Post Ecom Express deal, Delhivery ditches discounts to boost margins

Logistics company Delhivery is betting on a more stable market to expand cost efficiencies and profit margins achieved last year, even as the timing of goods and services tax (GST) changes hurt shipment volumes in September.

Delhivery chief executive Sahil Barua, in his post-earnings call for the September quarter on Wednesday, said that after acquiring Ecom Express, the company no longer needs heavy discounts and Express margins could rise above 18% as competition eases and smaller rivals decline.

Delhivery completes acquisition of Gurugram-based Ecom Express ₹1,407 crore in July, shipment volume and market share increased.

“Post-acquisition, we will probably approach 27 to 30% (market share),” Barua said.

The company aggressively rationalized its acquired footprint, growing from approximately 1.1 million sq ft while maintaining only seven facilities (1.3 million sq ft). It has also reduced approximately 85% of Ecom Express’ corporate and support costs since the deal.

Delhivery also plans to terminate some acquired contracts. “Ecom was in certain lines of business that Delhivery did not want to serve. This too will be wiped out and go to zero,” Barua said.

Delhivery reported ₹In the September quarter (Q26), revenue from services rose 16.3% year-on-year to Rs 2,546 crore, while a net loss was posted. ₹51 crore for the quarter. The company served 48,442 active customers during the period. Its physical network spans 22.05 million square meters and reaches 18,830 pin codes, up from 19.48 million square meters a year ago.

Shares of Delhivery rose 2.7% to 4.84.95 on the BSE on Tuesday. Markets were closed on Wednesday due to a public holiday.

Reduced discount pressure

Barua reiterated that Ecom Express’ long-term EBITDA (earnings before interest, tax, depreciation and amortization) margins could rise above the company’s stated 16-18% range, depending on pricing choices.

“Above 18%, we generally tend to pass back some of the pricing benefits if the company deems it necessary… and if… there is additional share of wallet to be gained for us,” Barua said.

However, consolidation and inflationary pressure on rivals have reduced the need for discounts.

“As the intensity of competition in this industry has diminished … our obligation to pass on these benefits has diminished with each passing year,” he said.

The Express business reported a service EBITDA margin of 15.3% in the second quarter; slightly softer sequentially, partly due to volumes moving into October following GST changes.

Temporary drift of GST

The change in GST rates also caused a temporary recession. “I think people consciously postponed consumption when GST rates changed. Therefore, there was a decrease in consumption in the middle 10 days of September,” Barua said.

He noted that the recovery in volume was driven by categories such as consumer durables.

Delhivery’s express parcel volumes rose 32% year-on-year and 18% sequentially to 246 million orders in FY26.

The single-day peak of 7.2 million came in the wider festive window, when volumes shifted towards late September and early October following GST-related demand timing changes.

The government’s GST reforms, which came into force from September 22, eliminated the 12% and 28% rate brackets, creating a two-slab system where goods and services are taxed at 5% and 18%.

Flash trading still small, growing

Delhivery’s adjacent bet on express commerce is still nascent, but the company is slowly expanding the network. Barua said the business is currently running approx. ₹Backed by 20 dark stores across three cities, the annual revenue of Rs 12 crore is expected to grow meaningfully in the next few quarters.

“We expect Rapid Commerce to contribute to the following revenues: ₹80-100 crore in the near to medium term… We will start our operations in NCR (national capital) in the third quarter of FY26,” he said, adding that the company plans to expand the offerings to B2B customers in the 3rd and 4th quarter of FY26.

Under Rapid Commerce, the company promises to deliver packages within 2 hours.