Q1 2027 Delhivery Ltd Earnings Call Transcript
Key Points
- Record volumes in Q1 FY27: Express business delivered 322 million packages, up 55% YoY, and PTL volumes grew 18% YoY to 542,000 tonnes.
- Strong revenue growth: Overall revenues increased 28% YoY to nearly INR3,000 crore, with PTL revenue growing over 20% YoY.
- PTL yield improvement: Yield rose to nearly INR12 per tonne, driven by organic improvements (not just fuel pass-through), and is expected to be sustainable.
- Delhivery Direct outperforming expectations: GMV is ahead of plan at ~INR150 crore, with higher contribution margins and lower-than-expected investments.
- Market share gains: The company is gaining share from both other 3PLs and in-house logistics, supported by service quality and a flight to quality in uncertain environments.
- Technology and automation investments: Launch of Delhivery Maps and continued automation investments are expected to sustain market share growth and mitigate labor shortages.
- Fuel cost pass-through nearly complete: Over 97-98% of contracts have been revised for fuel price hikes, with full benefit expected in Q2.
- No structural margin concerns: Management expects margins to recover in H2, with Express service EBITDA margins returning to the 16-18% range and PTL exiting FY27 at 15-15.5%.
- Strong new initiatives pipeline: Delhivery Local is growing faster than expected, with Ahmedabad set to break even in Q3, and contribution margins ahead of plan.
- Stable pricing environment: No significant pricing pressure in the e-commerce express market, with yields expected to hold or improve.
- Challenging external environment: Chronic labor shortages, election disruptions, weather-related issues, and geopolitical uncertainty impacted operations and increased costs.
- Margin pressure from fuel and wage inflation: Q1 service EBITDA margin was 13.1%, impacted by fuel price hikes and statutory minimum wage increases, with a combined impact of ~INR30-35 crore.
- Supply Chain Services profitability affected: Two new large contracts started in Q1, leading to a sequential decline in margins due to inventory buildup and commissioning costs, expected to stabilize by Q2/Q3.
- Delayed fuel cost pass-through: Fuel price increases were only partially passed on in Q1, with the full impact deferred to Q2, affecting quarterly margins.
- Corporate overheads remain elevated: Corporate costs as a percentage of sales stayed at ~9.3-9.4%, due to investments in business development teams and technology costs, delaying operating leverage.
- New initiatives still loss-making: Delhivery Local and other new services continue to incur losses, with a negative contribution margin of ~50% and a cost-to-revenue ratio of 1.5x.
- Integration costs persist: Ecom Express integration costs (INR17 crore cash, INR30 crore on statutory P&L) continue to weigh on reported PAT, with depreciation on unused assets adding to the drag.
- Labor cost pass-through is slower: Unlike fuel, minimum wage increases lack contractual pass-through clauses, leading to a lag in recovering these costs from customers.
- Weather-related disruptions continued into Q2: Some weather challenges from Q1 spilled over into Q2, potentially affecting early Q2 performance.
- Uncertainty in fuel prices: Management noted that future fuel price movements remain unpredictable, which could impact margins if prices rise again.
Thank you, Dhruv. Thank you, AMBIT team, for hosting us, and thank you all who've joined today on a Saturday evening. We'll make a slight change from our usual sort of practice so far. I'll just start with a quick summary of the quarter. Our investor presentation and analyst presentation is already uploaded. So instead of going through that, after a short summary, we'll just jump directly into questions and answers.
So very quickly, I think looking at Q1, it's been a pretty solid start to the year. Overall revenues for quarter one came in at nearly INR3,000 crore, up about 28% year on year compared to Q1 FY26, and EBITDA came in at INR156 crore, which is about a 5% growth year on year.
Q1 was an interesting quarter because we faced several new challenges as a business. I think there have been chronic labor shortages across the industry throughout the period of April, May and June. We also had significant disruptions due to both elections as well as weather in this quarter, some of which
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