On April 5, 2025, Delhivery Limited announced plans to acquire a controlling stake in Ecom Express Limited, detailed in an FAQ document released on April 11, 2025. Subject to Competition Commission of India approval, this deal could alter India’s e-commerce logistics landscape. It aims to bolster Delhivery’s position, but raises questions about competition, profitability, and execution.
Scaling Up Operations : Delhivery sees scale as key in logistics, where size drives efficiency. Integrating Ecom Express’s operations, which handled 514 million express parcels in FY24 and 405 million in 9MFY25, would expand Delhivery’s network, already 2.5 times larger in express parcels. The company plans to absorb Ecom’s volumes using its technology and automation, targeting high gross margins. By consolidating Ecom’s 9 million square feet of facilities, Delhivery expects to exit redundant assets by FY26, with lease costs of Rs. 300 crore. A near-100% customer overlap suggests smoother integration than its prior SpotOn acquisition.
Profitability Challenges : Delhivery projects profitability gains. Ecom Express reported a Rs. 398 crore PAT loss for 9MFY25, largely due to a non-cash loss from Compulsory Convertible Preference Shares, which will vanish post-consolidation. The operational loss was Rs. 184 crore, which Delhivery aims to reverse with its cost structure. Retained revenue, estimated at 30% of Ecom’s FY25 base, is expected to yield higher margins than Ecom’s standalone results.
Success depends on integration. Ecom’s negative adjusted EBITDA of Rs. 104 crore in 9MFY25 highlights its struggles. Absorbing Ecom’s workforce and aligning operations could face hurdles. The logistics sector’s thin margins and competition could magnify any missteps
Competition and Regulatory Hurdles : The deal may pressure smaller competitors, as Delhivery and Ecom share nearly all customers. The FAQs focus on a six-month timeline, potentially extendable, without addressing Competition Commission scrutiny. Delays could disrupt plans. Some large clients may shift business short-term, a risk Delhivery factors in, but competitors like Blue Dart could capitalize on integration issues, threatening profits.
Risks vs. Potential : Delhivery’s technology and automation support its strategy, and due diligence found no major liabilities. However, Ecom’s losses and integration complexities could strain finances if network consolidation or customer retention falters. The valuation accounts for Ecom’s weaker Q4FY25 and integration costs, but logistics is unforgiving, with regulatory and economic uncertainties looming.
What’s Next? : As Delhivery awaits approval, the Ecom Express acquisition marks a pivotal moment for India’s logistics sector. It could streamline operations and boost scale, but integration and competition pose significant challenges. Delhivery’s execution will decide if this reshapes the industry or proves costly.
Disclaimer: This article is based on the provided document and does not constitute investment advice. The acquisition’s outcome depends on regulatory approval and market conditions.