Express: a market consolidating into two models

The express-parcel industry is settling into two distinct camps. At one end sits a low-cost, high-volume model built on marketplace shipments — Shadowfax realises about Rs 50 a parcel and Delhivery Rs 58 to 60, against logistics costs near Rs 42. At the other end, Blue Dart serves high-value customers at Rs 160 to 170 a shipment, while Xpressbees remains loss-making and concentrated in business-to-business work. Meesho, whose delivered shipments rose 37 percent to 48.1 crore in the June quarter, now leans on third-party couriers for half its parcels, a pool that favours players with scale and cost discipline. Against this backdrop the brokerage casts Delhivery as one of the strongest positioned to capture incremental industry volume, courtesy of its reach, its diversified customer base and its ability to handle cost-sensitive freight efficiently.

A more diversified book

Diversification is the quieter edge. Delhivery's largest single customer accounted for just 19.2 percent of revenue in FY26, where Shadowfax's two biggest clients — led by Meesho and Flipkart — together made up 64 percent, and its single largest alone 53 percent. That spread lowers the risk that any one marketplace's pricing or routing decision dents the business. The company has also expanded inorganically: the Rs 1,400 crore acquisition of Ecom Express, completed in July 2025, consolidates its lead in express parcels and adds a complementary rural network across Tier 2-to-4 cities, promising density gains, footprint rationalisation and cost synergies as third-party logistics wins share from captive arms under cost pressure.

The second engine: part-truckload and supply chain

Beyond parcels, the part-truckload business offers a long runway: organised players still handle under 25 percent of industry volume. Here the brokerage models a 15 percent revenue CAGR through FY28, driven by expansion into small-business and retail segments, yield improvement and the adoption of value-added services, with tonnage rising from about 19.9 lakh tonnes in FY26 toward 26.3 lakh tonnes by FY28. The supply-chain arm, meanwhile, is turning profitable by exiting unremunerative contracts while riding the formalisation of warehousing and demand for integrated, multi-location solutions.

Margin expansion looks inevitable

Profitability is the clearest part of the story. The brokerage sees the consolidated operating margin widening to 8.4 percent by FY28 from 6.1 percent in FY26, powered by operating leverage, better asset utilisation and technology integration. The part-truckload service margin is guided toward 16 to 18 percent over two to three years, from roughly 13 percent, while the express service margin should hold near 18 percent. Crucially, the heavy network build-out is largely behind the company: steady-state capital spending is set to ease toward 4 to 5 percent of revenue by FY28, and a net-cash balance sheet leaves ample room for further deals.

The estimates

Valuation: a franchise near its trough multiple

The valuation case leans on history. On a forward enterprise-value-to-operating-profit basis, the stock trades at about 26 times — a whisker above its all-time low and roughly one standard deviation below its three-year mean of 46 times, as the band below shows. For a business compounding profit at double-digit-plus rates with improving returns, that is an undemanding starting point.

On a discounted-cash-flow basis the brokerage arrives at a target of Rs 510. For investors, the proposition is a scaled, net-cash leader in a formalising logistics market, bought while its multiple hugs the floor — a patient accumulation rather than a momentum trade, with the earnings inflection doing the heavy lifting from here.