₹1,407 Cr Acquisition: Is This Acquisition a Good Bet for Delhivery?

Delhivery announced that it acquired Ecom Express at an all-cash deal for Rs 1,407 crore, making it one of the largest acquisitions in the Indian logistics industry. In this article, we will try to understand this acquisition and whether it can add benefits to Delhivery.

Financial Highlights

Ecom Express reported a revenue of Rs 2,609 crore in FY24 and a 9MFY25 revenue of Rs 1,912 crore, followed by EBITDA of Rs 104 crore and (-11) crore respectively during the same period. It posted a loss of 249 crore and 398 crore respectively.

As of March 24, its fixed assets, including CWIP, are reported to be worth Rs 501 crore, debt (excluding CCPS) of Rs 224 crore, and cash & equivalents of Rs 560 crore. The company faced major financial hurdles when one of its largest customer (Meesho) launched its in-house logistics unit ‘Valmo’ in 2024.

Acquisition Rationale

Delhivery said that the acquisition will allow them to offer better services. In logistics, if the network is bigger, it can effectively serve different customers, such as big companies, small businesses, startups, etc., and keep the cost low. Also, it mentioned that more parcels are flowing through Delhivery’s systems, which will help them use their resources better and cut extra costs by integrating them with advanced technologies.

Challenges

When questioned about Delhivery’s acquisition of SpotOn, Delhivery mentioned that the integration risk is relatively lower as compared to SpotOn, as Delhivery had to onboard many new customers who were unfamiliar with Delhivery’s systems and processes, and they also had to sign new contracts with them, making integration more complex.

But in the case of Ecom Express, almost 100 percent overlap is there in the count of customers, 95 percent in revenue, and major things like packaging manifestation, tracking, billing, etc are the same between Ecom Express and Delhivery.

It also mentioned that Ecom Express handles about 40 percent of Delhivery’s Express Parcel volumes, but less than 20 percent of Delhivery’s total tonnage, since theft also handle Heavy Goods and PTL, which are unique to their network. At the time of acquisition, SpotOn’s PTL volumes were twice the size of Delhivery’s own PTL business.

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Infrastructure and CapEx

Ecom has 9 million sq. ft. of space and 3,750 facilities such as hubs, delivery centres, warehouses, etc, of which Delhivery plans to utilize only some resources and exit the rest which are not needed and is a plan for business efficiency.

Coming to Delhivery’s spending, Delhivery mentioned that it has already been spending less on infrastructure as a percentage of revenue, and by purchasing Ecom’s underused equipment and space, it can grow more in the future without spending much new money.

Ecom’s Rs 398 crore loss

Coming to Ecom’s significant loss in 9MFY25, Delhivery quoted that most of the Rs 398 Cr loss is due to accounting treatment of investor shares (CCPS) and not real cash loss. Once the deal is finalized, this won’t appear in Delhivery’s books anymore.The actual operational loss is around Rs 184 Cr, which Delhivery plans to recover through improved efficiency and different cost-cutting measures.

Conclusion

Delhivery is positive about this acquisition, which may add great value to the firm in its supply chain by leveraging assets and a strong customer base. However, the deal is not finalized yet and still needs approval from the Competition Commission of India. The deadline to complete the deal is 6 months from April 5, 2025, but it can be extended as stated by the management.

Written by Satyajeet Mukherjee

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