Bernstein Downgrades Delhivery Amid Threat from Meesho’s In-House Logistics: Report 

With Meesho moving its deliveries to an in-house system named Valmo, the shipment volume of Delhivery is bound to be impacted, as per a report by brokerage firm Bernstein, as reported by Moneycontrol. 

The firm has downgraded Delhivery to a market-performing rating. It has also removed the logistics firm from its India SMID portfolio. 

Several factors led to this downgraded rating, including exits by management, issues regarding business execution by the company, valuation concerns, and more.

Recently, Bernstein analysts wrote, as reported by MoneyControl, “Delhivery is a volatile company. In some quarters, it has struggled with its PTL business, led by Spoton integration issues, and some due to weak Ecom business (Shopee exit, peak season execution issues, etc.). Meesho's insourcing is now affecting it. This, coupled with senior management exits, suggests that the ship is still unstable.” 

During the Q4 FY24 results, Delhivery reported a loss of Rs 68.5 crore. A loss of Rs 159 crore was reported by the company in the corresponding period of the previous year. While the company's revenue stood at Rs 2,076 crore in the January–March period, it was Rs 1,860 crore in the corresponding quarter of the previous year. 

Valmo now handles 20 per cent of Meesho's total volumes, according to the brokerage firm, and it intends to grow this to 40 per cent in the coming months. In addition, Valmo says that it can reach 5,000 pin codes and that its cost per parcel is roughly 5% less than that of 3PLs. 

Bernstein analysts reportedly said, “We believe that Valmo's claims of lower costs than 3PLs may stem from its current concentration in urban clusters. More clarity on cost advantages will emerge as it penetrates deeper into Tier 2+ towns. In the meantime, we expect Delhi's growth in e-commerce volumes to be impacted and remain volatile.” 

Meanwhile, Delhivery is also seeing several top-level exits, with the latest being the exit of Chief Business Officer Sandeep Barasia. Barasia was one of the key senior executives of the firm. As per the company, Barasia is leaving to “pursue outside interests."