Delhivery To Buy Ecom Express For $165 Mn

Listed logistics service provider Delhivery said it is acquiring a controlling stake in rival startup Ecom Express.

The logistics unicorn will pick up a 99.4% stake in Ecom Express for INR 1,407 Cr ($164.5 Mn) in a fire sale. Ecom Express, as per reports, was last valued at about INR 7,000 Cr during its funding round in June 2024.

The acquisition announcement came out of the blue as Ecom Express was eyeing a public listing. The logistics startup filed its DRHP for INR 2,600 Cr IPO in August last year and received SEBI’s approval for the public issue in December 2024.

The deal is subject to approval of the Competition Commission of India (CCI).

Following the acquisition, which is expected to complete within six months, Ecom Express will become a subsidiary of Delhivery. 

Delhivery said that the acquisition will help it boost operations and also allow it to invest more effectively in improving service quality through network expansion and network quality improvements (such as automation and electric vehicles). 

“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,” Delhivery CEO Sahil Barua said.

From IPO Dreams To Acquisition

As per Ecom Express’ DRHP, its public issue was to comprise a fresh issue of up to INR 1,284.5 Cr and an offer for sale component of INR 1,315.5 Cr. Investors like Eaglebay Investment, PG Esmeralda Pte, British International Investment plc, Kotla Satyanarayana, Manju Dhawan, among others, were to sell their shares with the IPO. 

Post getting the SEBI approval, the logistics player didn’t file its RHP. As of now, it seems unlikely that the startup will go for a public listing.

As per the DRHP, Ecom Express’ operating revenue rose 2.15% year-on-year to INR 2,609 Cr in FY24 from INR 2,553.9 Cr in the previous fiscal year. Meanwhile, it managed to reduce its net loss by 67% to INR 255.8 Cr in the fiscal from INR 428.1 Cr in FY23.

The startup earned 51.15% of its total revenue from its top customer group in FY24, as per the draft papers. While it didn’t name the client, Ecom Express’ top ten customer groups include Meesho, Amazon, Shiprocket, Roposo, Nykaa, among others. 

Many reports suggest that Meesho was the top customer for Ecom Express. In February 2024, the ecommerce major launched its own logistics arm, Valmo. As per Meesho’s annual report for FY24, more than half its orders were being fulfilled by Valmo. 

It is also pertinent to mention that Ecom Express’ draft IPO papers drew flak from its rival and soon to be parent company, Delhivery. The listed company alleged in September last year that its rival had used incorrect information about the former multiple times in its DRHP. 

Delhivery made these allegations in an investor presentation under a section titled, ‘Benchmarking in Peer DRHP’. Delhivery said that Ecom Express’ shipment count of 514.41 Mn was actually 450 Mn when adjusted for return to origin (RTO) shipments in FY24. The listed logistics major said while it counts forward leg (movement of goods from the manufacturer to the customer) and undelivered or RTO leg as one shipment, Ecom Express counts it as two shipments.

Set up in 2012 by TA Krishnan (passed away in 2023), Manju Dhawan, K Satyanarayana and Sanjeev Saxena, Ecom Express is a pure-play B2C ecommerce logistics provider, with a strong focus on the tier II market. 

Founder Satyanarayana said that Delhivery 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,” he added. 

Delhivery Looks To Expand Market Share

The acquisition comes at a time when Delhivery has been eyeing expanding into new segments to expand its market share.  

At the end of Q3, Barua detailed the company’s plans to scale its quick commerce delivery segment. Back then, he said that Delhivery’s rapid commerce business which offers two-hour deliveries was live in Bengaluru, Hyderabad, and Chennai with  two core customers, with an additional 15 expected to be onboarded within the current quarter. The company was eyeing to generate INR 80 Cr to INR 100 Cr revenue in FY25 from this vertical.

“The initial performance of dark stores has been promising, with some locations already handling close to 500 orders per day within just 45 days of launch,” said Barua.

In the case of Ecom Express, a key USP lies in its emphasis on warehousing solutions and dark stores targeting the burgeoning quick-commerce space.

Besides, Delhivery is also targeting another logistics segment — drones. Since getting MCA nod to establish its drone subsidiary in July 2024, there haven’t been any explicit disclosures from the company in this direction. 

However, Ecom Express entered the drone delivery segment as early as June 2024, piloting the service in the Delhi NCR-region.

On the financial front, Delhivery’s revenue jumped 8% year-on-year (YoY) to INR 2,378.3 Cr in Q3 FY25. Net profit stood at INR 24.98 Cr as against INR 11.70 Cr in the corresponding quarter of previous year.