Delhivery’s growth hits a speed bump, but fixes are in motion

The December quarter (Q3FY25) marks the fourth straight quarter of low single-digit volume growth in its B2C express business. As if that wasn’t enough, competition in the third-party logistics (3PL) segment is intensifying, keeping growth challenges firmly in place. A key customer, Meesho, has stabilized its insourcing exercise, but that hasn’t translated into a demand rebound for Delhivery yet.

Plus, this time around, the festival season—a period that should have boosted numbers—ended up hurting profitability instead. Fleet costs surged amid supply constraints, leading to higher freight charges, while unabsorbed fixed overheads from the new Bengaluru facility further pressured margins. Thus, Delhivery’s reported Ebitda declined 6% year-on-year to ₹102 crore, with margin contracting to 4.3% from 5% last year, missing Street’s expectations by a wide margin.

But not all is bleak. Delhivery is already working on mitigating cost pressures. One key move—shifting fleet contracts from variable to fixed pricing—could provide much-needed stability. The impact of high logistics costs seen during the festival period may not be a permanent drag if these measures take hold.

Also Read: Delhivery expects rapid commerce business to generate ₹80-100 crore by fiscal end

Meanwhile, Delhivery is pushing for growth in newer areas. It has expanded its infrastructure footprint to 20.6 million square feet, including 0.5 million square feet of temporary space to handle peak demand. The company also launched a two-hour rapid commerce service in Bengaluru, Hyderabad, and Chennai, with plans to scale up to 50 dark stores across the top eight cities. These dark stores are currently processing around 500 orders per day, with breakeven expected at 700-800 orders. If all goes well, this venture could add ₹800-1,000 crore to Delhivery’s topline, with a margin profile similar to its core B2C express business.

The PTL (partial truckload) segment continues to be a bright spot, with Q3 volumes and yields growing at 16.4% and 4.7%, respectively. The company expects PTL to grow by 25-30% in FY26, providing some cushion to overall performance.

Delhivery’s capex in the long term is expected to stay in the 3.5-4% range of revenue, indicating a disciplined expansion strategy. Despite recent struggles, Delhivery aims to bring back B2C service Ebitda margins to a healthy 17-20% versus 15.6% currently.

Analysts at Emkay Global Financial Services point out, “Improving PTL volumes without sacrificing realizations and benefits of operating an integrated network should aid the margin trajectory in the long term.” They added that a strong net cash position of around ₹5,400 crores and a declining capex intensity (5% in FY26) are expected to help Delhivery navigate industry headwinds better than its peers. However, given the cost pressures in a subdued demand environment, Emkay has cut FY26/27E Ebitda estimates by 9% and 4%, respectively.

For now, competition and cost pressures remain weak spots. Against this backdrop, Delhivery’s shares have lost close to 40% in value in the past one year. But if Delhivery’s cost-control measures play out as expected and new ventures gain traction, this phase of sluggish growth may prove temporary. The next few quarters will be key to seeing whether the logistics player can get back on a stronger growth track.

“Recovery in B2C volumes is key to re-rating,” said a report by Prabhudas Lilladher on 10 February. The broking firm expects Delhivery to report 13% sales CAGR over the next two years with Ebitda margin of 6.3% and 8% in FY26 and FY27, respectively.

Also Read: Delhivery has turned profitable and is set to ride the e-commerce boom