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2C growth remains imperative

Delhivery’s B2C segment grew modestly in FY25 (up 2%/5% YoY, on volume/revenue, respectively) on the back of insourcing by Meesho and aggressive pricing cuts by competitors. With acquisition of Ecom Express, that too at undemanding valuations (on annualized 9MFY25 EV/sales of 0.4x), pricing is likely to stabilize in the B2C industry as participants focus on profitable growth going ahead. However, should Meesho increase the level of insourcing (from 55-60% levels currently), Delhivery may see yet another year of tepid growth in the B2C segment. We expect B2C/overall revenue to grow 10%/12% YoY, respectively, in FY26 vs 15% CAGR over FY26-28E in both, B2C and overall revenue. We maintain BUY on Delhivery with unchanged Mar-26E TP of Rs380, based on DCF methodology (WACC: 13%; terminal growth: 5%).

Ecom acquisition sets the tone for pricing discipline

Delhivery announced the acquisition of Ecom Express—the second largest 3PL B2C operator, for a cash consideration of Rs14bn, valuing the company at 0.4x EV/sales (annualized 9MFY25; net cash as on Dec-25). The 3PL B2C express logistics industry (as a whole) has never been profitable due to irrational pricing by participants, mainly owing to the well capitalized nature of their balance sheets (Exhibits 5-7). The acquisition of an established player as Ecom, at undemanding valuations, is likely to limit any aggressive pricing moves in a bid to upscale by remaining participants, in our view. This should firm up the 3PL B2C industry’s profit pool, where Delhivery is the only profitable player at present.

Meesho holds the key

With ~40% share of volume in the B2C industry, Meesho remains one of the key customers for the entire 3PL B2C industry. However, since it started insourcing via Valmo (its captive LSP), 3PL LSPs have seen significant pressure on volume which has resulted in losses ballooning in FY24 (and likely continuing in FY25). Our channel checks suggest Meesho now insources ~55-60% of its logistics requirements via Valmo and, should the company decide to increase this insourcing to higher levels, 3PL LSPs could see yet another year of tepid growth. However, mounting losses at captive units like Ekart and ATS (Exhibits 2-3) may prompt other platform businesses to selectively increase outsourcing from the current 10-15% levels.

Last man standing

Delhivery has successfully diversified its revenue base (contribution from B2C 60% in FY25 vs 83% in FY19), thus reducing concentration risk that other 3PL B2C operators are currently faced with. Further, ramp up in the PTL business (revenue CAGR of 28% over FY23-25) and a strong net cash balance sheet allow Delhivery to withstand any irrational pricing moves, the tepid environment, and continued insourcing from platform customers compared with competition, in our view. We maintain BUY.

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