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Express consolidation and e-commerce tailwinds to drive growth

* Delhivery’s Express segment recorded robust volume growth of 55% YoY in 1QFY27 and we expect this momentum to continue in 2QFY27, aided by healthy growth in e-commerce shipments and market share gains after consolidation.

* In terms of ecommerce volume, in 1QFY27, Meesho’s delivered shipments rose 37% YoY to 481m. As per Meesho, third-party logistics firms account for 50% of its shipments. Shadowfax’s largest two customers accounted for 60%/64% of revenue in FY25/FY26. As per RHP of Shadowfax, in FY25, its largest two customers were Meesho and Flipkart. Excluding the Walmart group, Meesho’s share stood at ~48- 49%. Accordingly in FY26, excl. Walmart, Shadowfox’s largest customer accounted for 53% of total revenue. Assuming the customers mix to remain same of as in FY25 despite the increase the large customer’s contribution in FY26, Shadowfax delivered ~198m shipments in 1QFY27, assuming ~48% of its shipments coming from Meesho. Meesho could account for ~40% of Shadowfax’s total volumes (express and hyperlocal). In comparison, Delhivery appears more diversified, with the largest customer accounting for 17.7%/19.2% of revenue in FY25/FY26.

* Shadowfax’s realisation at INR50/shipment is meaningfully lower than Delhivery’s INR58-60/shipment. Lower realisation is partly reflective of Shadowfax’s higher exposure to Meesho, whose logistics costs stood at ~INR42/shipment in 1QFY27. Hence, the higher concentration of Meesho shipments could continue to weigh on Shadowfax’s blended realisation relative to Delhivery.

* The express segment is increasingly consolidating under two distinct models, with low-cost, high-volume shipments driving incremental growth. While Blue Dart operates in the express segment, its focus remains largely on high-value customers with greater willingness to pay. Blue Dart’s shipment realization stands at INR160- 170 per shipment, unlike Meesho, whose business is driven by a high-volume, lowcost shipment model. Meanwhile, Xpressbees continues to report losses and remains relatively more concentrated in the B2B segment, which contributes ~50% of its volumes. Against this backdrop, Delhivery emerges as one of the strongest players to capture incremental industry volumes, given its scale, diversified customer base and ability to efficiently handle high-volume, cost-sensitive shipments.

* Looking ahead, we estimate Delhivery’s Express segment to clock a 14% revenue CAGR over FY26-28, aided by healthy e-commerce volumes and industry consolidation. Meanwhile, margin expansion is likely to be driven by operating leverage and a favorable product mix. PTL segment offers significant headroom, with organized players handling less than 25% of industry volumes; we project a 15% revenue CAGR over FY26-28, led by SME and retail expansion, yield improvement, and increasing adoption of value-added services. Overall, we expect the company to report sales/EBITDA/APAT CAGR of 15%/35%/82% over FY26-28. We reiterate our BUY rating with a DCF-based TP of INR510.

Valuation and view

* Delhivery is well-positioned for future growth, driven by strong momentum in its core transportation businesses amid industry consolidation and its focus on profitability. With steady volume growth and healthy service EBITDA margins in both the Express Parcel and PTL segments, the company should sustain strong margin going ahead.

* We expect the company to report sales/EBITDA/APAT CAGR of 15%/35%/82% over FY26-28. We reiterate our BUY rating with a DCF-based TP of INR510.

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