Delhivery said that Express Parcel volumes remained stable in Q2 and picked up towards the end of the quarter, driven by festive season sales, especially in the Heavy Goods category.
The company said that the market sentiment in Q2 continued to remain broadly unchanged from Q1. Consumer discretionary spending remained muted due to continuing high levels of inflation, with average user spends and total active shoppers remaining flat or lower during the ongoing festive season, as per the industry reports.
Industrial output (IIP) also remained weak in the first 2 months of the quarter. In spite of the challenging market conditions, the company's market position remains strong owing to its structural cost advantages, network size and investments in capacity.
The overall service line volumes for the Express Parcel business grew in the high teens in Q2 FY23 over a large base of the same quarter last year (Q2 FY22). While the festive season sale surge in shipment volumes will spill over to Q3 FY22 as well, the company anticipates moderate growth in shipment volumes through the rest of the financial year.
Delhivery's Part Truckload (PTL) business faced operational challenges in Q1 FY23 due to integration of Delhivery and SpotOn networks. However, the business is on a path to recovery and it has recorded high teens growth in freight tonnage handled on a QoQ basis (Q2 FY23 as compared with Q1 FY23).
A majority of Delhivery and SpotOn's pre-integration customers have restarted shipping through the integrated network. We also successfully onboarded more than 200 new customers in Q2 FY23, driven by improving service metrics. The company expects volumes to continue to show a gradual scale up through FY23.
Volumes in the Supply Chain Services (SCS) and Truckload (TL) businesses declined in Q2 FY23 as compared with Q1 FY23 owing to the expected effects of seasonality in our customers' businesses. However, both businesses have shown substantial double-digit growth compared to Q2 FY22.
The Cross-Border business also showed steady growth on a YoY basis despite a global slowdown and a decline in yields for both air and ocean freight.
"Going forward we remain watchful of the market sentiments. We have made sufficient capacity investments in FY22 and early FY23 to sustain our current rate of growth and expect new mega-gateway and sorter decisions only by early FY24.
As inflationary pressures and service disruptions due to monsoon ease across the country we expect improvement in volumes, revenue and service margins going forward, the company said in a statement.
The company had reported a consolidated net loss of Rs 399 crore in Q1 FY23 as against a net loss of Rs 130 crore recorded in Q1 FY22. Revenue from contracts with customers rose by 32.5% YoY to Rs 1,746 crore during the quarter.
In Q1 FY23, the Express Parcel business accounted for 60% of Delhivery's revenue. The PTL and the SCS segments accounted for 15% and 14% of the revenues, respectively. TL and Cross Border accounted for 7% and 4% of the revenues, respectively.
Delhivery is India's largest and fastest growing fully integrated logistics services provider. With its nationwide network covering over 18,400 pin codes, the company provides a full suite of logistics services such as express parcel transportation, PTL freight, TL freight, cross-border, supply chain, and technology services.
The scrip slumped 13.07% to currently trade at Rs 485.40 on the BSE.
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