Shares of Delhivery Ltd., the logistics services provider, are down another 5% on Wednesday after ending 7% lower on Tuesday. With this, the stock has extended the two-day drop to 11%.

Delhivery on April 5 announced that it is acquiring rival Ecom Express in an all-cash deal valued at up to ₹1,407 crore. The acquisition, involving a 99.4% stake, marks one of the biggest consolidation moves in India’s fragmented logistics sector.

According to brokerage firm Emkay Global, the combined entity would command 55-60% market share of the third-party logistics B2C (business-to-consumer) express market. These two companies would be three times bigger than their next biggest rival in this space.

Apart from scale benefits, given that both operators service 97% of pin-codes in India, Emkay believes there are significant cost synergies to be realised over the next 12-18 months.

Improvement in network utilisation, especially in the last mile (50% of linehaul costs in the B2C express segment), should aid profitability once networks are integrated, the brokerage said.

While valuations are fairly attractive, the acquisition is unlikely to be earnings accretive in the near term.

With majority of customers being common between the two and given the learnings from the Spoton acquisition, Emkay expects sales retention and network integration to be relatively smooth.

However, concerns around Meesho increasing insourcing of logistics would continue to cast a shadow on the volume trajectory in the near term.

Emkay said that it will await management commentary on its network integration plan going forward. The brokerage has retained a ‘Buy’ rating, with a price target of ₹400 per share.

While positioned as a strategic move, the contours of the transaction suggest it may also be a distress sale — with SoftBank exiting yet another Indian investment at a significantly lower valuation than expected.

For SoftBank, this represents yet another subdued exit in India. The Japanese investor, which acquired a significant stake in Ecom Express nearly a decade ago, is believed to have invested close to $125 million in the company. Its share in the ₹1,407 crore deal is expected to result in a loss, although the payout breakdown has not been disclosed.

Out of the 24 analysts that have coverage on Delhivery, 18 of them continue to maintain a ‘Buy’ rating on the counter, while six others have a ‘Hold’ recommendation.

Shares of Delhivery are trading 2.49% lower on Wednesday at ₹242.70. The stock has corrected 50% from its IPO price of ₹487. With today’s drop, the stock has fallen 30% so far in 2025.