Will Ecom Express Deliver for Delhivery?

Analysts remain divided on the merits of the purchase, the economies of scale it can generate

- Soumya Gupta

It took less than a year for everything to unravel.

In August 2024, India's second largest business-to-consumer (B2C) logistics firm, Ecom Express, filed for an initial public offering. Valuation: nearly ₹7,500 crore.

This month, the company was sold to its biggest competitor, Delhivery, for less than half that amount.

In between, both the companies had an awkward spat via stock exchange filings. Ecom Express had claimed in its draft prospectus that it performed better than the much bigger Delhivery on some key metrics, including cost per parcel. Delhivery countered it by saying Ecom Express may be lying about its numbers.

None of it matters now. Earlier in the year, Ecom Express put its public offering plans on pause and began downsizing aggressively. And by April, it was sold. The biggest reason for its decline is well known: more than half of Ecom Express' revenue came from a single client that most in the industry say is Meesho, the tier-II and -III focused e-commerce platform. In February 2024, Meesho launched its own in-house logistics arm called Valmo and reportedly stopped using Ecom Express' services for most of its shipments.

Bereft of its biggest client, Ecom Express quickly spiralled downwards and could not stick the landing on the best way out: a public listing. Acquisition was the next best outcome for its investors—the list includes PE firm Warburg Pincus and impact fund British International Investment.

It is clear why Ecom Express needed a deal with Delhivery, even at a paltry valuation. With a deal size of ₹1,407 crore, Ecom Express is selling for roughly 0.6x enterprise value-to-sales (EV/sales), based on its financial reporting for FY24.