Delhivery cuts working-capital days, but H1 free cash flow is negative

Delhivery cut net working-capital days to five at September 2026 from 38 in March 2023, driven by receivable days falling to 41. Yet H1FY27 free cash flow was negative Rs 31 crore because Rs 336 crore of capex and Rs 219 crore of lease payments exceeded Rs 525 crore of operating cash flow.

How did Delhivery reduce working-capital days to five?

Delhivery reduced net working-capital days by 33 days between March 2023 and September 2026, principally as receivable days declined by 36 days while payable days moved by only three days. Net working-capital days fell consistently across the reported dates, from 38 in March 2023 to 28 in March 2024, 22 in March 2025, 11 in March 2026 and five in September 2026.

Receivable days reached 41 at September 2026, compared with 44 at March 2026 and 77 at March 2023, while payable days were 36 versus 33 and 39, respectively. Delhivery defines receivable days using trade and unbilled receivables against annualised revenue from the last quarter. From March 2024, receivables were also measured net of cash on delivery held against receivables and customer-advance costs, while payables were measured net of vendor advances.

Why was Delhivery's H1FY27 free cash flow negative?

Delhivery recorded negative free cash flow of Rs 31 crore in H1FY27 because its Rs 525 crore net operating cash inflow was more than offset by Rs 336 crore of capex and Rs 219 crore used for interest and principal on lease liabilities. The presentation defines free cash flow as operating cash flow plus capex cash flow plus lease-liability interest and principal payments, rather than simply operating cash flow less capital expenditure.

This was a deterioration from FY26 free cash flow of Rs 89 crore, but an improvement on negative Rs 196 crore in H1FY26. The first-half year-on-year change reflects operating cash flow rising by Rs 310 crore from Rs 215 crore to Rs 525 crore, while capex cash use increased by Rs 124 crore from Rs 212 crore to Rs 336 crore and lease payments increased by Rs 20 crore from Rs 199 crore to Rs 219 crore.

Operating cash flow in H1FY27 included Rs 543 crore of cash operating profit before working-capital changes, Rs 125 crore of adverse changes in net assets and a Rs 107 crore positive entry in the income-taxes-paid line. The reported net-assets line includes inventory, receivables, other financial assets, loans, other assets, payables and other liabilities. Thus, the five-day net working-capital metric and the Rs 125 crore cash outflow from changes in net assets are separate disclosures and should not be treated as identical measures.

How much has Delhivery lowered capex intensity?

Delhivery lowered capex on a capitalisation basis to 4.8% of revenue in H1FY27 from 7.8% in FY23, a reduction of 3.0 percentage points. The ratio was also below 5.1% in H1FY26, though it was slightly above the 4.7% recorded for FY26. The disclosed capex ratio excludes the Ecom Express acquisition impact and construction work in progress.

Network investment was the largest component of H1FY27 capex intensity at 2.6% of revenue, up from 2.5% in H1FY26, while vehicle capex declined to 1.8% from 1.9%. Automation fell to 0.1% from 0.2%, and information-technology assets were 0.4% versus 0.5%. The multi-year reduction therefore occurred despite network spending remaining the largest category in the latest half-year.

The cash-flow statement reports Rs 336 crore of capex cash use in H1FY27, compared with Rs 405 crore over all FY26 and Rs 212 crore in H1FY26. On the balance sheet, property, plant and equipment including construction work in progress rose by Rs 105 crore, from Rs 1,597 crore in March 2026 to Rs 1,702 crore in September 2026. Capitalisation-based capex and cash capex are differently defined disclosures, so their reported amounts need not match.

What operating changes sit behind Delhivery's cash profile?

Delhivery's operating cash generation rose alongside revenue and reported earnings in the latest quarter, with Q2FY27 revenue from services at Rs 3,066 crore and profit after tax at Rs 41 crore. This compares with Rs 2,559 crore of revenue from services and a Rs 51 crore loss after tax in Q2FY26. The Q2FY27 income statement also recorded Rs 34 crore of finance costs, of which Rs 33 crore related to lease liabilities.

At the service level, transport revenue increased to Rs 5,135 crore in H1FY27 from Rs 4,069 crore in H1FY26, while transport adjusted earnings before interest, tax, depreciation and amortisation, or adjusted EBITDA, rose to Rs 294 crore from Rs 190 crore. Express parcel shipments increased 42.7% to 647 million, and part-truckload freight tonnage increased 16.3% to 1.087 million metric tonnes. These measures show increased activity over the same period in which cash operating profit before working-capital changes reached Rs 543 crore.

Cash balances nevertheless remained substantial in the presentation. Cash and cash equivalents at September 2026 were Rs 4,676 crore, up from Rs 4,555 crore at March 2026, while borrowings fell from Rs 3 crore to nil. Lease liabilities were broadly unchanged at Rs 1,465 crore versus Rs 1,460 crore, making the Rs 219 crore H1FY27 lease-related cash payment a continuing component of Delhivery's free-cash-flow calculation.

Conclusion

Delhivery's disclosures show a material reduction in capital intensity and working-capital days: net working-capital days fell from 38 to five over three and a half years, and capex as a share of revenue declined from 7.8% in FY23 to 4.8% in H1FY27. However, first-half cash generation did not cover both Rs 336 crore of capex and Rs 219 crore of lease payments, leaving free cash flow at negative Rs 31 crore despite Rs 525 crore of operating cash flow.

The unresolved matter for subsequent reporting periods is whether operating cash flow can cover capex and lease-liability payments together. The relevant disclosed variables are capex cash use, lease-related interest and principal payments, and the movement in net assets, which used Rs 125 crore of cash in H1FY27.