Flipkart’s Ekart entry into B2B logistics can impact Delhivery’s growth, says Kotak

According to a research note by Kotak Institutional Equities, the success of Flipkart’s logistics arm, Ekart, could have an impact on the medium-term growth and economics of logistics unicorn Delhivery. This assessment follows Ekart’s recent announcement about launching its B2B trucking and transportation services.

Ekart’s B2B Express service will cater to brands, manufacturers, and retailers across industries, offering full truckload (FTL) and part truckload (PTL) services. With this move, Ekart becomes the third ecommerce logistics player to enter the express PTL business, joining Delhivery and Xpressbees.

Analysts at Kotak noted that Flipkart’s foray into express B2B logistics is an experiment to enter Delhivery’s domain. While it is considered a low probability event, the success of Flipkart’s logistics arm could potentially impact Delhivery’s growth and economics in the medium term. Delhivery, which has a lean operating cost structure, is still not profitable.

Competition in the ecommerce logistics space is intensifying further, with international courier and supply chain company DSV entering the market in India with a single price-point offering.

In light of these developments, Kotak downgraded Delhivery from a “buy” rating to “reduce” and pushed back its cash flow break-even projections for the company to FY27. Kotak also reduced the fair value on Delhivery by 5% to INR 390.

Despite a recovery in new-age tech stocks, Delhivery’s gains have been comparatively lower than other tech stocks such as Paytm, PB Fintech, and Zomato, which have seen significant increases this year.

The recent rise in Delhivery’s share price prompted some of its key investors to book profits. CA Swift Investments, owned by Carlyle Group, exited Delhivery last month with returns of about 2.7 times the investment. SoftBank also offloaded a significant number of Delhivery shares earlier this year.

Delhivery remains a loss-making venture, with its net loss widening by 32% year-on-year to INR 158.6 crore in Q4 FY23. However, this represents a 19% decline compared to the loss reported in Q3 FY23.

Delhivery shares ended the day’s session slightly lower at INR 392.45 on the BSE.

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