Logistics firm Shadowfax has seen a sharp growth in its express parcel business—nearly 70% of its revenue—in the first half of the current fiscal, as consolidation across the country’s fragmented logistics market pushed more volumes towards the remaining third-party players.
The firm saw revenue from its express parcel business rise nearly 60% year-on-year to `1,239 crore, while order volumes rose about 43%.
Market Consolidation Trends
In recent years, e-commerce majors such as Amazon, Flipkart and Meesho expanded their in-house logistics capabilities, leading to volume and pricing pressures for traditional third-party logistics (3PL) providers. This trend led to a phase of consolidation in the ecosystem, with Delhivery acquiring smaller rival Ecom Express last April.
Despite expanding their in-house logistics arms, e-commerce companies have continued to be large clients to 3PL players. For Ecom Express, it was Meesho, which contributed over half of its revenue. For Shadowfax, its largest investor Flipkart is also its largest client, contributing 48.91% of its revenue in H1FY26.
This over-reliance on one customer continues to be a concern for its investors. However, market consolidation among 3PL players has been positive for the company overall, the management pointed out, as weaker logistics operators exit and large e-commerce and D2C brands increasingly consolidate shipments with fewer, reliable partners.
The company’s growth comes at a time when India’s e-commerce ecosystem is entering a new phase. Online retail penetration in India remains at about 7% of total retail, significantly lower than the US and China, but is expected to climb to 12-14% by FY30, according to RedSeer estimates cited by the company during its IPO conference on Wednesday.
Rising Market Share
Shadowfax expects to be a direct beneficiary of this industry growth. In FY25, the company emerged as one of the top 3PL players in e-commerce, with market share rising to about 21% in FY26, up sharply from a few years ago. While express parcel continues to be its largest business, the firm also offers hyperlocal delivery to quick-commerce players and other value-added logistics services.
The company expects daily e-commerce and hyperlocal shipments to nearly triple from 22-24 million orders a day currently to as much as 62-74 million by FY30, creating a large opportunity for organised logistics players.
So far, Shadowfax’s growth has been accompanied by improving profitability. The company’s adjusted Ebitda margin improved to 2.9% in H1FY26, compared with a loss-making margin in FY23, while revenue from operations rose nearly 70% y-o-y to `1,805.6 crore. Shadowfax has now delivered 10 consecutive quarters of profitability, management said.
“Looking at how the sales numbers have gone and how the momentum has varied into H2, one could easily argue that some of the growth pace of H1 will continue into H2, and we will probably grow at a faster pace than what we have historically grown,” co-founder and CEO Abhishek Bansal said during the conference.
The management also highlighted the company’s asset-light operating model, which relies on leased infrastructure and a crowdsourced last-mile network.
As Shadowfax prepares to list in the coming weeks, the key question for its investors would be whether the company can sustain its growth momentum as competition intensifies and pricing pressure tests its profitability in the year ahead.