**Delhivery Anticipates Consolidation in Delivery Sector Post-Earnings Call**
Delhivery has indicated that the delivery ecosystem is poised for further consolidation, marking the end of unsustainable pricing strategies in the market. During its Q4 FY25 earnings call, the company announced plans to integrate qualified personnel from the recently acquired Ecom Express into its operations. CEO and founder Sahil Barua emphasized that the aggressive discounting practices that drove prices below cost are no longer viable.
Barua stated, “Our anticipation was that this pricing was suicidal and untenable because it appeared to be at a negative gross margin. I think suicidal pricing in this industry has more or less ended at this point, as most players have seen the consequences of such discounting.” Delhivery achieved profitability for the first time in FY25, reporting a net profit of ₹72.6 crore alongside a 6% year-on-year revenue increase.
Discussing the acquisition of Ecom Express, Barua noted that the deal signals a critical shift for loss-making networks in the express delivery sector, suggesting that consolidation or exit is inevitable for those without a clear path to profitability. He highlighted the industry’s struggle with excess unproductive capacity, not only within Ecom Express but across various competitors.
In April, Delhivery acquired Ecom Express in an all-cash transaction valued at ₹1,407 crore. This acquisition is pending approval from the Competition Commission of India, after which Ecom Express will operate as a subsidiary of Delhivery. Barua explained that the integration of Ecom Express is expected to be less risky compared to the 2021 acquisition of SpotOn Logistics, due to nearly complete customer overlap and existing compatible processes.
Ecom Express manages express parcel volumes that are approximately 40% of Delhivery’s, although its freight tonnage is lower at about 20%, which simplifies the integration process. Barua mentioned that only a few facilities will be retained, primarily where capacity constraints exist or repurposing is feasible, and that no new technology will be required for the integration. He also noted that Ecom Express’s experienced workforce is well-versed in e-commerce logistics.
The acquisition price includes around ₹300 crore allocated for integration costs, with lease liabilities and lock-in periods being significant factors in managing these expenses.
In conclusion, Delhivery’s strategic moves signal a transformative period in the logistics industry, as the company positions itself for sustainable growth and operational efficiency in a competitive landscape.
**FAQ**
**What does Delhivery’s acquisition of Ecom Express mean for the logistics industry?**
Delhivery’s acquisition of Ecom Express indicates a trend towards consolidation in the logistics sector, particularly for companies struggling with profitability. This move may lead to a more sustainable pricing model and improved operational efficiencies across the industry.