Dixit)
- Answer: Strategic execution allowed shutting facilities earlier than planned and sustaining volumes during the transition. Total costs will likely be half of the original ₹300 crore provision (Sahil Barua).
Express Margins & Pricing Power
- Question: Can Express margins exceed the historical 24-25% peak? (Sachin Salgaonkar)
- Answer: Technically possible, but margins above 25% often lead to service instability. The current 18% is sustainable without yield hikes, purely through utilization (Sahil Barua).
Competitive Health & Market Dynamics
- Question: How do you view competitors expanding their own captive capacity? (Aditya Bhartia)
- Answer: Logistics is not just “people on bikes.” Captives often report 2,000 crore losses while claiming profitability. Delhivery remains the only player with a cost structure that allows profitable 3PL operations (Sahil Barua).
Capital Allocation & ROIC
- Question: What is the steady-state ROIC profile? (Abhishek Banerjee)
- Answer: We target 25-30% ROIC on tangible assets. This is driven by 3x asset turns, 10-11% Adjusted EBITDA margins, and corporate overheads falling to 7% (Vivek Pabari).
Key Takeaway
Delhivery delivered a record-breaking Q3 FY26, characterized by its first-ever ₹1,000 crore cumulative 9M Service EBITDA and ₹110 crore quarterly PAT (pre-integration). Express parcel volumes surged 43% YoY to 295 million, fueled by market share gains following the Ecom Express acquisition, while PTL volumes hit a record 507k metric tons. Strategically, the company is shifting from rapid infrastructure build-out to “utilization-indexed” optimization, successfully exiting unprofitable SCS contracts and improving segment margins from 2% to 13%. Management remains confident in achieving 10-11% steady-state Adjusted EBITDA margins through corporate deleveraging and mid-mile automation. While e-commerce insourcing by major players remains a watch point, Delhivery’s diversified client base and superior cost structure position it as the primary beneficiary of industry consolidation. The company is now approaching a free cash flow breakeven inflection point as capex intensity stabilizes below 5% of revenue.
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