Why are Delhivery shares outperforming despite market crash? Details here

The rise in the Delhivery share price came after the company announced on April 5 that it had signed a definitive agreement to acquire a controlling stake in Ecom Express for about ₹1,400 crore

Delhivery share price: The shares of Logistics company Delhivery were in demand on Monday, April 7, 2025. The stock advanced up to 2.42 per cent to hit an intraday high of ₹264.50 per share despite overall market crash. 

 

The rise in the Delhivery share price came after the company announced on April 5 that it had signed a definitive agreement to acquire a controlling stake in Ecom Express Limited for a cash consideration of about ₹1,400 crore from its shareholders.

 

Ecom Express is an end-to-end technology-enabled logistics solutions provider to the Indian retail and ecommerce industry. Incorporated in 2012, the company provides first-mile pickup, processing, network operation, last-mile delivery, reverse logistics and returns management under its flagship service – Ecom Express Services. 

 

 

Sahil Barua, MD and CEO of Delhivery, said: “We believe this acquisition will enable us to service customers of both companies better through continued bold investments in infrastructure, technology, network and people. The founders and management of Ecom Express have established a high-quality network and team, creating a strong foundation to integrate into Delhivery’s operations.” 

 

The completion of the transaction, according to Delhivery, is subject to approval from the Competition Commission of India (CCI), and customary closing conditions. 

 

On the deal, K Satyanarayana, founder of Ecom Express, said: “Delhivery is among India’s leading fully integrated logistics service providers with significant scale advantages and will be the ideal shareholder for Ecom Express’ next phase of growth. With this acquisition and its inherent synergies, businesses across India as well as the logistics industry itself will benefit immensely through the combination of two like-minded players.”   ALSO READ | Stock Market Crash LIVE: Sensex 3,200 pts lower at 72,150 on tariff turmoil

 

Here’s what HSBC thinks about the deal between Delhivery and Ecom Express:

 

1) The acquisition is being made at a trailing enterprise value (EV)/Sales ratio of 0.7x, which appears attractive in comparison to Delhivery’s current 1.7x ratio, analyst at HSBC said. The acquisition price of ₹1,400 crore is notably lower than the implied valuation of about ₹4,900 crore, based on the ownership of the largest shareholder (Partners Group, holding a 50 per cent stake) and its acquisition price. However, analysts highlighted that Ecom Express lags behind Delhivery in terms of growth, profitability, and customer concentration.

 

2) With considerable concentration at the demand level, this consolidation from the supply side is a welcome and necessary move for the sustainability of the industry. As scale plays a crucial role in driving cost efficiencies in logistics, analysts believe the combined entity will become the second-largest ecommerce express parcel company in India, about three times larger than the nearest competitor, Xpressbees.

 

3) Given the remarkably similar business and customer profile, we see significant levers to improve profitability through cost optimisation and pricing discipline. Cost efficiencies can come from increased scale, network and capacity optimisation, savings in technology, marketing and hiring spends, etc. For example, Delhivery should be able to reduce long-haul transportation costs of Ecom Express as more cargo goes on larger size trucks deployed by Delhivery. So overall, the industry profit pool can expand coming from efficiencies and pricing discipline with most of the improved profit pool going to the combined entity. 

 

For instance, Delhivery will likely be able to reduce Ecom Express’s long-haul transportation costs by shifting cargo to larger trucks in Delhivery’s fleet. As a result, the overall industry profit pool is expected to grow, with a large share of the improved profits benefiting the combined entity.  ALSO READ | Major oil-linked companies stock slump after brent crude oil slips 3%

 

4) Analysts highlighted that unlike Spoton’s acquisition (August 2021), the integration process here is expected to be less challenging due to the similarities in business models and customer profiles between the two companies.

 

5) On the flip side, the combined entity has more revenue concentration with the largest customer — Meesho — versus Delhivery’s current customer base. Given Ecom Express’s lower growth rate compared to Delhivery in the past and a possibility of a small business loss from large customers as it can reduce dependence on one supplier to diversify the vendor base, analysts at HSBC believe, this acquisition is likely to be revenue growth-dilutive. 

 

Besides, analysts at HSBC have retained their ‘Buy’ rating, with a target price of ₹400. “We await the conclusion of the deal before factoring the same in our earnings and valuation. Delhivery is trading at 26x FY27e price-earnings (PE), while our ₹400 target price (TP) implies c40x,” HSBC analysts said in a note.

 

Key downside risks to the target price and rating, analysts said, include a slowdown in the ecommerce industry, failure to efficiently utilise assets to improve profitability, fierce competition, and faster pricing decline than expected.

 

At 12:10 PM, Delhivery shares were trading 0.72 per cent higher at ₹260.10 apiece. By comparison, the BSE Sensex was trading 3,009 points, or 3.99 per cent, lower at 72,355.60 levels.