Indian startups have had a rough time at the stock markets, but many of them seem to now be turning a corner.
Delhivery has reported a profit of Rs. 12 crore for the December quarter. This makes it the latest listed tech startup to make a profit after Zomato and Policybazaar. Last quarter, Delhivery had reported a loss of Rs. 103 crore. This is the first time that Delhivery has been profitable since being founded in 2011.
Delhivery saw its operating revenue grow by 20% this quarter to Rs. 2,194 crore. The company recorded a 30% year-on-year increase in D2C volumes, a 45-50% rise in volumes from small and medium enterprises, and a 25-30% rise in consumer parcel volumes. The December quarter is strong for delivery companies, and is characterized by high demand during the Diwali-Christmas holiday season.
Interestingly, Delhivery CEO Sahil Barua said that the profit in this quarter wasn’t necessarily indicative that the company would continue to be profitable in the coming quarters. “I wouldn’t use this quarter to forecast a linear and upward swing in margins…there will be quarters where we will expand capacity and where demand will be affected by factors that are beyond our control. At that point, there will be swings that will happen in profitability and revenue as well,” he said.
“We expect ecommerce volumes to continue to grow at 15-20%,” he said. “So, 20% growth (as seen in the October-December period) quarter-on-quarter is not regular for the industry. Long-term sustainable growth for the industry will remain at 15-20%” he added.
But Barua said that there was significant headroom for the industry to grow. “What we’re seeing in metros is that the average number of packages per person per year is something in the range of four…and the equivalent number in China with a significantly higher disposable income stands at 70-72. That will continue to be the trend in metros…order frequency will continue to go up,” he added.
While its CEO is hinting that profitability might not be a given, Delhivery has become the latest listed Indian tech startup to report a profit. Last year, Zomato had reported a profit of Rs. 2 crore in the first quarter of FY24, and had followed it up with a profit of Rs. 36 crore the following quarter. Earlier this week, Policybazaar had reported a profit of Rs. 37 crore, its first ever profit since being listed.
This is dramatic change from just a few years ago, when every listed tech startup — with the exception of Nykaa — was making losses. These companies had been punished by the stock markets, and their shares had crashed below their IPO prices. But as these companies have moved into the black, they seem to have again found favour with investors — Zomato’s shares are up 4x over the last 12 months, and Policybazaar’s shares spiked 10% after it reported its first profit. And with Delhivery now also reporting its first-ever profit, it appears that Indian startups might’ve just cracked the code to making money after being chastened by the stock markets.