Delhivery boasts a larger scale and higher profitability than Ecom Express and is in a superior position than Ecom Express, according to a report by HSBC Global Research.
Delhivery’s revenue from express parcel business surpassed Ecom Express’ by 2.2x in FY24, with an overall lead of 3.1x in total revenue.
The report states that Delhivery’s number for parcel shipments cannot be compared with Ecom Express because of different return to origin shipment counting process. Ecom Express counts direct-to-origin and return-to-origin as separate transactions while Delhivery counts them as one transaction. Therefore, Ecom Express’ annual parcel shipment numbers are more than that of Delhivery.
Moreover, Delhivery’s express parcel revenue growth has consistently outpaced Ecom Express’ growth over the past five years, except for FY23, and Delhivery also has a significant advantage in adjusted EBITDA margin for its express parcel business.
“We like Delhivery for its dominant position with superior economics in high growth ecommerce logistics industry,” says the report.
There is a difference between what the two companies are targeting.
Delhivery focuses on the entire Indian logistics market. Its business is more diversified across logistics services, with its top contributors chipping in about 16% of sales.
Ecom Express, which is more ecommerce oriented and is focused on providing unbundled services, gets about 52% sales from its top customers. Its customer addition has grown significantly over the past two years compared to Delhivery, although from a far lower base.
The report also notes that Delhivery’s corporate overhead to sales ratio is about 250 bp lower than that of its peer Ecom Express. Delhivery’s lost shipment expenses as a percentage of sales stands at 1.2%, significantly lower than Ecom Express’ 3%.
This comes just a week after Ecom Express filed its DRHP with SEBI, which includes a fresh issue of equity shares worth Rs 1,284.50 crore and an offer for sale of shares valued Rs 1,315.50 crore by promoters and other shareholders. It is also considering raising Rs 257 crore through a pre-IPO round.
