DELHIVERY - Delhivery Limited Share Price

In the earnings call held on May 16, 2026, management provided an optimistic outlook for Delhivery Limited following a strong performance in FY26. The company achieved revenues of over Rs.10,400 crores, with more than a billion packages delivered, a significant milestone. The profit after tax (PAT) was noted at Rs.347 crores, reflecting a 3.2% margin, while the EBITDA stood at Rs.764 crores, translating to an EBITDA margin of 7.3%. Management highlighted robust growth in both express and part truckload (PTL) segments, with express revenue showing a 46% year-on-year growth and PTL reaching Rs.2,254 crores in revenue.

Key forward-looking statements included maintaining a solid cash position with over Rs.4,500 crores on the balance sheet and a focus on expansion in supply chain solutions, which turned profitable, achieving Rs.79 crores in service EBITDA. Management indicated plans for sustained investment in new growth pillars such as local, cross-border, and financial services, alongside ongoing technology investments, emphasizing AI and robotics to enhance operational efficiency.

Sahil Barua, the MD & CEO, noted that the express and PTL businesses were expected to continue thriving, maintaining a normative margin target of 16-18%. Additionally, a goal was set to further optimize capital efficiency, with anticipated ROIC increasing from 16% toward a target of over 20% in the future. Free cash flow positivity was achieved one year ahead of schedule, with management confident about continuing these trends into FY27.

Overall, Delhivery is positioning itself for further growth by capitalizing on market leadership in core transport, enhancing service capabilities, and strategically selecting customers to drive profitability.

Here are some major questions from the Q&A section of the earnings call transcript accompanied by detailed answers:

1. Question: "What kind of impact could we expect from an increase in fuel prices?"
   Answer: First, we have a natural pass-through process for fuel prices, especially in the PTL business. With rising diesel prices, costs will inflate for customers under our contracts. Express business is less sensitive to these increases, but we still have diesel price hike clauses applicable. Overall margins in Q4 improved despite rising fuel costs due to cost efficiencies elsewhere. It's early to assess the impact on consumption, but historically, a volatile price environment benefits market leaders like Delhivery.

2. Question: "What about the impact of Amazon opening its 3PL?"
   Answer: I believe this is not a new strategy, and its effectiveness may be limited. Amazon's in-house operations are vast compared to any third-party customers. When it comes to prioritizing deliveries, first-party orders will take precedence. Moreover, first-party logistics tends to be more expensive than third-party options, lessening its appeal to many customers. Thus, I don't anticipate a significant impact on Delhivery from this development.

3. Question: "Can you clarify the market share situation, especially in 3P logistics?"
   Answer: The overall market is now more stable following our Ecom acquisition, and we are seeing a gradual shift towards 3P logistics. I believe our share within the long tail of the market has grown and stabilized year-over-year. Our focus remains on maintaining service levels, allowing us to reward our clients through reliable operations, thus fostering growth in both our Express and PTL segments.

4. Question: "What has driven the significant reduction in net working capital?"
   Answer: The improvements in net working capital stem from better billing accuracy and customer selection. We have focused on streamlining our processes, ensuring faster collections, and minimizing exposure with specific clients that do not align with our billing philosophy. Our initiatives have resulted in a remarkable drop from 38 days to 11 days in net working capital, indicating considerable operational improvements and discipline in client management.

5. Question: "How are you managing the operational expenses given the AI and robotics investments?"
   Answer: The rise in AI capabilities has improved our productivity without a substantial increase in operational expenses. By automating processes, we've reduced the need for larger technology teams. Our robotics investment, particularly in AGVs, is aimed at enhancing service reliability without materially impacting our expected CapEx trajectory, which remains aimed below 5% of revenue. Thus, overall operational expenditures remain fairly stable.

6. Question: "On the supply chain services, will this be margin accretive moving forward?"
   Answer: Yes, every SCS project must meet internal hurdle rates for profitability. We've improved our ability to price accurately over time, ensuring that these new projects add to our margins. The normalized performance and experience in various sectors allow us to achieve margin accretion as we grow the SCS pipeline.

7. Question: "Are you concerned about a potential increase in CapEx intensity within the industry?"
   Answer: I don't foresee an irrational increase in CapEx like we've seen in the past. Delhivery has learned to improve network utilization, and as such, our capital intensity as a percentage of revenue has decreased. Most players know that unnecessary spending can lead to financial strain, which we are unlikely to see again in the current more rational market environment.

These responses outline the details and context provided by the management regarding fuel price impacts, competitive strategies, working capital improvements, and the company's outlook overall.