sahil barua: Delhivery CEO Sahil Barua expects volatility in firm’s revenue, margin profile in near term

New-age logistics player Delhivery, which posted a surprise maiden net profit of Rs 12 crore for the December quarter, expects volatility in its revenue and margin profile in the near term, the company’s cofounder and chief executive Sahil Barua said on Saturday addressing a post-earnings analyst call.
Barua told analysts that the profit after tax number that the company reported should not be used to model Delhivery’s performance in the near term and did not give guidance for profitability going ahead.

“I wouldn’t use this quarter to forecast a linear and upward swing in margins…there will be quarters where we will expand capacity and where demand will be affected by factors that are beyond our control. At that point there will be swings that will happen in profitability and revenue as well,” Barua said.

“If you look at Delhivery over a long arc of time, you’ll find that we’ll achieve our overall revenue and profitability targets…but please don’t use this quarter as an immediate way to model the next six quarters or so. The market will evolve,” he said. “I think you should look at the PAT (profit after tax) number…in the same manner as the management team, which is with satisfaction but I don’t want to provide any guidance going forward into fiscal 2025.”

The Gurugram-based firm reported a 20% year-on-year growth in its operating revenue to Rs 2,194 crore on Friday in what was a seasonally strong quarter for the sector on account of festive sales and consumer push by large ecommerce players.

Delhivery services marketplaces such as Amazon and Flipkart, in addition to a number of smaller direct-to-consumer (D2C) brands. The company’s express parcel delivery business is the biggest contributor to its topline.

In the third quarter of the ongoing fiscal, the company recorded a 30% year-on-year increase in D2C volumes, while a 45-50% surge in volumes from small and medium enterprises. For consumer parcel volumes, Delhivery recorded an increase of 25-30%, Barua said.

Ecommerce growth
Delhivery cofounder pointed out that the logistics firm was accounting for a 15-20% growth in ecommerce sales for its capacity planning, and top 20 cities of the country will continue to see growth in this segment, contrary to some views that metros and tier-I cities are witnessing saturation.

The company’s express parcel business saw sequential growth of 20% in the December quarter, and Barua said that this was driven by an “extreme impact of (ecommerce platforms) sales in the early part of October”.

ET reported on January 19 that ecommerce sites witnessed a significant fall in volumes in December after the end of festive season, triggering growth concerns in online marketplaces and brands. Data sourced from market research firm Datum Intelligence showed the ecommerce sector recorded a sub-20% growth for the first time in calendar year 2023 against average growth of 25-30% in the last few years.

“We do continue to see growth in metros and key cities…ecommerce is a funny animal in India in some ways. The drivers of growth in the metros are not the same as the drivers of growth outside,” Barua said.

“What we’re seeing in metros is that the average number of packages per person per year is something in the range of four…and the equivalent number in China with significantly higher disposable income stands at 70-72. That will continue to be the trend in metros…order frequency will continue to go up,” he added.

On the tier-II and tier-III side, he said growth will come from a combination of increased order frequency and people ordering for the first time.

“We expect ecommerce volumes to continue to grow at 15-20%…the 20% uptick you saw in Q3 – a part of it is driven by an extreme impact of (ecommerce platforms’) sales in the early part of October. So 20% growth quarter-on-quarter is not regular for the industry. Long term sustainable growth for the industry will remain at 15-20%,” he said.

New-age logistics player Delhivery, which posted a surprise maiden net profit of Rs 12 crore for the December quarter, expects volatility in its revenue and margin profile in the near term, the company’s cofounder and chief executive Sahil Barua said on Saturday addressing a post-earnings analyst call.
Barua told analysts that the profit after tax number that the company reported should not be used to model Delhivery’s performance in the near term and did not give guidance for profitability going ahead.

“I wouldn’t use this quarter to forecast a linear and upward swing in margins…there will be quarters where we will expand capacity and where demand will be affected by factors that are beyond our control. At that point there will be swings that will happen in profitability and revenue as well,” Barua said.

“If you look at Delhivery over a long arc of time, you’ll find that we’ll achieve our overall revenue and profitability targets…but please don’t use this quarter as an immediate way to model the next six quarters or so. The market will evolve,” he said. “I think you should look at the PAT (profit after tax) number…in the same manner as the management team, which is with satisfaction but I don’t want to provide any guidance going forward into fiscal 2025.”

The Gurugram-based firm reported a 20% year-on-year growth in its operating revenue to Rs 2,194 crore on Friday in what was a seasonally strong quarter for the sector on account of festive sales and consumer push by large ecommerce players.

Delhivery services marketplaces such as Amazon and Flipkart, in addition to a number of smaller direct-to-consumer (D2C) brands. The company’s express parcel delivery business is the biggest contributor to its topline.

In the third quarter of the ongoing fiscal, the company recorded a 30% year-on-year increase in D2C volumes, while a 45-50% surge in volumes from small and medium enterprises. For consumer parcel volumes, Delhivery recorded an increase of 25-30%, Barua said.

Ecommerce growth
Delhivery cofounder pointed out that the logistics firm was accounting for a 15-20% growth in ecommerce sales for its capacity planning, and top 20 cities of the country will continue to see growth in this segment, contrary to some views that metros and tier-I cities are witnessing saturation.

The company’s express parcel business saw sequential growth of 20% in the December quarter, and Barua said that this was driven by an “extreme impact of (ecommerce platforms) sales in the early part of October”.

ET reported on January 19 that ecommerce sites witnessed a significant fall in volumes in December after the end of festive season, triggering growth concerns in online marketplaces and brands. Data sourced from market research firm Datum Intelligence showed the ecommerce sector recorded a sub-20% growth for the first time in calendar year 2023 against average growth of 25-30% in the last few years.

“We do continue to see growth in metros and key cities…ecommerce is a funny animal in India in some ways. The drivers of growth in the metros are not the same as the drivers of growth outside,” Barua said.

“What we’re seeing in metros is that the average number of packages per person per year is something in the range of four…and the equivalent number in China with significantly higher disposable income stands at 70-72. That will continue to be the trend in metros…order frequency will continue to go up,” he added.

On the tier-II and tier-III side, he said growth will come from a combination of increased order frequency and people ordering for the first time.

“We expect ecommerce volumes to continue to grow at 15-20%…the 20% uptick you saw in Q3 – a part of it is driven by an extreme impact of (ecommerce platforms’) sales in the early part of October. So 20% growth quarter-on-quarter is not regular for the industry. Long term sustainable growth for the industry will remain at 15-20%,” he said.