Delhivery, which saw a flat revenue increase of 5% in FY23, is looking for new growth opportunities and may consider inorganic [via acquisition] routes to scale up, according to a media outlet.
As per sources, the logistics company, which is backed by Tiger Global and SoftBank, is in preliminary discussions to buy Gati from All Cargo Group. “The two companies have been engaged in talks for about a month.”
Delhivery has a strong presence in the air cargo industry, but it needs to improve its standing in the trucking industry. “The deal makes sense for Delhivery as Gati is strong in surface logistics [trucking],” claimed the media house.
Five subsidiaries are under the control of Gati Limited, which has a market cap of Rs 1,535 crore. It is an integrated logistics company with a focus on fuel stations, contract logistics, express distribution, and e-commerce logistics. The majority of the company’s income comes from supply chain management and express distribution services.
“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.
This would be Delhivery’s largest acquisition to date if the talks result in a deal.
Delhivery acquired Spoton Logistics in August 2021 for cash totaling roughly Rs 1,600 crore. Delhivery acquired Pune-based supply chain company Algorhythm Tech in December 2022. It also purchased stock in Vinculum, a software company specializing in omnichannel retailing, earlier this month.
Delhivery was able to surpass Rs 7,200 crore in revenue during FY23 but at a meager growth rate of just 5%. Its losses, however, stayed the same during that fiscal year at Rs 1,007 crore.
Delhivery reported revenue of Rs 1,860 crore on a quarterly basis in Q4 of FY23, while losses decreased by 18.9% to Rs 158.6 crore during the same period.
While its losses increased 2.5X to Rs 10.9 crore, Gati’s scale increased by 15.6% to Rs 1,723 crore in FY23. Gati reported Rs 415 crore in quarterly revenue and Rs 5.51 crore in losses in Q4 of FY23.
