Following a flat revenue increase of 5% in FY23, Delhivery is eyeing fresh growth opportunities and may explore inorganic routes [via acquisition] to scale up, two sources aware of the details told Entrackr.
The Tiger Global and SoftBank-backed logistics giant is in early-stage talks to acquire All Cargo Group’s Gati, said one of the sources on condition of anonymity.
“The two companies have been engaged in talks for about a month.”
Delhivery has a formidable presence in air cargo, but it needs to strengthen its position in the trucking biz. “The deal makes sense for Delhivery as Gati is strong in surface logistics [trucking],” said the second source, who also requested not to be named.
Entrackr couldn’t get details such as size and terms of the deal.
Gati Limited, with a market cap of Rs 1,535 crore, controls as many as five subsidiaries.
It is an integrated logistics company engaged primarily in the business of express distribution, contract logistics, e-commerce logistics, and fuel stations.
The firm derives majority of its revenue from express distribution and supply chain services.
Queries sent to Delhivery on Sunday did not elicit any response even after repeated follow-ups. Gati said it does not comment on any speculation.
“As a part of our policy, we do not comment on any speculation. Gati is an important and integral part of Allcargo Group. We remain focused on strengthening the group’s position in the fast-growing express and contract logistics space,” a Gati spokesperson said in a statement.
If the talks translate into a deal, this would be the largest acquisition for Delhivery to date.
In August 2021, Delhivery took over Spoton Logistics in a cash deal worth about Rs 1,600 crore. In December 2022, Delhivery acquired Pune-based supply chain firm Algorhythm Tech. Earlier this month, it also picked up stakes in omnichannel retailing focused software firm, Vinculum.
During FY23, Delhivery managed to cross Rs 7,200 crore in revenue but at a mere 5% growth. Its losses, however, remained stable at Rs 1,007 crore during the said fiscal.
On a quarterly basis, Delhivery recorded Rs 1,860 crore revenue in Q4 of FY23, while losses reduced by 18.9% to Rs 158.6 crore during the same period.
Gati, on the other hand, recorded 15.6% growth in scale to Rs 1,723 crore in FY23, while its losses surged 2.5X to Rs 10.9 crore. On a quarterly basis, Gati reported Rs 415 crore in revenue and Rs 5.51 crore losses during the Q4 of FY23.
