Is Delhivery delivering or dressing up?

Delhivery's stock surged nearly 10 per cent after announcing its Q4 FY25 results, marking its first annual profit since listing. A similar reaction followed its acquisition of Ecom Express, with markets cheering the seemingly opportunistic deal at a bargain price. But scratch beneath the surface, and the narrative becomes less straightforward. Is the company delivering on structural strength, or are these just accounting-led wins and short-term signals? The profitability illusion First annual PAT—but what lies beneath? Delhivery reported a PAT of Rs 162 crore for FY25, its first full-year profit. However, this was aided by a Rs 230 crore reduction in depreciation expenses due to a change in accounting method from Written Down Value (WDV) to Straight Line Method (SLM). Why did the company initially adopt WDV? In the early capex-heavy years, Delhivery was unsure about asset life and usage intensity, prompting it to accelerate depreciation as a conservative approach. However, management now says its automation assets have lasted well and are likely to be useful for much longer, prompting the shift to SLM—in line with global peers. While the change may be justified, it also shows how accounting choices can significantly influence reported numbers—both positively and negatively. Importantly, Delhivery clarified that the change will have a positive impact on FY25 and FY26 numbers, but will turn mildly negative from FY27 onwards. This is because WDV leads to high initial costs but minimal expenses in subsequent years,

This article was originally published on May 24, 2025.