Delhivery’s bold Rs 2,600cr+ play: Here’s what the Ecom Express deal really means for India’s logistics future

Why is Delhivery acquiring Ecom Express?

Delhivery Limited’s decision to acquire a controlling stake in Ecom Express marks a strategic inflection point in India‘s evolving logistics sector. The definitive agreement, signed on April 5, 2025, aims to bolster Delhivery’s operational scale and profitability through synergies in infrastructure, automation, and technology-led efficiencies. As the logistics industry becomes increasingly consolidated, Delhivery is positioning itself as a foundational layer for India’s commerce ecosystem.

The company believes the long-term growth of the Indian economy requires a world-class logistics backbone, akin to how telecom infrastructure underpinned the country’s digital revolution. With the acquisition of Ecom Express, Delhivery intends to streamline overlapping networks, reduce redundancies, and integrate volumes into its core platform to deliver better outcomes across speed, reliability, and cost.

What is Ecom Express’ financial position?

Ecom Express reported total revenue of ₹2,609 crore in FY24, which declined to ₹1,912 crore during the first nine months of FY25. Its express delivery services accounted for the bulk of revenue, while warehousing contributed the remainder. Despite its scale, Ecom Express posted a net loss of ₹249 crore in FY24, widening to ₹398 crore in 9MFY25. A significant portion of this loss was due to a ₹215 crore non-cash charge related to fair valuation of CCPS (Compulsory Convertible Preference Shares), which Delhivery noted will be eliminated upon consolidation.

On an adjusted basis, excluding the CCPS revaluation impact, Ecom Express recorded losses of ₹140 crore in FY24 and ₹184 crore in 9MFY25. The company’s net worth stood at ₹998 crore as of December 2024, with debt (excluding CCPS) of ₹88 crore and cash reserves of ₹508 crore. These metrics indicate operational inefficiencies despite a healthy asset base and cash buffer.

What are the integration risks for Delhivery?

Delhivery anticipates fewer integration challenges with Ecom Express compared to its earlier acquisition of SpotOn. A key factor is the significant overlap in customer base—almost 100% by count and over 95% by revenue. Both companies already operate with similar business processes and technology systems, allowing for a smoother merger without the need for major system integrations or reconfigurations.

In contrast to SpotOn, where Delhivery had to integrate new clients and systems, Ecom Express clients are already aligned with Delhivery’s digital interface and operating workflows. Ecom’s overall tonnage is also under 20% of Delhivery’s network load, enabling absorption of volumes without the need for extensive physical or capital expansion.

How has the acquisition been valued, and what are Delhivery’s profit expectations?

Delhivery has taken a conservative stance on valuation, estimating revenue retention at approximately 30% of Ecom Express’ FY25 base. This estimate includes potential customer attrition in the short term, as large clients may diversify sourcing during the integration phase.

The expected value accretion lies in cost optimization and operating leverage. Given Delhivery’s leaner cost structure, the company anticipates significantly higher incremental margins from retained revenue than Ecom Express currently earns. Moreover, the integration is not expected to necessitate additional corporate overhead or significant Capex, making the deal margin accretive.

Temporary integration costs, such as overlapping corporate expenses and lease obligations for redundant facilities, have been factored in at approximately ₹300 crore. Delhivery expects to fully rationalize this within two quarters post-acquisition.

What will happen to Ecom Express’ infrastructure?

Ecom Express operates a substantial logistics infrastructure footprint with 9 million sq. ft. of space across 3,750 facilities, including hubs, processing centers, last-mile delivery stations, and fulfillment centers. Delhivery plans to assess each facility based on capacity, cost, and location utility.

Some facilities will be retained for strategic expansion or reconfigured into Delhivery’s freight or fulfillment operations. Others will be phased out, especially where Delhivery already has overlapping or better-placed infrastructure. Lease lock-ins for redundant properties have been accounted for in the acquisition valuation, with potential for internal repurposing where feasible.

Will the acquisition impact Delhivery’s capital expenditure plans?

The acquisition is expected to reduce Delhivery’s capital intensity over the next few years. Ecom Express’ net block of ₹450 crore includes ₹370 crore worth of underutilized equipment and assets. With retention of volumes requiring less than 50% of current capacity, Delhivery anticipates leveraging the surplus capacity to defer fresh Capex, particularly for automation and sorting equipment, during FY27–29.

Are any liabilities being assumed?

Delhivery engaged external advisors for financial, legal, and tax due diligence, which revealed no material undisclosed liabilities or obligations. Identified risks have either been incorporated into the acquisition pricing or addressed through indemnity clauses in transaction documents, reducing downside exposure.

How will the acquisition affect Delhivery’s financials?

Post-consolidation, the ₹215 crore non-cash CCPS-related loss will be eliminated from Ecom’s income statement, improving reported profitability. The adjusted 9MFY25 PAT loss of ₹184 crore reflects a more accurate view of Ecom’s operational performance.

Delhivery expects that with rationalized network and corporate overheads, the higher-margin structure of the integrated business will significantly mitigate the impact of temporary integration costs. Over time, the company anticipates a sharp improvement in EBITDA margins driven by retained volumes and network optimization.

What is the expected timeline for closing?

The transaction awaits clearance from the Competition Commission of India (CCI). The definitive agreement includes a six-month long-stop period, with provision for mutual extension. Delhivery has committed to disclosing material updates as the regulatory process unfolds.

What is the market sentiment towards Delhivery’s stock?

As of April 11, 2025, Delhivery’s stock closed at ₹246.95, up 1.48% on the day. However, the stock remains nearly 40% below its 52-week high of ₹478.00. This suggests that while short-term investor confidence is improving, long-term sentiment remains cautious. Analysts tracking the stock have issued a mix of ratings: 10 “Strong Buy,” 6 “Buy,” and 4 “Hold,” with an average target price of ₹405.86—implying significant upside potential of over 60% from current levels.

Morgan Stanley has issued an ‘Equal Weight’ rating with a target of ₹320, urging investors to watch the integration outcomes closely. The elevated trailing P/E ratio of over 1,100 indicates high valuation expectations, which could be justified if Delhivery delivers on its promise of margin expansion and cost rationalization through this acquisition.

Is Delhivery a buy, sell, or hold right now?

Short-term investors may consider a “Hold” approach until greater clarity emerges around integration milestones, customer retention rates, and Q1FY26 performance.

Long-term investors could see current levels as an attractive entry point, especially if Delhivery succeeds in absorbing Ecom Express’ infrastructure and clientele without material disruption. With its continued investment in automation, technology, and network intelligence, Delhivery remains one of the most technologically advanced logistics companies in India.

That said, the high valuation multiples warrant a careful review of quarterly earnings, competitive pressures—particularly from players like Meesho moving logistics in-house—and progress on synergy realization.

This acquisition reflects more than a strategic expansion; it signals Delhivery’s ambition to dominate India’s logistics value chain by combining infrastructure with intelligent operations. If executed effectively, the Ecom Express deal could serve as a critical lever for long-term growth, profitability, and shareholder value in an increasingly competitive sector.