Delhivery gains 1% despite Jefferies downgrade; what should investors know

What does Meesho's insoucing of logistics mean for Delhivery and the whole logistics industry; Jefferies explain

Delhivery shares gained 1 per cent in trade on Monday, June 23, 2025, logging day's high at ₹362.45 per share. The stock closed at ₹360.8 per share, up 0.82 per cent despite global brokerage Jefferies downgrading the stock.  Delhivery's scrip has rallied over 41 per cent against Nifty's rise of 8 per cent following its deal with Ecom Express, highlighting optimism about the growing consolidation in the logistics industry. However, global brokerage Jefferies is cautious as it sees that the e-commerce giant Meesho's decision to insource logistics could pose significant challenges for Delhivery's third-party logistics (3PL) business, which accounts for 60 per cent of its sales.

 

 

Jefferies has lowered its price target for Delhivery to ₹315 per share from ₹500. In the bull case, where Meesho opts to outsource logistics again or the e-commerce industry grows faster than expected, Delhivery’s price target could rise to ₹405 per share. 

Meesho's insourcing impact on Delhivery:

Jefferies estimates that Meesho will insource 40 per cent logistics by FY25E, and 90 per cent by FY27E. This could negatively impact Delhivery’s 3PL business, which makes up 60 per cent of its sales.

 

Meesho, a top-3 marketplace player launched its logistics vertical, Valmo, to insource logistics. Meesho accounts for 45 per cent to 50 per cent of 3PL volumes. 

 

Further, Meesho’s insourcing strategy could impact Delhivery’s 3PL volumes, leading to a decline in growth for the industry, as more e-commerce players seek to control their own logistics costs. 

 

With logistics accounting for 29-78 per cent of e-commerce players’ sales, the pressure on 3PL providers like Delhivery is expected to rise, as more companies follow suit and take their logistics in-house.

 

Further, overall, e-commerce industry growth is expected to slow down to a 10 per cent compound annual growth rate (CAGR) from FY25 to FY30, down from the 30 per cent CAGR seen from FY20-25.

Marketplace share in third-party logistics to halve

Marketplace share in 3PL is likely to halve to 34 per cent by FY28E as more e-commerce marketplaces like Meesho insource their logistics operations, they will reduce their reliance on third-party logistics (3PL) providers like Delhivery.

 

Jefferies estimate captive arm volumes to be similar/exceed Delhivery’s total addressable market (TAM) by FY28E, giving them a scale advantage and further pressuring 3PL incumbents.

Delhivery – not out of the woods yet 

As the broader logistics industry undergoes consolidation, it could help restore pricing discipline. Previously, aggressive competition and cost-sharing with marketplaces like Meesho had led to weak parcel realizations, particularly for Delhivery. However, with the expected consolidation, Delhivery and Ecom Express are likely to hold 57 per cent of the market share by FY27, improving pricing power and profitability. 

Outlook on Delhivery 

Despite the recent rally, Delhivery’s revenue share from its key customer, Meesho, has remained flat year-on-year (Y-o-Y), suggesting the full impact of Meesho’s insourcing has yet to materialize. 

 

Delhivery’s FY25-28 Earnings before interest, tax, depreciation and amortisation (Ebitda) growth projections are optimistic, with Jefferies expecting a 57 per cent CAGR in earnings, driven by a 12 per cent CAGR in the 3PL business and 19 per cent growth in PTL (Parcel Transportation and Logistics).  The company is also set to see a 14 per cent CAGR in its Supply Chain segment.