Should You Invest in Delhivery Ltd for the Long Term? Stock Analysis by Finology

Delhivery Ltd., India's leading integrated third-party logistics company, has achieved a compounded annual sales growth (CAGR) of 37.54% over the past five years.

Finology Research Desk has analysed the company this week, providing a clear verdict on whether Delhivery Ltd. is a good long-term stock or not. Find out in this article.

What makes the Indian logistics industry special?

The Indian logistics market was valued at USD 354 billion in FY24, contributing 18.4% to the country’s GDP and is expected to reach USD 450 billion by FY27, growing at a CAGR of ~8.32%, driven by growth in the e-commerce, higher disposable incomes, rapid urbanisation, technological advancements and infrastructural developments within the country.

Source: WrightResearch

The government has implemented many regulatory reforms, including the adoption of e-way bills, fast-tags, e-invoicing, and GPS-based toll collection (under development), which are all contributing to the evolution of the Indian logistics market In the National Logistics Policy, the vision for 2030 is to reduce logistics costs from 14-18% to 8% of GDP, increase the share of railways and inland waterways in the modal mix, and develop a seamless and efficient logistics ecosystem.

Source: DRHP

The overall logistics industry is divided into two segments: transportation and warehousing & supply chain services. In FY24, transportation made up the majority with an 84% share, while warehousing & supply chain services accounted for the remaining 16%. Within transportation, railways accounted for the majority 66% of the market in 2022, followed by railways at 31%, waterways at 3% and airways at 1%.

Source: EY Report 2022

This industry is highly dominated by the unorganised sector, comprising small fleet owners, local warehouse operators, and freight forwarders, accounting for ~90% market share as of 2022. In contrast, the organised sector holds just~10%, with the top 10 organised players accounting for only around ~2% of the market.

Key players in the organised sector include Blue Dart, XpressBees, Mahindra Logistics Ltd, DTDC, etc. Delhivery recently acquired a controlling stake in Ecom Express in April 2025 by purchasing 99.4% of the company for around Rs 1,407 crores. This move came after Ecom Express faced challenges like losing volume from its key client, Meesho (which accounted for over 50% of its volume), which launched its own logistics network. The acquisition was approved by the Competition Commission of India in June 2025, allowing Delhivery to integrate Ecom Express’s operations and expand its reach in e-commerce logistics.

Logistics services in India span multiple models:

• 1PL (First-Party Logistics): First-party logistics involves just two parties. There is the manufacturer or distributor that ships the goods (you), and then there is the retailer or customer that receives the goods (your customer). There are no other middlemen involved in the whole process. The business handles everything itself. It owns vehicles, warehouses, and manages deliveries without outside help.
• 2PL (Second-Party Logistics): Second-party logistics companies are responsible for the method of transportation. In 2PL, the business hires another logistics company only to transport its goods, while handling all other logistics tasks itself. This is similar to hiring a courier company for sending goods.
• 3PL (Third-Party Logistics): Third-party logistics involve offering a variety of other logistics services. In a 3PL, the business hires other external logistics service providers for most or all of its logistics, including transportation, warehousing and sometimes extra services like packaging.
• 4PL (Fourth-Party Logistics): Fourth-party logistics services provider is an integrator that manages all aspects of the supply chain. This means going beyond the physical logistics and offering services like IT, procurement or finance. A 4PL logistics covers all the benefits of a 3PL services provider and also offers project management, sourcing and negotiation, Logistics strategy and analytics, etc services. 
• 5PL (Fifth-Party Logistics): Fifth-party logistics is a relatively new term in the logistics industry and reflects the development of full logistics integration through many outsourced providers. 5PL services include fully integrated logistics solutions that encompass the whole supply chain from beginning to end through multiple outsourced service providers. The business uses a technology-focused provider to manage complex supply chains. This provider uses tools like big data and automation to run large-scale, multi-partner operations, often for e-commerce or international trade.

The third-party logistics market was valued at USD 42.94 billion in 2025 and is expected to reach USD 61.02 billion by FY27, growing at a CAGR of ~7.28%, driven by rising e-commerce volumes, increasing demand for efficient supply chain solutions, and technological advancements. Growing customer expectations for faster delivery and cost optimisation are also key factors pushing this growth.

Business model of Delhivery Ltd.

Founded in 2011, Delhivery is engaged in the business of providing end-to-end logistics and supply chain solutions. Its services include warehousing and inventory management, last-mile delivery, logistics management systems and supply chain consulting.

It serves a diverse base of customers, including e-commerce marketplaces, direct-to-consumer e-tailers and enterprises & SMEs across sectors like FMCG, consumer durables, electronics, lifestyle, retail, automotive and manufacturing. The company operates across India and in 220 countries worldwide.

Revenue Mix of Delhivery Ltd.

Source: Financial Results FY25

Delhivery Ltd. reported a consolidated revenue of Rs 8,932 crores in FY25, with the segment-wise breakup as follows:

Express parcel: This is Delhivery’s core business, contributing 60% of its total revenue in FY25. It involves door-to-door delivery of small parcels, largely for e-commerce platforms and direct-to-consumer brands, benefitting from Delhivery’s large last-mile network.

Part Truck Load (PTL): These are used by businesses that want to send goods that don’t fill an entire truck, so they share space with other shippers, making it cost-effective for medium-sized shipments. Its contribution to overall revenue has risen steadily in recent years, reaching about 21% in FY25, reflecting rapid growth in this segment.

Truck Load (TL): It refers to full-truck shipments booked by large businesses for long-distance transportation, typically for moving goods from factories to warehouses or distributors. This segment accounted for approximately 7% of revenue in FY25.

Supply chain solutions: This segment includes warehousing, inventory management, order processing, packaging and fulfilment services for brands, such as storing and packing products for a D2C brand. It made up around 10% of revenue in FY25.

Cross-border services: Contributing 2% of revenue, this segment covers international shipping and freight forwarding, handling both imports and exports. Although it remains a small part of the overall business, it plays a vital role in cross-border logistics.

Unit economics of Delhivery Ltd.

Source: Financial Results FY25

Cost of services rendered, comprising freight, handling, and servicing charges, accounted for 70% of total income, rising 9% YoY from Rs 5,970 crores in FY24 to Rs 6,534 crores in FY25. However, as a share of total income, it fell from 72% in FY21 to 69% in FY25, indicating improved operational efficiency.

Finance costs rose 42% from Rs 88 crores in FY24 to Rs 125 crores in FY25. The increase was mainly driven by an increase in interest on lease liabilities during FY25 on account of the expansion of their logistics network.

Depreciation and amortisation expenses fell significantly to Rs 535 crores in FY25 from Rs 722 crores in FY24, due to a change in accounting method from written‑down value (WDV) to straight‑line method (SLM).

Employee benefit expenses declined 4% from Rs 1436 crores in FY24 to Rs 1375 crores in FY25. Over the last 5 years, it has ranged around 15% to 19% of the total income.

Other expenses rose slightly from Rs 607 crores in FY24 to Rs 645 crores in FY25. These include travel and conveyance, software and technology costs, repair and maintenance, etc. As a percentage of income, they remained steady at around 7% in both FY24 and FY25.

Tax expense stood at Rs (49.78) crores in FY25, mainly on account of deferred tax assets recognised from accumulated losses.

Delhivery reported a net profit of Rs 162 crores in FY25, its first full-year profit after years of losses, with a modest net margin of 1.8%.

Porter's five forces analysis on Delhivery Ltd.

Source: Finology Research Desk

1. High bargaining power of buyers: Customers hold significant bargaining power in the logistics industry because of the wide availability of regional and national players. This price sensitivity fuels aggressive price wars, with competitors operating on thin margins to capture market share. A large share of Delhivery’s revenue comes from a few big clients, giving these buyers even stronger negotiating power. They can push for lower rates because switching to a rival is easy and many already have their own in-house logistics arms. This concentration means losing even one major client could significantly impact Delhivery’s revenue.
2. Moderate bargaining power of suppliers: Delhivery’s suppliers mainly consist of lessors providing trucks, warehouses, and equipment. These suppliers can influence costs and contract terms, and any disruption in these arrangements could directly affect Delhivery’s operations and profitability. Although Delhivery’s scale provides some negotiating power, managing these leasing terms effectively is essential for maintaining efficiency and controlling costs.
3. High competition in the industry: Competition in India’s logistics market is intense, with large organised players like Blue Dart, XpressBees, and DTDC competing alongside thousands of unorganised regional operators. Price wars are frequent, with rivals willing to run on thin margins to gain market share. The Delhivery–Ecom Express merger has removed one competitor, but overall rivalry remains high. Service quality, delivery speed, and range of offerings are key differentiators, while low switching costs mean customers can quickly shift to a provider offering better terms.
4. Moderate threat of substitutes: The biggest substitutes to Delhivery’s services are the in-house delivery networks of large e-commerce giants like Amazon, Flipkart, and Meesho, which now handle most of their parcel volumes internally. Emerging technologies such as drones and autonomous vehicles, though still in trial phases, also pose a potential future threat to traditional delivery models. To keep pace, Delhivery has launched Delhivery Robotics, focusing on R&D for UAV design, manufacturing, and Drone-as-a-Service (DaaS) for shipments and remote sensing. To protect its client base and remain competitive, the company must continue offering competitive pricing, favourable terms, and fast and reliable services.
5. Moderate threat of new entrants: While entering the logistics industry does not pose significant barriers, and smaller players can enter the market easily, building a nationwide logistics network at Delhivery’s scale requires heavy investment in fleets, warehouses, technology, and a strong brand reputation, keeping the overall threat of new entrants moderate

What led us to reject Delhivery Ltd. for Finology 30?

1. Consistent losses over the years: Delhivery has reported losses consistently over the past five years. Even when it posted its first-ever profit of Rs 162 crores in FY25, this was not driven by the company’s core business operations. The profit mainly resulted from a Rs 228 crores reduction in depreciation expenses following a switch from the Written Down Value method to the Straight Line Method, along with Rs 440 crores of other income. This shows how accounting choices can significantly influence reported numbers; without these benefits, the company would have suffered losses once again.
    
2. Increasing pressure on margins and volume: Delhivery’s revenue from services grew 9.7% in FY25, down from 12.7% the year before. Its largest and most profitable vertical, Express Parcel, is showing clear signs of pressure. The segment’s EBITDA margin fell from 18.4% in FY24 to 16.2% in FY25, mainly due to intense pricing pressure from competitors. Revenue growth was weak at just 5%, driven largely by better realisation rather than volume, which stayed almost flat. The segment’s contribution to revenue also dropped from 70% in FY21 to 60% in FY25, reflecting its shrinking role in the company’s overall business.
   
   A key reason for the volume hit is Meesho, one of Delhivery’s key customers. The e-commerce platform launched its own logistics arm, Valmo, in 2024. Within a year, Valmo is already handling 53% of Meesho’s shipments. Since Meesho accounts for nearly half of India’s 3PL volume, this shift could significantly affect Delhivery’s business over time.

The Bottom Line

For Finology 30, our ideology has been to focus on business models with a strong moat and strong management pedigree. For now, Delhivery Ltd. failed to pass our investment checklist. So, for now, we decided not to go ahead with Delhivery Ltd.

However, there are very few stocks that made it to Finology 30. Check them out here.