Release Date: February 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Delhivery Ltd (BOM:543529, Financial) achieved its highest ever quarterly revenue of INR 2,194 crores, marking a 20% year-on-year growth.
- The company reported its first positive PAT margin of INR 12 crores, indicating a significant milestone in profitability.
- Delhivery Ltd (BOM:543529) delivered 200 million consignments in its Express Parcel business, an 18% year-on-year growth.
- The company expanded its pin-code reach to 18,675, adding about 1,000 pin-codes compared to the previous year.
- The adjusted EBITDA margin improved to 4.2%, with an adjusted EBITDA of INR 92 crores, reflecting an 800 basis points year-on-year expansion.
Negative Points
- Despite the positive results, the company acknowledged that the market will remain 'interesting' over the next couple of quarters, indicating potential volatility.
- The Supply Chain Services business remained broadly flat year-on-year, with revenues slightly decreasing from INR 178 crores to INR 173 crores.
- The cross-border business also remained largely flat on a quarter-on-quarter basis, with yields continuing to decline.
- The company faced a relatively slow quarter for the part truckload industry, with only low single-digit growth over the previous quarter.
- There was a significant reduction in PTL volumes compared to Q3 FY '22, with 90,000 tons less freight handled, impacting overall revenue potential.
Q & A Highlights
Highlights of Delhivery Ltd (BOM:543529) Q3 FY '24 Earnings Call
Q: Congratulations on a great set of numbers. My first question, just looking at the e-commerce yields right, pretty strong growth, 8% Q-o-Q and you've called out the mix of heavies earlier as contributing to that in the festive season. I'm just wondering in 4Q, does yield drop back to 2Q levels, broadly speaking? Or are you actually seeing a sustained increase in share of heavies in your e-commerce mix beyond festive? And related to that question, if you could provide total contribution of those 3 categories you called out, D2C, SME and C2C in your e-commerce mix, that will be great. That's my first question.
A: Sure. Thanks, Vijit. You're right. The increase in yield by 8% in quarter 3 is a sort of standard annual affair as overall heavy yields go up, that's one. The second also is that in this quarter, as there's more buying from across the country, typically average distances that we move also tend to go up and yield is also influenced by the distance that is traveled. So the origin-destination mix tends to change a little bit during the quarter 3 period. On quarter 4, I think it's too early to say, Vijit. I think yields will obviously not remain at quarter 3 levels because the overall mix will shift back a little more towards lighter weights and distances typically do tend to go down a little bit in quarter 4. However, it's a very early sort of point of the quarter for me to comment too conclusively as to what will happen. And customer mix also tends to change during quarter 4 a little bit because there's a different set of players which typically will have their sale periods and volume growth at this time. But suffice to say, I don't think the yield of quarter 3 where the heavy mix is larger is representative of overall annual yield. Now in terms of the other question you were asking sort of the subtext is are we seeing a larger shift towards heavy overhaul across our network? I think we've said this before, our ability to deliver odd form factors and heavy products is the key differentiator of our network. Typical light parcel networks are not able to handle heavy products because they require a fundamentally different infrastructure and a fundamentally different delivery mechanism. Our ability to blend parcel and freight is what gives us this unique ability to gain share in heavy. And we have seen heavy volumes go up secularly, not just in the last quarter, but if you look at it since the inception of the company and when we began to integrate freight and parcel, I think we've seen heavy go up. So continuing to grow heavy volumes is a key strategic focus for the company, and it's something we'll continue to do. So yes, we do see salience of heavy going up. In terms of contribution, various segments, Vijit, we don't declare it at this point in time. But suffice to say direct-to-consumer brands, SME, consumer-to-consumer, and there are a couple of other smaller segments. For example, we do service a number of omnichannel retailers as well. As an overall percentage of our business, this has been growing for us year-on-year. Over the last financial year, in fact, this was a very significant focus for Ajit and his team. And we've seen growth in D2C to give you a sense, if I'm not mistaken, we're nearly 30% up year-on-year on D2C volumes. We are nearly, I think, about 45% to 50% up on overall SME volumes year-on-year. And on the consumer side, I think we are somewhere between 25% and 30% up year-on-year. This is both our franchise service where you can apply to be Delhivery franchisee across the country and source all deliverable loads for us and our Delhivery direct application where consumers can download the app and directly ship through us. So we're seeing growth in both. Suffice to say, these are the fastest-growing segments that we have as part of our overall e-commerce portfolio.
Q: Congrats on a great set of numbers. I have 3 questions. First question, Sahil just wanted to understand if it is possible for you guys to directionally help us in terms of understanding on the volume uptake, how much is seasonal and how much is, let's say, consistent improvement in the industry? Or in other words, we did see a 20% Y-o-Y growth on Express Parcel. Is that a range one could look as a range which could be sustainable, more or less in that range going ahead?
A: Yes, Sachin, I think we've spoken about this before. We expect e-commerce volumes in general to continue to grow at the sort of 15% to 20% range. The 20% uptick that you've seen in quarter 3, of course, a part of it is driven by the extreme sort of impact of sales in the early part of October. So 20% growth quarter-on-quarter, obviously, is not a regular rate of growth for the industry. I think long-term sustainable growth fits for the industry, as we mentioned before, will remain 15% to 20% or at least that's what we model our capacity planning on. Of course, if the industry surprises us with higher than 20% growth, we're happy either way because we're the only player with the capacity to absorb that increase in volumes and also with the cost structure that we have. But internally, our planning is usually done in the 15% to 20% range.
Q: Congrats on a very good set of results. My question is actually on this gross margin, right? So let me set the context. Basically, you said that trailer -- tractor trailer utilization has gone up. So first, can you help us understand what percentage of your tonnage goes through your own trailer? And how is that number been for this quarter versus last quarter? And last quarter, you had talked about -- middle of the quarter we had an earnings call, you talked about 30%, 35% as a gross margin going ahead because you had created capacities. This quarter, you have delivered 50%, right? So this number is quite volatile for investors to really understand what can be the sustainable gross margin on transport business on which the margins are driven. So can you please explain this -- these things?
A: Absolutely, Hitesh. On the first one, the percentage of tonnage that's moving on our own tractor trailers -- sorry, as I mentioned, 7 quarters ago, we were driving close to about 72 billion cubic foot kilometers, of which about 20% was being driven on our own tractor trailer network. The rest of it was being driven on 32-foot single axle, multi-axle trucks and then smaller formats. In the last quarter, we've driven about 125 billion cubic foot kilometers, of which about 63%, 64%, as I mentioned, is being driven on our tractor trailers. All of
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
