Good evening everyone. Welcome to the Q1 Earnings Call of Delhivery Limited. I am Apar from the investigations team of Delhivery. Before we start, we would like to point out that some of the statements made on today's call will be forward looking in nature. A disclaimer to this effect has been included in the earnings presentation shared with you earlier. To discuss the Q1 FY 2026 results, I am pleased to welcome Mr. Sahil Barua, MD, Chief Executive Officer; Mr. Amit Agarwal, Chief Financial Officer; Mr. Ajith Pai, Chief Operating Officer; Ms. Vani Venkatesh, Chief Business Officer; Mr. Varun Bakshi, Senior Vice President and Head of Part Truckload; and Mr. Vivek Pabari, Senior Vice President and Head of Investor Relations at Delhivery. As a reminder, all participants' lines will be in listen-only mode and participants can use the raise hand feature to ask any question post the opening remarks. Now I invite Mr. Sahil Barua to take us through the key highlights of the quarter, post which we will open up for the Q and A. Thank you, and over to you, Sahil. Thank you. Apart, can we have the presentation please? All right. Excellent. Thank you all of you for joining our earnings call this evening. On Friday, as always, we'll begin with a short presentation for about 15 minutes and then I'll be happy to take questions. Before we begin, I'd like to place on record on behalf of the entire team of Delhivery, our deepest gratitude to one of our directors, Mr. Shiva San Rajan, who has served as a Director on the board of Delhivery for the last 10 years and will be stepping down in September. I'd also like to extend a very warm welcome to two new directors on the Delhivery board. Professor Padmini Srinivasan from the Indian Institute of Management at Bangalore and Mr. Yashish Dahia, MD and Group CEO of Policy Bazaar, will be joining the Delhivery Board from today. Welcome on behalf of the Delhivery team to them. Moving on to summary of results for Q1. We've had an excellent start to financial year 2026 with strong revenue growth in our core transportation businesses and significantly improved profitability. I'll walk through the numbers. As of Q1, we delivered INR 2,294 crores of revenue from services, which is about 6% higher year on year and about 5% higher quarter on quarter. Total income stood at INR 2,424 crores, a growth of 6% YoY and 5% QoQ. EBITDA margins came in at INR 149 crores or 6.5% compared to INR 97 crores in the same quarter last year and compared to INR 119 crores or 5.4%. This is an expansion of nearly 200 basis points YoY and about 110 basis points QoQ. PAT came in at INR 91 crores, nearly 4%, which is an expansion of 140 basis points from INR 54 crores in Q1 of fiscal 2025 and 70 basis points compared to Q4 fiscal 2025 when PAT stood at INR 73 crores. We registered strong growth in the Express Parcel business as we discussed earlier. This is also post our acquisition of Ecom Express for which we recently received approval from the Competition Commission of India. The full impact of the acquisition, of course, will begin to show more in Q2. However, we did see significant improvement in volumes even towards the tail end of Q1. Parcel volumes reached 208 million shipments for quarter one, which represents a year on year growth of nearly 14% and a quarter on quarter growth of 17%. Our PTL business continued to show stable performance. We closed at 458,000 tonnes of freight in quarter one, which represents a year on year growth of 15% and broadly flat quarter on quarter. Do bear in mind that quarter one typically is the lowest quarter of the year from a PTL standpoint, and quarter four typically is the high watermark quarter for a fiscal year. Quick snapshot of operational metrics: pin code reach continues to stay consistent. We are present across 18,857 pin codes spanning India as defined by the Indian Postal Services. We continue to serve the entire world through our partnerships with FedEx and with Aramex. Total number of active customers have expanded significantly from 35,000 in quarter one fiscal 2025 by nearly 8,000 customers. As of this quarter, we closed with 43,000 active customers. Infrastructure continues to remain at about 20.4 million square feet of gateways and fulfillment centers as opposed to 20.1 million square feet in quarter four. We continue to operate 119 gateways. This includes a few new gateways that have been integrated from the Ecom Express network into the Delhivery network. There are 45 automated sort centers and 64 sorters. There's a mild expansion in the footprint of the entire freight business. We have 125 freight service centers as opposed to 118 in quarter four, 161 processing centers, and we continue to expand the express delivery network in response to significantly higher volumes anticipated in Q2 and Q3. Total number of express delivery centers stands at about 4,500. Team size has expanded to 65,849 people with 52,000 partner agents and 17,000 vehicles on a daily basis. Quick snapshot of financial performance: as I'd mentioned, overall revenue from services grew to INR 2,294 crores in quarter one fiscal 2026 as compared to INR 2,172 crores a year ago and INR 2,192 crores in Q4. The Express Parcel business has grown as a percentage of our total revenues on the back of increased volumes towards the tail end of quarter one and stands at 61% of total revenues. The PTL business continues to form 22% of total revenues. Express Parcel revenues have grown 10% YoY and 12% QoQ. We closed with INR 1,403 crores of revenue in quarter one fiscal 2026 through 218 million packages delivered, which represents a 14% growth in volume and a 17% growth quarter on quarter compared to the previous quarter. PTL freight revenues have grown 17% from INR 435 crores in the same quarter last year compared to INR 508 crores in this quarter and are broadly flat between quarter four and quarter one. Freight tonnage has grown 15% YoY from 399,000 metric tons of freight in Q1 fiscal 2025 versus about 458,000 tons of freight in Q1 of fiscal 2026. Revenue growth being higher than volume growth implies that yield improvements have continued in this business as well. Supply chain services business has degrown QoQ and YoY. This is driven by two factors. One is, as mentioned previously, our exit from providing mother warehousing services to the quick commerce industry and the second impact from seasonality with one of our major electronics and durables clients. FTL Services revenues have remained broadly flat at about INR 150 crore a quarter and cross border services brought in INR 24 crore of revenue in Q1 of fiscal 2026. In terms of profitability, profitability continues to expand. The highlighted column on the right refers to Quarter 1 fiscal 2026. As discussed, revenue from services stands at INR 2,290 crore. Total service EBITDA came in at INR 298 crore or 13%, which is an expansion of 60 basis points versus Quarter 4 of fiscal 2025 and an expansion of 190 basis points compared to fiscal 2025. On the whole, Express Parcel came in at INR 228 crore of service EBITDA at a 16.3% margin. As discussed previously, we expected continued expansion in parcel margins from quarter two of last year, which was our low point at 15.1%, and we expect margins to continue to improve going forward. We will remain broadly within the normative range of 16% - 18% in the express business. As guided previously, Part Truckload margins continue to remain stable. We brought in INR 54 crore of service EBITDA margin in the Part Truckload business in quarter one at 10.7%. This is to some extent affected by India's adjustments as well. Broadly, we anticipate that margins in the Part Truckload business will continue to rise with improvements in utilization of the network. The big change of course is in the supply. We've continued to renegotiate commercial terms with several customers and, as discussed previously, shut down certain unprofitable accounts. As a consequence, margins in this business have improved significantly from 2.2% as of fiscal 2025 to 7.2% in quarter one fiscal 2026. The business brought in INR 15 crore of service EBITDA this quarter. In terms of corporate overheads, corporate overheads continue to remain flat as guided previously in terms of broad percentage of revenue. Corporate overheads have declined from 9.3% of revenue in fiscal 2025 to 9.1% of revenue in quarter one of fiscal 2026. Do bear in mind that quarter one fiscal 2026 also contains the impact of inflation on wages as this is our increment cycle. Wages have remained broadly constant at INR 114 crore. Technology expenses and general administrative expenses have broadly remained constant as well. We've invested INR 14 crore in new services. These are two new services as discussed previously. One of them is our Rapid Commerce initiative, which is a sub-2-hour same-day delivery service currently present through 20 dark stores in three cities, and the second is Delhivery Direct, which is an on-demand intra-city service launched at the moment in the cities of Ahmedabad, Delhi, NCR, and Bangalore. Both of these businesses continue to scale, and investments continue to be made both on the demand side as well as on building of supply. The investment levels are currently at INR 14 crore a quarter. This has led to an overall adjusted EBITDA margin of INR 75 crore or 3.3% of revenue, and expansion of 80 basis points compared to Q4 fiscal 2025 when we generated an adjusted EBITDA of INR 55 crore and more than double of the adjusted EBITDA from the same quarter last year. PAT stood at INR 91 crore on a PAT margin of nearly 4%, an expansion of INR 18 crore compared to Q4 of fiscal 2025 and an expansion of nearly 60% compared to the same quarter last year. PAT trend continues to be heartening. As discussed, PAT came in at INR 91 crore in Q1, which is significantly higher than the PAT in the same quarter of last year, and the overall trend of improvement of Q1 is from -4.4% in Q1 fiscal 2024 to 2.4% in Q1 of fiscal 2025 to nearly 4% in Q1 of fiscal 2026. We believe that the PAT margin will continue to expand through the rest of the year as well. A short update on the Ecom Express acquisition: we received formal approval from the Competition Commission of India on June 17, 2025. The acquisition was formally completed on July 18, and financial consolidation of Ecom Express into Delhivery will be effective from this date. The final purchase consideration as guided previously post the adjustments will be at INR 1,369 crore. From an integration standpoint, the volume and client side integration of Ecom Express is complete. No further volumes flow through the Ecom Express network, and we are in the process of reconciling and shutting down the last few shipments which continue to be open within the network. All other volumes have been moved successfully to the Delhivery network and will reflect in Delhivery standalone volumes in Q2. The network rationalization plan is also under execution. On a final basis, we expect to retain seven facilities in a combination of transportation and fulfillment operations. A significant portion of the network of Ecom Express has been rationalized and shut down, and we anticipate that the entire network shutdown will follow the plan previously discussed. We have also begun the process to exit the non-Express businesses of Ecom Express and anticipate that we will complete these exits by quarter three of this financial year. Just a quick snapshot of Express Parcel volume growth. As you can see, volumes have consistently been on an uptrend throughout this calendar year. The deal with Ecom Express was announced towards the end of March. We presented a version of this chart previously. We have begun to see an upside to volumes in April and May. I'm pleased to announce that that has continued through June and has gone up significantly into July, and our belief is that this trend will continue through the rest of this quarter. Do bear in mind that this is an unusual year. The peak season this year is expected to be in the middle of September. Unlike last year, the impact of a large portion of the peak will be seen in Q2 and the early part of Q3. That's a quick summary of our results. Broadly speaking, highly positive quarter. We're very satisfied with where we've landed. I think big questions last time were really around the integration of Ecom Express, and as mentioned, I think we've completed that integration quite successfully and overall very happy with where volumes have trended as well and obviously the expanded profitability. Very well set up for the rest of fiscal 2026. With that, I will pause. Happy to take questions. Thank you, Sahil. We will now start the Q & A. Those who wish to ask any questions can use the raise hand feature. The first question is from Sachin Salgavagar. Second, please go ahead. Thanks, Apar. Congratulations on a good set of numbers. I have a few questions. Let me go through the questions all at one time and then I'll hand it over to you guys. Number one, Express Parcel volumes have increased this quarter, but we did see the yield coming down. Is there a way to look at it that the incremental shipments which have come have largely come at a lower yield, or is there something else which is going on here? Number two, after your Ecom Express consolidation, what impact should we see on the overall volumes of Delhivery? I'm saying that because the follow-up question here is, have all volumes moved in Q1, or are there incremental volumes which could be moved in Q2, and if any, could you help us quantify or understand what range that could be? A similar question is, what could be the impact on yields and margins from current levels after the Express Parcel consolidation? Lastly, Silent Team, thank you so much for sharing the shareholder letter and your views across businesses. One sentence you guys mentioned was Quick Commerce has created a material opportunity for our PTL division in the immediate term. Again, would love to understand what you guys mean by that. Anyway, you could quantify the upside opportunity here. Thanks. Sure. Thank you, Sachin. I'll go one by one on Express volume versus yield. Fundamentally, the drop in yield is a function of volume mix, which is a function of clients, which is a function of the weights of packages and the distances that they travel. When I look at the overall weight per package across our Express business, consolidating both small parcel as well as heavy, there is a double-digit decline in the average weight per parcel, which is not surprising because obviously there's been growth in the small parcel business, and as a consequence of that, yield has shrunk. It's just an organic shrinkage in yield and has nothing to do with pricing. The yield, as we've discussed previously, does vary quarter to quarter based on these inputs. For example, during the peak season, we typically see yields go up because there's a larger percentage of heavy packages that come through the network. I think that trend will continue in Q2 and Q3 as well. Nothing sort of alarming on yield; pricing remains consistent. If anything, I believe, as I've discussed previously, that irrational pricing-led compression of yield that previously was the risk factor in the last two years is a materially lower risk going forward. One, obviously, is as we consolidated Ecom Express. I think that gives us a certain amount of pricing stability in the market. The second, as I mentioned previously, is that independent CPLs in this space need to cut burn rapidly, especially in the face of inflating costs. We do believe that there will be no further compression on yields. In terms of Ecom Express consolidation and impact on volumes, what you're seeing in Q1 is actually a very minimal impact of volume transition from Ecom Express to Delhivery. Most of it was only towards the end of Q1, in the last parts of June. The real impact, as you can see in the chart—if you can just go to the chart—yeah, the real impact actually is in July, which you can see there's a very materially higher trend for July than there has been for June. Our view is that that's a more representative level of volume that we will be at going forward. There's a very large sort of. Uptick that you should see in Q2. With the new volumes coming in from Ecom Express, I think there's no reason to believe there'll be any negative impact on margins. I think, again, as I mentioned, depending on client mix in any given quarter, there may be some impact on yields and there may be a marginal impact on margins here and there. Broadly speaking, we anticipate that margins will actually expand as volumes go up, and we'll easily be in the 16% - 18% range. In terms of Rapid Commerce's impact on Part Truckload and the opportunity it creates, I think the main opportunity that it creates is brands who work with big commerce companies. Whether it's FMCG companies, packaged food companies, grocery, whatever it is, there's a large amount of B2B consignments that get shipped to both the mother warehouses of Rapid Commerce companies as well as the dark stores of Rapid Commerce companies. This is a complex delivery process because it involves, for example, taking appointments with the mother warehouse, making sure goods are delivered within that appointment, on time and in full. This is a service that Delhivery already provided outside of Rapid Commerce. It's not particularly different from what we would do for a seller trying to consign stock, for example, to an FBA warehouse or to a Reliance warehouse or a Flipkart warehouse. It's fundamentally a similar kind of service. Now, what's interesting, of course, is that it's now a new channel that has gotten created and a new opportunity for us. What makes this a complex delivery is the process of coordinating with large numbers of Rapid Commerce mother warehouses and ensuring on-time delivery, integrating with their systems to make sure that appointments are delivered on time, managing proofs of delivery electronically, making sure that POs are properly reconciled between the brand, the logistics partner, which is us in this case, and the mother warehouse or the dark store. Potentially, it also opens up an opportunity for returns from mother warehouses and dark stores back to brands. That's the large opportunity that we see, and it's actually been a pretty exciting part of the Part Truckload business over the last two or three quarters. Thank you, Sahil. Just a quick follow-up out here. Since the acquisition of Ecom Express, are you seeing any change in terms of competitive intensity? I'm saying that because one of the statements in your shareholder letter was the last couple of years there was a poor pricing discipline amongst multiple 3PLs. Has anything changed in the near term since your acquisition, or does that continue to be the issue? The rational pricing that I've spoken about did exist, and logistics is really not one of those spaces where pricing below cost is a good strategy, as obviously evidenced by our acquisition. As I mentioned, I think what we've seen is a reduction in the intensity of price competition. I wouldn't like to necessarily take credit for us having driven sense into the market. I think it's the financial constraints that face companies which price irrationally in the first place. Obviously, with the acquisition of Ecom Express, all of the contracts that we've negotiated with clients are at Delhivery pricing. Of course, clients get volume discounts for giving us larger volumes, but on Delhivery's terms. The rational pricing has been cleaned out, at least out of what was the erstwhile Ecom Express network. I do believe that other 3PLs in this space have also signed contracts in the past which are below cost. As I've mentioned, logistics costs inflate in a very predictable manner. Wages in logistics, for example, will typically inflate 7%- 8% a year. Rentals will inflate anywhere between 5% and 8% a year, and fleet costs also inflate at a fairly predictable rate. The reality is that I think whether Delhivery does anything or not, balance sheet constraints will force independent 3PLs in this space to sort of make sure that they're disciplined about pricing. Very clear. Thank you and all the best. Thank you. Thank you, Sachin. The next question is from Vijay. Thank you for the opportunity. Congratulations on a good one. My first question is, in last quarter, I think you said you were aiming to retain 30% of the volumes of Ecom Express. That was what you were budgeting in your acquisition price. Do you have a sense of what was the volume of Ecom Express as it existed in April, for example, that you've retained? Yeah, so that's my first question. You want to ask all of them. Yeah, sure. The second question is, you also, last quarter, talked about your sense that self-sourcing at some of the other horizontal players was peaking. You expect that to continue to play through. Has that progressed along expected lines as you see players ramping up for the festive season ahead? That's the second. The third question I had was if you can give a broad sense of the category mix that you see on your network in categories that you mentioned are not amenable to quick commerce, so apparel, consumer electronics, home and lifestyle goods, etc. Those are my questions, and if possible, if you could talk about what will be your recurring costs apart from the integration costs that you will incur, the recurring costs from Ecom Express from Q2 onwards? Yeah, sure. In terms of volume retention, our plan, when we, our assessment of the deal at that time was based on a 30% volume retention of Ecom Express volumes. What I can tell you without disclosing specifics is that we have retained significantly more than the 30% that was planned originally, which is reflected in the chart that Ajith Pai had shown previously. I think broadly speaking we will be close to about perhaps somewhere in the 55% - 65% retained volume already, and this continues to rise month on month. Part of the reason, as I mentioned, is that this has been a tough quarter from a logistics standpoint for other players in the space owing to profitability constraints. The reality is the operating environment in Q1 has been pretty complicated with rains and a number of other kinds of disruptions. We have seen a flight to quality. That's been positive for us in terms of change in sourcing strategies. I think clearly we've retained more volume than we anticipated. As you can imagine, we have gained share across all client types. Earlier, of course, we always used to talk about the fact that we were growing share rapidly with direct-to-consumer and SME segments of the market. As I look at our volumes across an absolutely broad swath of clients, we have gained significant amount. Of share. Including the marketplaces. I think of the three key marketplaces, at two of them, we do see an increased sort of interest in outsourcing to Delhivery. They obviously continue to maintain in-house arms, there's no question. Equivalently, the consolidation towards a quality partner who is reliable, that trend is also visible at the third marketplace. Also, we have seen an expansion of our share of wallet. I think the reality is that until the marketplaces with completely captive arms, and I'm not counting Valmo here, are able to account properly for the cost of doing enhanced logistics, the true comparison internally to them also will not be perfectly clear. I think costs are still, relatively speaking, for lack of a better word, hidden between retail arms and logistics arms. It's too early to comment on whether there's a very material shift. That said, I will point out that the same inflationary pressures that I've spoken about that apply to third-party logistics companies apply exactly as much to first-party logistics companies as well. They aren't exempt from wage inflation and rental inflation. We're very confident that our ability to manufacture productivity gains and efficiencies in our network significantly outstrip other players in this market, whether they're first-party or third-party players. The reality is that our cost advantages expand every year. We've been talking about this since the time that Delhivery has gone public. I realize that for the first year or so that may not have shown up in our numbers. As you can see with the acquisition of Ecom Express and what you see in July and August, I think reality does catch up. It's a matter of time. In terms of the broad category mix, I won't be able to provide you a breakup of our volumes by category. If I take some very, very broad numbers, my sense is maybe softline is probably about half our volumes. FMCG, BPC kind of categories are maybe about a quarter. The rest of it is just a very broad mix. Grocery is practically zero. Unsurprisingly, it's not a category that we intend to play in. In terms of recurring costs, the integration cost as we've mentioned, our envelope was about INR 300 crore that we anticipated. We will report that separately in quarter two and quarter three, calling out quite clearly what the specific integration cost from the Ecom Express acquisition will be. Those will largely be limited to certain people-related costs that will persist through quarter two and quarter three, and certain costs in terms of winding down leases and certain fixed contracts that they've had. As of now, we don't anticipate that we will breach that INR 300 crore limit. In terms of recurring costs, there will be none, no further recurring costs, because as the volumes go up, it's as if we were expanding the Delhivery network itself. If I can just follow up, you know there is no cost associated with anyone who comes on board. Any cost at all. That's what you're referring to as none, right? Yeah. Because Vijit, you know, if we were to do, you know, whatever X million number of packages compared to let's say the 60 million average that we were doing in Q4, we would need to hire people ourselves. It can't be sort of classified as a recurring Ecom Express cost. Perfect. Thank you so much. Those were my questions. Thank you. The next question is from Sachin Dushan. Sachin, please go ahead. Hi. Hi. Jayan and Dean. Congrats on a decent set of results. My first question is on supply chain services. Right. That's a business which seems to have a good mood, but it's like hit and miss. It does well if you got it. Obviously, you have highlighted multiple times it's slightly lumpy in nature, it's not linear. In your shareholder letter, you are talking about roughly INR 1,800 crore-INR 2,000 crore of revenue in three years, which I am guessing is FY 2029. Can you talk about what is giving you the confidence that finally that business will see a sustained growth trajectory? Sure. Do you have more questions? Sure. The second question was again on the volumes piece on Ecom Express, right. You have already highlighted that the volume retention is happening at a much faster clip. The point being that when we were talking about 30% volume retention, you're expecting the Valmo sort of impact being there and a lot of volume going out. What has really changed there? Is it that one of your largest customers is struggling to ramp up capacity or anything, which is why you are in such a better situation compared to where you are, what you are anticipating? That's my second question. Those are the two questions that I have. Sure. I'll start with the second one. In terms of why volume retention is higher than expected, as I discussed, I think when we were evaluating the deal, it was our judicial responsibility to take a conservative view of the world. We've been doing this for a while, we are a conservative team, and we've been pleasantly surprised is perhaps the simplest way to put it. The reality of the market, however, is this. I don't think it's a fundamental shift in the sort of strategy that Meesho has with respect to Valmo or Flipkart with respect to Ekart Logistics. I think the reality is as the operating environment becomes tougher and as e-commerce principals realize that third party logistics firms who price below cost merely to get a share of volume cannot survive, there's a flight to quality. Over a long period of time, quality players will get rewarded. That's what you're seeing fundamentally. Delhivery is a large network which is highly reliable and very fast. The other advantage that obviously is inbuilt within the Delhivery network is that the volatility of tonnage within our network owing to Express Parcel is now increasingly very small. Our ability to handle large swings in Express Parcel volumes obviously is significantly improved by running a Part Truckload business, and the benefits of that flow to our Express Parcel customers as well. It's not surprising that clients are choosing to allocate volumes away from lower quality players. I've mentioned this in the past. I do think over a long period of time, Delhivery and Blue Dart Express are the two highest quality networks in the country. For us, for the specific businesses that we run, in our case a large Surface Express network and in their case an air network, you will see volumes accumulate towards the two highest quality networks. Pricing can only get you so far, but the reality is that no customer is willing to pay a lower logistics cost for packages to not get delivered. That's effectively what you're seeing in terms of supply chain services. I think the fundamental sort of shift in supply chain over the last year has been, as I've mentioned, as we have done in Part Truckload in the past, as we have done in Express Parcel in the past, I have discussed this as a management team. We've been very clear that the ability to make money comes before chasing growth. That's exactly the trajectory that we followed in Part Truckload as well. If you go back about eight quarters, you'll remember that we went through a U-shaped curve for PTL as well. The logic was that we would first fix the business and then start growing it rapidly. On supply chain services, we had a number of things that we needed to do. One was really fundamentally renegotiate contracts that, you know, had not been priced the way they should have been. Get out of sectors that, you know, we wanted to explore but fundamentally have now reached a conclusion that we don't want to participate in. That's really the impact that you're seeing in the last financial year. We experimented with getting into fulfillment for quick commerce and then realized that, you know, the inventory issues in that business are fundamentally too large for a third-party logistics company to bear and we've exited that sector. I think what you're seeing now is a business which is starting to resemble what it will look like from a profitability standpoint. I think there's still margin expansion that will happen in the SCS business as we scale. That's a story that will still play out over the next couple of quarters. What we're getting better at is pricing contracts correctly. The second thing obviously is improving the quality of our underlying software, whether it's our warehouse management systems or transportation management systems, and driving efficiencies through those. I think that's matured as well. As I look at our pipeline at this stage, our pipeline is healthier than it's ever been before. At this stage we've got probably close to about INR 300 crore of sort of broad supply chain mandates which are in various stages of conversion. Conversion in this business can take three months, four months because it's a long sales cycle. Given our visibility of the pipeline, we're very confident, frankly speaking at this stage, from a pure pipeline standpoint, we probably have more than INR 1,000 crore in the pipeline. Now, over a three-year period, can we convert, you know, INR 600 crore, INR 700 crore of that? I think pretty confident that we'll be able to do that. Fairly confident that we'll get to the INR 1,800 crore, INR 2,000 crore in SCS. Got it. Just one final confirmation if I may. The numbers or the sort of guidances that you have given in the shareholder letter, these are inclusive of Ecom Express intact, right? Yeah. Ecom Express has no relevance. No, no, not Supply Chain Services. I'm talking about generally you have given right service, EBITDA margins for PTL. All those are inclusive of. Yes. Got it. All right, thank you and all the best. Thank you. Thank you. Sasha. The next question is from Suresh. Please go ahead. Hi, Sahil and team, thank you for the opportunity. I have three questions if I may. First, if I can take you back to Slide 6 on your key KPIs. If you can just give us a glimpse in terms of what are the changes we'd expect with Ecom Express consolidation. The key changes which you'd like to call out, that's one. Second is in the market structure itself within Express Parcel. What is your sense about kind of? Within 3PL, your market share here today, even if it's a broad range, that's great. Where do you think this could settle at in, say, the next 12, 24 months? Third is on PTL. Now, here, was there a broader theme about kind of value over volume this quarter? Is that a fair kind of read? Into kind of what happened this quarter? Within this margin at 11%, would it be a fair conclusion to say that if volumes expand sequentially, then margins can only expand towards your guidance of 15%- 18%? Thank you. Sure. Thanks. Ajith Pai. If you just go to the page like six. Yeah. Broadly speaking, with the Ecom Express acquisition, you know, and the July volumes and continuing from here on, I think the big change will really be one in the number of express delivery centers and partner centers. We're currently at about 4,500. My sense is you should see this number at probably close to about 4,750 - 4,800 by the end of the year. The team size, obviously it will go up during the season. It will come down after the season. Hard to say exactly what it will be, but it will sort of follow broad trends in line with volumes. From an infrastructure gateway standpoint, you will not see any major change. That is part of the reason why we wanted to acquire Ecom Express in the first place. We don't believe that we need to significantly increase our express infrastructure or our gateways or our automated sortation centers to absorb the additional volumes that will come in from the Ecom network. As mentioned, there are no volumes in the Ecom network at this stage. All of them are coming into the Delhivery network. Our network has absorbed these fairly seamlessly. Absolutely no change there. I think there will be some expansion of pin code reach. We're at some 18,857. Ecom obviously had a wider reach than Delhivery did. Some of those will get activated over the next quarter. I don't know exactly what it'll reach, but let's call it maybe 19,200 or thereabouts. In terms of market structure, we've obviously gained market share in the last quarter. Hard to put an exact number to it, but my sense is, you know, and different people have different interpretations of this, but I would expect that our market share would have expanded by Ecom Express was probably about 50%, 60% of our size. Our market share has probably expanded by about 25% or so, possibly higher, but I'm not entirely sure. I think that will become clear. I'll give you a much better answer maybe end of Q2, Q3 when things stabilize a bit more. Right now things are still in flux, volumes continue to increase, and where does it settle long term? That is almost a nuanced question, really depends on what happens to the rest of the third party market. As I mentioned previously, the unit economics of other third party players are unsustainable and we've seen how that plays out once already. Now how that plays out with the other players in this market I can't say, but there is no road to better unit economics in the cases, and the reality is that market share should continue to consolidate towards more disciplined players and higher quality players. As I mentioned, who those players are is pretty clear. I think the only risk that one could think of is what would happen if first party players were to try to expand into the third party market. My response as ever remains the same. It is a right strategy that has failed, and we don't anticipate that that's sort of a major risk in terms of PTL. It's not so much value over volume actually. If you look at the rest of the industry also, broadly speaking, I think most PTL players have seen sequential declines from quarter four to quarter one. Minor declines are broadly a straight flattish. That's largely because Q4 is the peak quarter, so Q2 and Q4 tend to be larger quarters in PTL. Q1 and Q3 tend to be slightly lower. Q1 also has sort of this artificial impact of two 30-day months, and there were also disruptions in Q1 for a variety of reasons. One of them obviously was significant amount of rain. There was a certain amount of disruption from Operation Sindur as well in this period, and there have been some festive disruption. No particular change in the PTL strategy. I think it's just, you know, overall that's what the market is like. We anticipate that we'll be back to sort of business as usual in this quarter and beyond. Thanks. May I just ask a follow up if that's okay? Sure, please. Just on ppm, right, the guidance is 16% - 18%. Is there a broad tonnage which I'll think about which you need to hit to achieve that level of margins? Yeah, I think I will just. Number, and then I think Amit should just quickly comment on this. My sense is at about 1.5 times the size, we should be at those numbers. Please come in here. So. Thanks. Roughly at close to about 600,000 tons. 600,000 tons- 640,000 tons of quarterly load, which translates to about 200,000 tons- 215,000 tons of monthly load. Whereas we are posting an average of about 150,000 tons of quarterly load. Three things will kick in. One is fixed cost utilization will go down. We will get significant benefits of operating leverage on that. The second aspect is our utilization of our trucking will continue to improve on reverse lanes and a bit of it on forward lanes as well. Tractor trailer penetration will also increase. Lastly, pricing discipline and churning out of low margin customers will continue to happen. These three things should comfortably give us a 7% uptick on margin. Thank you. Thank you for the clear answers as always. Thank you, Aditya. Next question is from Gaurav. Rotevia Gaurav, please go ahead. Hi. Thanks for taking my question and congratulations on good setup numbers. I have a couple of questions. I will read it out all and then pass it on to you guys. The first is how much of the benefit of volume from Ecom Express has already come in the financials in Q1 as the network was unstable and the volumes were coming through to strong players like us. Second, your comment that you made on incremental Ecom Express volumes are coming at the Delhivery rates which my understanding is that could be higher, but then there would have been some volume discount. Is it fair to say on a net basis there would have been some still pricing gains as those volumes now pass through the Delhivery network? Third question is on your comment that you made on Part Truckload on 20%+ annual tonnage growth while Q1 was slightly short of this number. What drives your confidence to hit 20% on an annual basis, which means that your ask rate for Q2 to Q4 will be materially higher than 20%. Any anecdotes that help us to understand what drives that incremental gain? Last question is on you mentioned about couple of new value-added services on the FTL segment. Just trying to understand, are these material TAM opportunities or are these material gross margin opportunities from companies? Thank you. Yeah, sure. I'll probably bring in some of my colleagues also, since these are good questions. In terms of benefit of volume from Ecom Express, I think I answered this earlier in the call. The impact on Q1 is not that high. It's only towards the end of June that you see some of the impact. You can see the lift off begin. We've obviously gotten to 208 million packages in Q1, but July obviously has been significantly higher and we expected that will continue. The real impact will be visible in Q2. I think, see, network businesses have one other advantage, right? Unlike deliveries, which is that given the kind of network that we are, the more the volume that flows through our network, the more stable the network actually becomes. Most other networks which are not constructed like ours tend to have a reverse problem, which is that the more volume that goes to them, the less stable they become. The advantage of a mesh, as we've discussed, is that actually stability is an outcome of higher volumes. Potentially, you know, while the obvious immediate impact of the Ecom acquisition will be clear in the Q2 numbers, over the long term, I think, you know, the reality is the opportunity for us is potentially even larger in terms of the volume discounting on to customers. I think my colleagues are on the call who deal with customers on a more sort of regular, ongoing basis. Maybe Ajith or Vani, if you guys want to come in, please go ahead. Yeah, I'll take that. Vani, you can add to that. I think most of our relationships with customers are based on a pricing volume chart, which is how we've always conducted business. We have not seen any material changes to that. In some cases, of course, there are adjustments that we do during the year to reflect any change in the client's business in terms of mix, etc. Hence, our desire or their desire to sort of change the mix for us or to introduce new products at some points. I think, like Sahil mentioned, that has been broadly very, very stable with the Ecom Express acquisition. Again, like it was mentioned by Sahil, we expect that scenario to remain stable. Going forward as well. Yeah, I think third question is confidence on PTL at 20%. I mean, see, I'm very confident. Better that you hear it from the horse's mouth. Varun Bakshi, ask him to come in. Yeah, hi. I'm audible. Yes, you're audible. Please continue. First of all, so. The growth year on year on this business is, on the revenue term, 17%. The growth in terms. Getting about a 20% growth for the year, it's not going to be linear first of all. There'll be quarters with slightly lesser, there'll be quarters with slightly more growth. Number two, I think as Sahil mentioned when he was going through the presentation, this quarter's revenue got slightly impacted by the accounting adjustments, the Ind AS adjustments that we need to do to follow the statutory requirements. Adjusted for that, the 17% growth would be slightly higher. In fact, our yields quarter on quarter have increased over Q4 as well. So. That is a result of, because there is certain churn of customers which we were voluntarily doing as well. Adjusted for that, I think the business gives us confidence that it would be able to meet the 20% revenue growth expectations that we have for the business. No reason to say anything otherwise at this point. Yeah, Gaurav, obviously, you know, the impact in Q1, there was a material impact because of, you know, Operation Sindhur. There was some impact because of the rains in certain places and it is getting worse obviously year on year. Here on at least, you know, the rainy season, the monsoon appears to have died down to a significant extent and we should see lesser impact. I think so far the numbers in Q2 are good. July has been fine, so fairly confident. I know it's obviously a question saying if you grew 15% in the last quarter, why do you believe we'll go 20% for the year? I think let our Q2 numbers come out and at that stage things would be a little clearer. In terms of FTL VAs, I think too early to comment. These are important services that bind high quality supply of trucking into the FTL marketplace. These are value added services. For example, simplest one that we can do almost on an immediate basis in due course is fuel procurement support to some of our trucking partners. The other one obviously is on road assistance and control tower services for our clients, which are things that we anyway do internally for Delhivery's own operations. Both of those we will do. These are theoretically large TAMs. Just to be perfectly clear, Delhivery's ambition is not to become the largest retailer of fuel to trucks. It shouldn't be viewed in that fashion either. We have very specific strategic objectives for our FTL business, which is fundamentally, first of all, to bring down the cost of trucking procurement for Delhivery's own transportation operations. The second is to be a large input and a very efficient procurement mechanism for our supply chain services division, which is what it is. The third obviously is to be an extremely capital light way for our clients to discover trucking services and especially spot trucking services via trucking marketplace. As long as this allows us to make sure that high quality suppliers of this service are bound into the Delhivery network, we will provide these, but we have no desire to come and sort of start banging about metrics like, you know, we have whatever 4 billion trucks on our platform or whatever and we sell fuel to 75% of them. That's really not the end. Thank you for the detailed answers and all the very best. Thank you. Thank you, Gaurav. The next question is from Achal. Achal, please go ahead. Thank you for the opportunity. Congratulations for a great set of earnings. Sahil, a couple of questions. First, if you could talk a little bit about the utilization of the network. Where are we in terms of the efficiency? I know it's got partially answered in piecemeal, but just on a top down basis. The second question I had was when we are looking at incremental volumes coming through month on month, it's improving. Why would the margins be between 16% - 18%, why not more expansion? If you could elaborate a little bit. Number three, for the quarter we have seen the other income has gone up to about INR 1.3 billion. If you could talk about that as well in terms of whether it is sustainable or is there any one-off we need to note. Thank you. Sure. In terms of utilization of network, we've discussed this in the past as well. Much as I would love to tell you that the utilization of the network is whatever 42%, there's no way for me to really say that because the reality is the utilization of the network differs at various points. Line haul utilization is different, sort center utilization is different, DC utilization is different. Obviously, the numbers for July are going to look very different from the numbers for April, May, and June because the volume trajectory has meaningfully changed. Fundamentally, one way to think about it is that we did 208 million consignments versus, let's call it, 180 million consignments in quarter four. If you look at the spread of distribution centers, we had broadly, I think, 4,450 distribution centers, including partner centers in quarter four. We have 4,500 in quarter one. For a 1% increase in delivery centers, we have had a 14% increase in volumes. All those volumes are delivered through distribution centers, and therefore the utilization of the distribution centers has gone up to that exact mathematical extent. It's obviously a little more. By the way, you can do exactly the same math for sortation centers. You can do exactly the same math for hubs and gateways. We have a constant set of sortation centers, and if the volumes have gone up 14% and we haven't increased the total number of sortation centers, the utilization of the sortation centers, it follows, must have gone up by 14%. Line haul is obviously the hardest one to talk about, which is a trucking network, trucking utilizations, because they also depend on the directionality of the loads that one is creating. I think, broadly speaking, as I mentioned, trucking utilization has been in that 60% - 65% kind of range. One of the things that has changed a little bit in quarter one is that there was a marginal expansion of our tractor trailer fleet while PTL volumes were flattish. There may be a marginal decline in trucking utilization between quarter four and quarter one. The second is that we've also begun experiments, as I mentioned in the past, with double trailers on a tractor, and there may be a marginal decline in utilization on reverse lanes associated with that to some extent, but it's very hard to put a very scientific number to it. The question on should margins go up beyond 18% given that there's no sort of adverse movement expected on pricing and the network filling up. I think as I mentioned, we have guided to the 16% - 18% previously, not because that is what we believe is the theoretical limit of the network. We have operated the network at higher than 18% service EBITDA margins in peak months. It is a conscious call to share a certain amount of efficiency with clients. Now, whether we will share all of the efficiencies that we create going forward or not, I think is a strategic choice that we make looking at every single customer. Technically speaking, you're correct, margins as volumes expand, could expand beyond the 18% sort of range as well in the express business. The other thing obviously, as I've spoken about in the past, is that the larger the PTL business gets, the better the margins for everybody. Therefore, when the PTL business reaches whatever, let's call it, 200,000 tonnes, 250,000 tonnes of freight on a monthly basis, the reality is the express margins have scope to expand further. We also obviously continue to look at new ways of automating our operations, which again have a positive impact on margins. The way I would look at it is to say, if you must model this, feel free to conservatively model our margins at 16% - 18%. There are opportunities for us to expand it beyond the 18%. You'll either see that as incremental margins in the business or you'll see it as incremental share of wallet if we choose to pass those benefits forward. Either which way, the absolute service EBITDA will continue to expand. On the last question in terms of other income, I think again, I'll just ask Amit to come in. Yeah, the increase in other income is. Primarily due to increase in value of mark to market securities due to interest rates going down in quarter one of current fiscal year. In the subsequent quarters, we expect this to normalize to our earlier level and maybe slightly go down because the yield curves have gone down. However, as you are aware, we have paid close to INR 1,400 million on 18th of July and hence no further interest income is going to accrue on it. That will be one change to the other income going forward. Yeah, thank you so much. Those were my questions. Thank you, Ajith. The next question is from Mukesh Saraf. Mukesh, please go ahead. Yeah, good evening and thank you for the opportunity. My first question is on could you give some sense on the volumes that Ecom Express has done in the first quarter? You had provided some indication on what it had done in the fourth quarter. It would help if you could tell us the volumes of the first quarter. Hello, I'm audible. I think broadly speaking, in quarter one, Ecom Express would have done something like 30 million packages. 30 million. All right. You had mentioned that we're probably retaining say around 50%-55% of the volumes, higher than what you had thought earlier. My question is that probably based on this high retention, your wallet shares with some of the marketplaces would have kind of gone higher. Typically, the understanding that we had is that marketplaces would not want a particular service provider to kind of get too large with themselves. Is this like a temporary phenomenon until the marketplaces kind of figure out and redistribute these volumes out, and hence you might lose some volumes later on? Or do you think this could be sticky going forward as well? I think I've answered this. First of all, you don't always get what you want. On a more serious note, the reality is that where will the volume go? The volume ultimately has to be delivered, not merely handed off to the lowest cost service provider. Right. There's no marketplace or direct-to-consumer brand or SME or aggregator or, you know, international shipper who's merely going to say as long as I get a INR 4 discount on shipping, I don't care whether the package gets delivered or not. What you're seeing is not just the impact, as I mentioned, of our cost efficiencies, which obviously also reflect in the fact that we were able to complete the acquisition of Ecom Express in the first place. This is a movement of volume towards higher quality players. As marketplaces get larger, they will look for a reliable partner. I would struggle to think of why Walmart, Amazon, or Meesho for that matter would say we're happy to have an unreliable partner just because we happen to have in-house logistics. I don't believe that unless we commit, you know, operational harakiri for our volumes to not be sticky. Got that. Got that. Understood. Thank you. The second question is on the INR 14 crore investment basically that you're talking about on the new businesses. Could you kind of help us understand probably in the next year or so how this could, how the business itself, the revenues here, and how the profitability here could materialize? Because as of now it's literally wiping out the service margins that we're making on the supply chain business. First of all, how much this could go up to in terms of losses, and secondly, how do we see that kind of turning profitable, say, over the next year or so? I think it's too early to, you know, these businesses are very small. To give you an example, the on-demand intra-city logistics market, you read the RedSeer reports or whatever, you know, is estimated at some INR 10 billion. I don't know whether it's INR 10 billion or whatever, but suffice to say it's very large. Right. Our entry into this market is approximately, you know, 100 days old. It's a bit too early to comment on what the size of the business for Delhivery will be and what the exact investment levels will be. I think it's a capability that we think is a significant growth driver. The second thing is that it's a service that's valuable to existing customers of Delhivery. As an example, Delhivery Direct also allows you to perform on-demand intercity shipping. Actual extension to also allow customers to do on-demand intercity shipping. I think the investment levels will vary a little bit. It's the first quarter, let's go through another one or two quarters that the operations for Direct, for example in Ahmedabad, Delhi, and Bombay, sort of stabilize. What I can tell you as an example is Ahmedabad is the first city that we launched in Delhivery Direct and we are at contribution margin break even in about four months. Right, right, right. Hopefully we'll follow a similar trend in Delhi and Bangalore. The reality is that Delhi and Bangalore, you know, are four times the size of the bath. I think still I think the is large which is in these. Sure, sure. Understood. Got it. Thank you. I'll get back. Thank you. Mukesh. The next question is from Aditi Munge. Please go ahead. Thank you, team, for the opportunity. Three parts to the first question. First, Sahil, you were the first time. Talking about this flight to quality. Obviously, there were some factors in the. First quarter that were transitory in nature. Could you speak a little bit more on what is something that can structurally drive a trend towards flight to quality? That's the first part. The second part of the question is for you and your peers to be. Kind of giving good service in this kind of environment. Is it essential to have a Part Truckload service to balance things out? If the answer to part B. Is yes, do you see other players? In a manner to kind of survive and grow, attacking the parts of road market somewhere on quite aggressively? Sure, yes and no. Is it essential to have a Part Truckload service to deliver high quality service? I think in a world in which you have volatile volumes, it helps obviously, but it is not the sole factor that enables you to deliver high quality service. High quality service is delivered by 14 years of investments in automation, software, teams, training, which is a lot more than just merely running a PTL network. Yes, it does help to some extent of course. The math is pretty simple. When you do, let's call it 160 million packages a month and on average they weigh whatever, let's call it a kilogram, you're only moving about 60,000 tons of freight. Whereas the reality is the PTL business is moving 150,000 tons. The delta variations when the parcel business spikes on the overall tonnage of the network are pretty small. If you were running a parcel-only network, obviously the delta variations would be larger. It is not just a consequence of having the ballast of the PTL business. It is the underlying network structure, it is the automation, it is the software. These are investments, as we pointed out, that have been in the making for a long time. Can other players attack the PTL business? I think one of our competitors has been trying to do that for a couple of years now with hardly any success. The fact anybody can run a PTL network, I mean anybody can take PTL loads, that's hardly very complicated. The answer to that is the market is unorganized, everybody with everything from one truck to a thousand trucks runs the PTL network. Integrating it with a parcel network is really very hard. Even other players who've tried to experiment by putting a PTL business together, express players, by that I mean fundamentally run the express and PTL networks on different rails and therefore they are not an integrated network. The reason why building an integrated network is hard is because you have to figure out complex things like how do you match cutoffs, how do you manage multi-piece shipments versus express loads, how do you make sure that the right kinds of goods get onto the right trucks and in a dynamic environment. That is a materially difficult problem to solve. Will people try to do a PTL business? I think various people will look at Delhivery strategically and possibly think of it as a sort of silver bullet. The problem is that the investments in software, automation technology, and team that are required to make this work are highly non-trivial. I actually don't think that most of those attempts are going to be successful, and they actually have not been successful for a couple of years already. You can try, but you know, the second thing I think, the other thing also is that even if somebody were to, you know, even if we, for example, were to give out our entire sort of technical back end, all our people were hired by some competitor, it would still take you years to actually construct the facilities, still take years to actually train the teams and make it executionally possible. In theory, yes, obviously over a long period of time any competitive advantage can be replicated. In practice, I think it's going to be very hard. You have to factor in that for existing CPLs, the attempt is to try and do this while the balance sheet is shrinking pretty rapidly. I think the number of real strategic options here are for all practical purposes zero in terms of flight to quality. Can you just help me out? I didn't fully understand your question. You said what will it take to structurally drive flight to quality? Quality. That was not the question, my friends. The question was that obviously there are some transitory factors like whatever, weather operations, Hindu and so on, so forth. Beyond that, are you really seeing some structural factors that are here to scale that are making customers more conscious and starting to think through vendors. In a different light than earlier. No, I think as the marketplaces, you know, who will this really affect? Because in Direct to Consumer and SME anyway or Shadow Wallet to begin with was sort of very high. Fundamentally there I don't think there's been that much change. I think it's for the marketplaces really where things have become a little bit different. I think as Meesho has specifically started doing logistics on their own and they've sort of discovered that logistics is hard to do. I think there's a greater appreciation for what it means to create quality in a transportation network, and they're obviously improving the operations in Valmo as well. At the same time, I think what they want is a highly reliable partner. The second, obviously, is that the volatility in these businesses also seems to have increased. If we look at quarter one, the inherent volatility in the marketplace volume seems to have increased. That could be sort of just a factor of quarter one being the way it was. You'll have peak season, there will be more volatility. I think as the volatility goes up, they are finding that other networks don't have the ability to take that on. The more, in some senses, I guess the more variable the weather becomes, the more festive seasons have impact and the more these guys go after growth, the more they will have to sort of rely on high quality partners. My second question was more on, let's say, as in the context is that it seems that your existing businesses until under 13 commit some operational hierarchy as we'll be going in autopilot mode. That way to put it. How are you thinking through kind of investing your time and the company's financial resources into newer ventures? I'm sure that this is right. Acquisitions or larger times, air cargo, how are you thinking. Through investing time and resources of the company from here on? Yeah, so, you know, I wish an operational business could ever be on autopilot, but it's really not. I think to create the impression of a business running smoothly, a lot of hard work does need to go in. I think a large portion of our senior team's focus, whether it's mine or, you know, Kapil, who's our CTO, or Suraj, who's our CHRO, or our Corporate Finance team, Amit or Vivek, etc., still obviously does go towards making sure that the existing businesses continue to run as smoothly as they need to. There are sort of long-term operational challenges that we need to solve even for these businesses. In terms of new services that we do need to launch, I think there are a few that we continue to evaluate. Two that we've launched as an example are Rapid Commerce and Delhivery Direct, which is the on-demand intra-city business. I think on Rapid Commerce the story is yet to be played out. We have so far launched as a B2C Rapid Commerce player. Our view is that the B2B market for Rapid Commerce actually is very large as well. You know, think for example auto spare parts, durable spare parts, tires and so on. These are the kinds of categories that we do want to bring in. Our view is that actually the B2C business over a long period of time will be much smaller than the B2B business in Rapid Commerce. In some senses, the economics of B2C will be determined by Delhivery's ability to create a large B2B Rapid Commerce business. We will do that. We will continue to expand our cross-border Express Parcel business. I think there's a growing demand from direct-to-consumer brands and SMEs for us to open up an economy product for them that allows them to ship across the world. Currently, we only provide an express product through FedEx and Aramex. We will expand and build that. I think these are the more direct adjacencies. We do continue to evaluate airfreight. We do have a material amount of load that now moves on airfreight. We're obviously not as large as Blue Dart Express yet, but we're a very large shipper on aircraft in Delhi. That's something that Ajith and his team continue to evaluate. There may be a moment in time when it'll make sense for us to make a more sort of decisive move on the airfreight side as well. Can I ask one more question, Sahil? Sure. Your guidance that is there over the medium term about, say, close to high teens margins in the Part Truckload business, does that take into account any material change in yields? I ask because until last quarter, I'm assuming that's continuing your incremental customers, so great value, and they're actually giving you higher yields than your existing customers. That's the final question from my side. Any upside risks or what are the assumptions essentially inside when you think you are certain margin number against any assumptions that you have? Hey, so yes, yields will play a role. Yields and the customer mix. As we have pointed out earlier, our customer mix is still a little less indexed to a lot of retail customers that are there in this industry. We do lesser of that. As we increase that, which is a higher-yielding business, more profitable even for us, whatever it is, whatever lesser we do at this point in time, as we increase that share, the profitability and the yields will continue to go up. What we have been doing over the last year is setting up teams geographically at the right place to tap this opportunity. We have done that. We have started seeing results of that. You are seeing those in ease as well. We are far from where we want to be in that. The answer to that is yes, partly because of this, and even I think in the existing customers, what we have seen over the last one, one and a half years, most of the customers, not all I would say, but most of the customers seem to be more quality conscious than chasing that last INR 0.20 or INR 0.30 off pricing that someone can give them better. In that sense, the market is less price sensitive than probably it's perceived. We do think even in our existing customers there is a play as one becomes a better PTL player. Thank you. That will be all from my side. All the very best. Thanks. Thank you, Aditya. The next question is from Ankit Agarwal. Ankit, please go ahead. Hi, can you hear me? Yes. Yeah. Hi team. Thanks for the opportunity and congrats on great set of numbers. I just have one question. Sorry to go back again on the insourcing strategy because you have already commented here. My question is that given that there are some signs of consolidation in the market with you sort of taking over Ecom Express and there is a sequential pickup in e-commerce volumes in Q1, which we normally don't tend to see given that this is a seasonally weak quarter. You are also saying that volume for Ecom Express has not materially flown to your network in this quarter. My question here is that has there been any material change in the strategy around insourcing for one of your largest clients? I'm basically talking about Meesho because they were the one who were aggressively increasing insourcing levels since last year. Can you provide some comments on that? Has there been any stabilization on the insourcing mix? Any sort of color on that would be great. Yeah. I think their insourcing strategy is consistent with what they have said in the past. It is at a level that they seem to be comfortable with. The important thing is that of the significant percentage that they outsource, a larger percentage of that is now accruing to Delhivery. Got it. Can you comment anything around Amazon Transport Services and E Cart on the same lines? Has there been any change on that front for these clients? I think our volumes, as I mentioned with all marketplaces, have increased in Q1 and so far in Q2 as well. I don't think that represents a fundamental shift in how they think about in-house logistics. I think that will take some more time to materialize. Fundamentally, since our volumes are going up, I think, as I mentioned, the shift in their thinking appears to be that instead of merely trying to go to the lowest cost provider, they are going to a highly efficient provider with the highest quality. Got it? Got it, sir. Thanks. Thanks for the answer. Thank you. The next question is from Mr. Katarian. Hello, can you hear me? Yes, please, go ahead. You know, historically you've been mentioning. That, you know, in E-commerce the incremental margin should be between 35% and 40%. Now that a majority of this revenue which will come from E-commerce will flow through the Delhivery network, how should we think about incremental margins excluding the integration cost? On a recurring basis, should we think this will be materially better than the 35% - 40% that you mentioned earlier? The incremental margins that I've spoken about in the past are obviously based on a target service EBITDA margin of 16%-18%. I think earlier in this call we were discussing this. You know, that's what we have at work as volumes go up, you know, evaluate client by client, sort of what kinds of potential opportunities we have for shallow wallet gain. There is a possibility that service EBITDA may expand beyond as well. It's really too early to say. I think the easiest way to think about this is that in the absence of any further adverse pricing, as long as that does not continue, and we don't believe it will continue, the reality is that the network's utilization will continue to go up. As I mentioned, by the end of the year, as opposed to 4,500 delivery centers, as the simplest example, we will be maybe 4,850, 4,900 delivery centers, which will be an expansion of maybe 6% or so. Now, if volumes in the network go up, you know, 30%-40% in this period, that obviously is going to present a massive increase in utilization. Last mile delivery costs, as an example, are probably just the fixed costs are about 10% of total costs, and you'll see a pretty significant reduction there. The same math will apply to sortation centers. The same math will apply to gateways and hubs. You know, even if you assume that there are no line haul benefits that are generated, the incremental margins could be higher as well. As I mentioned, I think, you know, the Q2 numbers so far are looking great. Let's go ahead. When the Q2 numbers come out, it'll be sort of much clearer. Understood. Great, thank you so much. Thank you. The next question is from Janam Shah Janam. Please go ahead. Yeah, hi. Thanks for the opportunity. Just wanted to confirm one thing. The Ecom Express volume you told about 30 million is for this 1Q or is it for a particular month? 1Q, so I just wanted to get. Your sense on this. Of course, our volume has been increased to around 208 million. If we add on our Ecom Express volumes, it is 238 million. If we see the trend of Ecom Express, they have been doing around 500+ million of volumes in a year. If we just take it on a quarterly basis, they have been doing 120 million, 130 million kind of volumes, which has dropped to around 75% in this quarter. Just wanted to get your sense out of 208 volume. As you commented in the last phone call that some of the customers already started shifting volumes after the formal announcement of the Ecom Express acquisition. Out of 208 volume, what could be. The volume that has eventually come from Ecom Express with the customer shifting? What has been the organic growth that we have seen in this particular quarter? If I just add back 208/330, it is 238 versus somewhat of 300 million orders that we have done combining Ecom Express plus Delhivery. 1Q last year that has been a drop of around 20%. Just confirming these numbers. I think, you know, let the Q2 numbers also come out. That's when this will become a lot clearer because the full impact will become visible. As I mentioned, the full impact will take some more time as well to play out because the reality is volumes continue to accrue into the Delhivery network. As I mentioned, our original assumption was that 30% of the volumes would accrue to Delhivery and we're already beyond that and that continues to grow. The reality is the full impact of the Ecom Express acquisition is a positive surprise so far and we'll have more sort of clear information as we go along. Just a very narrow point on the INR 500 million. Bear in mind that Ecom Express and Delhivery don't count shipments the same way. Delhivery accounts forward and return consignments, an RTO, effectively as the same as a forward consignment, whereas Ecom Express's accounting policy was to count them as two separate consignments. The INR 500 million number was inflated to the extent of the RTO rate, so the actual number was significantly lower than that. Got it. This retention of whatever we are talking about, 50% or more, will it be coming to the Delhivery standalone, and is it safe to assume that at the end of probably a few quarters, the Ecom Express will be having eventually zero revenue as a subsidiary? Ecom Express as of Q2 itself will have more or less zero revenue as a subsidiary. Got it, sir. That's it for myself. Thank you so much. Thank you, Jana. In the interest of time, we will take the last question from Sunal Minhas. Sunal, please go ahead. Hi, this is Sonal. Am I audible? Yes, go ahead. Hi team. Great set of numbers. Wanted to understand more from a 23-year-out perspective, what are the asset turns we look at or we internally evaluate in our financing, and what are the margins that we think that this is the asset turn we expect when we compare our balance sheet to our top line our business should be heading to, and tentatively what margins we should be at. The direction I'm basically trying to get to is that is this fundamentally a 12%-14% return on capital business 23 years out as the consolidations happen as the thesis that you're talking about plays out. Sonal, we right now do asset turns of about 2x net of cash basis. In the settings, we have close to INR 5,000 crore deployed in hard assets, working capital, all of it put together. I think closer to INR 4,500 crore and we do about INR 9,000 crore of revenue as revenue from services annualized. The target would be to get to roughly about 3x of asset turns for us in Express Parcel and PTL business, both of them which form bulk of our revenue, is close to 85% of our premiums. The service EBITDA margin, as Sahil spoke about, is in range of 16% - 18%, while there is a potential to be higher, but if you were to assume it at 17% you just have to deduct the corporate overhead, which is right now at about 8.5%, and we have guided it towards 6%, 6.5%, and that will bring you to adjusted EBITDA of close to about 11% for us to do, and that's a turnover of about 3x on that 11% order adjusted EBITDA. The aspirational return on capital for Express Parcel and PTL business is well above 24% we aspire to do with the acquisition of Ecom Express. Nothing in this changes except the fact that we have front loaded the capex by roughly about INR 300 crore. Now this INR 300 crore capex is. Essentially. Not something we are going to put into active use from day one. Many of the sorting equipment, etc. will be warehoused and will be put into use as the capacities, you know, long-term capacities need to be built in. Nothing with regard to Ecom Express acquisition will change the way we have, you know, put in the economics of the business. Got it, thanks for this explanation. Just understanding the Ecom Express integration with the business, we mentioned that we need to up the infrastructure by around 6%-8% from here to maybe like 2-3/4 out. Secondly, Ecom Express volumes, we possibly want to capture 30%-50%. Is it a fair assumption that whatever flows basically net of that should be margin accretive, should be straight away be flowing? To our EBITDA, or we would need. To add more overheads and maybe more cost involved once these one-time INR 300. No, no, there'll be no overheads required to service this additional volume because it's coming from the same customers. There's nothing additional to be done. As I mentioned, the 6% increase also, just to be clear, is in the distribution center network. The last mile delivery centers, which are, you know, out of the whatever INR 20.3 million odd square feet of real estate that we operate, are a very minor fraction of them. Most of the other infrastructure is absolutely sort of perfectly fine for us to absorb the volumes. In fact, I mean, as you can see, we have not expanded the network and have absorbed the volume. Yes, this is one or two, I think, imply that. Thanks for explaining. Just to be clear, it will be less the variable cost of delivery. Obviously, what will flow to the margin will be less variable cost. I think last question if I may ask. I think somebody previously was asking, you've seen a volume growth of around 14% in your Express Parcel. Has the volume growth with the three Ecom players been higher or it's roughly the same levels as this number? No, I think we've gained share, and you'll see that we've gained share for them. All right. Okay. That's it for myself. Thank you. Thank you. That was the last question. Thank you everyone for joining us on the call. Please reach out to the Investor Relations team for any further questions. Before we end, I'd like to request Mr. Sahil Barua to conclude this discussion with his closing remarks. Over to you, Sahil. Thank you, partner. I don't really have any sort of insightful closing remarks, I think. Thank you all for joining on Friday evening at 7:30 P.M. Hopefully this was useful. Like I said, we've had a good start. FY 2026 Q1 has been great. Hopefully this continues into Q2 and beyond. Thank you. You may disconnect.