Thread by @aditya_kondawar

Delhivery DRHP Key Takeaways -

An interesting company and a very interesting DRHP for sure!

Loved reading this DRHP!

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Ok let's go, let's know everything about the company -

1/n

About Delhivery -

- It is a tech-savvy logistics company
- Professionally managed, no identifiable promoter
- Offers integrated logistics services through a nation-wide network infrastructure

2/n

About their Logistics Infra -

124 gateways, 20 automated sort centres, 83 fulfilment centres, 35 collection points, 24 returns processing centres, 249 service centres, 120 intermediate processing centres and 2,235 direct delivery centres as of June 30, 2021

3/n

Bird's eye View -

- 20% e-Commerce parcel market share
- 17045 Pin codes covered
- 21342 Active customers
- 100 Cr + express parcels shipped since inception
- 80 technology applications

4/n

They provide a full range of logistics services -

- express parcel delivery
- heavy goods delivery
- part-truckload freight
- truckload freight
- Warehousing
- supply chain solutions
- cross border express and freight services
- supply chain software

5/n

As of June 30, 2021 -

- Revenue from e-comm customers vertical 60% (FY20 - 70%)
- 12665 permanent employees
- 27313 contracted workers
- 474 in data sciences and product team
- In addition, had 26370 last-mile delivery agents

6/n

About their Infra -

- Asset-light model
- They lease their network infrastructure
- Operated 15.15 mn sq feet
- short-term leases ranging up to 12 months
- leases for mega gateways are long-term (1 year + up to 9 years)

7/n

Technology development centers

- In Gurugram (Haryana), Hyderabad (Telangana), Goa, and Bangalore (Karnataka) and intend to add new centers in India and Europe, the Middle East, and Southeast Asia.

8/n

Let's look at the stakeholder map of Delhivery -

Lifecycle of a courier –

- First Mile
- Mid Mile
- Last Mile

9/n

There are 3 tech stacks when it comes to Delhivery -

- Application Layer
- Technology Layer
- Infrastructure Layer (Fixed and Mobile Assets)

Kindly read this in detail :)

10/n

M&A History -

- Company has spent 1545 Cr in the past 5 years on M&A
- excludes the asset purchase from FedEx and TNT India, which is subject to the fulfillment of certain closing conditions, including receipt of the requisite regulatory approval

11/n

Issue Size –

7460 Cr (5000 Cr Fresh + 2460 Cr OFS)

Objects of Fresh Issue -

- Funding Organic Growth
- Funding Inorganic Growth
- General Corporate purposes

12/n

Risks -

- Top 5 customer contribution to total revenue was 43% in FY21 (down from 49% in FY19)
- Trade receivables 15.5% of revenue in FY21 (20% in FY20)
- FY21 average outstanding receivable days - 47 (was 79 days in FY19)

13/n

Financials -

Note - Spoton, a subsidiary's FY21 revenue was 800 Cr, a good topline growth is due to M&A (wasn't able to find other revenue figures for other subsidiaries)

14/n

Now the company is said to target a valuation of 5 billion $ or Rs 37500 Cr

Let's look at their peers -

- We see that peers trade at lesser valuations, no surprises here, this is a startup IPO after all, so they are going to milk the Euphoria for sure

15/n

- Topline Growth largely seems M&A led (wasn't able to find subs revenue contribution but Spoton one sub contributed 17.4% to total revenue in FY21)

To conclude, we will know more when the company comes for an IPO and the pricing is known!

16/n

Indian Logistics Sector Overview -

- The Indian logistics sector is one of the largest in the world
- Presents a large addressable opportunity, with a
direct spend of US$216 billion in Fiscal 2020. The sector is expected to grow to US$365 billion by Fiscal 2026

17/n

This growth will come from -

- Improvement in India’s transportation infrastructure, especially highway connectivity
- Growth of the domestic manufacturing sector, driven by favorable policy support and increased domestic and foreign investments

18/n

Comparison between US, China, and India Logistics Markets

Comparison of business models of Logistics Players across the US, China, and India

Structure of the Indian Logistics Market

19/n

Road Transportation - Largest Segment of Indian Logistics

- NH network of 150,000 km
- Second largest road network in the world
- 70-80% of freight movements in India are short-to-medium haulage, where road transportation is the quickest and cheapest alternative.

20/n

The total road transportation market was estimated at US$124 billion in Fiscal 2020 and is expected to grow at a CAGR of ~8% to reach US$200 billion in Fiscal 2026.

21/n

Delivery sub-segments -

Express Delivery -

- Delivery of parcels weighing < 40 kgs
- typically e-comm orders or business documents, with TAT of 3-4 days
- Estimated to be ~US$2.3 billion in FY20, to reach US$10-12 billion by FY26, CAGR of 28-32%.

22/n

- This segment has been driven by e-comm growth & rising customer expectations for delivery speed.
- E-comm industry in India grew by 31% from FY18 to FY20. Estimated to grow 30-33% from FY20-26.
- E-commerce volume - 1.5 billion shipments in
FY20, to reach 8-9 bn in FY26

23/n

PTL freight -

- Delivery of consignments with weights of between 10-2,000 kgs
- PTL providers operate a network of pick-up and delivery points and terminals where freight from different customers that are traveling in similar directions is consolidated

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This consolidation leads to lower transportation costs for individual customers while providing faster delivery times and greater flexibility.

The PTL market, which was estimated to be US$13 billion in Fiscal 2020 is expected to double to US$26 billion in Fiscal 2026.

25/n

Truckload Freight (TL)

- delivery of a full truck/trailer load of freight, moving directly from shipper or origin point to consignee or point of destination
- The largest segment of road transportation

26/n

- Market size of US$109 billion in FY20. Expected to reach U$163 billion by FY26.
- Some of the largest end-users of TL freight include the FMCG, agriculture, raw materials, automotive and spare parts, manufacturing, retail, and pharma industries.

27/n

That's it, Folks! End of thread!

Thanks for reading :)

I highly recommend reading the DRHP!

Some rich data is given around logistics market setup in India and abroad, and around their company. The tech-enabled delivery section that shows all images is very cool!