Thread by @jshilanjanm

I sliced & diced Delhivery’s biz & financial metrics for last 8yrs.

And what I learned is what every investor should know 👇👇

Sahil Barua led Delhivery’s journey can be divided into 3 phases:

1️⃣ From start to a year before IPO (Until FY21 end)
2️⃣ From then to the IPO, particularly FY22
3️⃣ Post IPO

It primarily earns from 5 separate businesses. Here is the wtd avg yearly rate at which they grew during the 1st phase:

🔰 Express Parcel: 54%
🔰 Partial Truck Load (PTL): 93%
🔰 Full Truck Load (FTL): 81%
🔰 Supply Chain Services (SCS): 52%
🔰 Cross Border Services (CBS): 18%

Fantabulous achievement while maintaining great financial discipline. Cash burn was also largely restricted to infra & tech building.

Also, despite it being Covid year, except one, all other units grew 30-81%! 👏👏

But, then came the 2nd phase:

Preparing for IPO & to give solid returns to the VC & PE investors, it had to go for a bigger valuation which existing growth could not justify.

Thus, the management acquired multiple companies in a little over a year. This helped it add their revenues to its topline. This includes 2021 SpotOn acquisition, for which many analysts still remain skeptical.

But, for the IPO, revenue buying made the company look like it was some sort of a marvel!

🔰 Aided by revenue buying & higher capital burn, the PTL & CBS businesses grew by 320% & 480% within a year despite Covid Wave 2!

🔰 Plus, the mature Express Parcel biz with Rs 2.5k cr revenue grew by another 60%- The highest growth in 7yrs!

Revenue buying is common in the startup world. BYJU'S is a great example. But, as Byju’s shows, it can’t buy sustained growth, unless the fundamentals are great.

And this is where Delhivery got hit in the 3rd phase (Post-IPO) 📛📛

The tech & growth stocks had already seen crazy falls by the time Delhivery listed. And, the demand from investors was simple- Report profitability while maintaining stellar growth.

But, it was simply impossible as it could no longer grow fast without burning capital.

As it brought down burn, growth took a hit.

📛 Express parcel biz’s growth rate fell to 20%, the lowest in 7 years!
📛 PTL biz shrank by 20% after growing 320% in a year
📛 CBS biz has shrank by 14% after 480% jump

And despite this, cash burn remained 2nd highest in any year!!

Presently, the management commentary is along these lines:
😓 Slowdown in e-com to impact biz
😓 Shutdown of a major customer (Shopee) to impact biz

What they don't highlight is that Shopee accounted for ~3% of the its express parcels shipments.

None of these boost confidence.

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#IndianStartups #Stocks #StockMarkets #Delhivery