Shadowfax Bets On Apparel, Grocery To Drive Next Growth Phase

Last-mile logistics firm Shadowfax Technologies Ltd, which started its journey in food delivery, is now positioning itself as a full-fledged logistics platform as it prepares for its upcoming Rs 1,907-crore initial public offering.

Founder Abhishek Bansal says the company’s next phase of growth will be driven by India’s rising digital penetration, particularly in the under-served apparel and grocery segments.

“Today, only about 7–8% of India’s retail sales happen online. By FY30, this could rise to 13–14%,” the chief executive officer told NDTV Profit. “When you break this down, apparel and grocery remain the most under-penetrated categories. These will be key growth drivers for us.”

Shadowfax plans to support this shift with faster, low-cost delivery solutions aimed at expanding digital commerce adoption across the country.

The company’s Rs 1,907-crore IPO includes a Rs 1,000-crore fresh issue, with the rest being an offer for sale. About 45% of the fresh proceeds will be invested in capital expenditure, primarily to automate facilities, set up new hubs and expand operational capacity.

“Between FY23 and FY25, we grew at a 32.5% CAGR. In the first half of this year, our growth has been 68% year-on-year,” Bansal said. “We expect this momentum to continue, which is why expanding capacity is critical to staying reliable and customer-focused.”

The remaining funds will be used to scale the company’s presence among direct-to-consumer brands and smaller sellers, especially in deeper parts of India. Shadowfax is seeing triple-digit growth in this segment and plans to invest in sales teams and new service models to capture this opportunity.

While Shadowfax reported losses in FY23 with an Ebitda margin of -7% due to aggressive network expansion, the company has now been profitable for 10 consecutive quarters.

“With our network maturing, we are seeing strong operating leverage,” Bansal explained. “Our trucks are better utilised, delivery routes are more efficient, and orders per route have increased. This is directly improving our Ebitda.”

He added that global peers in mature logistics markets operate with healthy margins, and Shadowfax expects similar profitability as scale increases. Another driver of margins is the company’s focus on value-added services such as same-day and hyperlocal delivery, where it commands premium pricing.

Addressing concerns around new labour codes and their impact on the gig workforce, Bansal said Shadowfax has not seen any disruption to its operations so far.

“In fact, we see this as a positive development,” he said. “With social security benefits and standardisation, more people will be encouraged to enter the gig economy. This will strengthen the workforce and the overall ecosystem.”

Shadowfax’s unit economics have steadily improved over the years, driven by better control over both fixed and variable costs.

“We have seen strong operating leverage on fixed costs, trucking costs, and even delivery partner costs,” Bansal noted. “This is a big reason why we’ve moved into sustained profitability.”

The Indian logistics market is highly competitive, with players such as Delhivery and XpressBees, along with captive logistics arms of quick commerce companies. However, Bansal believes the sector is not a “winner-takes-all” market.

“Businesses don’t want to depend on a single logistics partner,” he said. “They prefer working with multiple players to manage risk and ensure reliability.”

Interestingly, many quick commerce and food delivery companies that earlier relied on captive logistics are now outsourcing a portion of their deliveries to third-party logistics (3PL) players like Shadowfax.

“As these companies focus on profitability, they are increasingly diversifying their fulfillment partners,” Bansal said. “We already play a major role in quick commerce logistics.”

Shadowfax boasts a highly sticky customer base. Over the past five years, the company has not lost any major customers, and its top 20–50 clients have consistently increased their business with the firm.

“Logistics is inherently sticky, especially when you offer value-added services like reverse logistics,” Bansal explained. “Integrations can take up to two quarters because we conduct doorstep quality checks for returns. That level of embedding makes switching difficult.”

To deepen relationships, Shadowfax typically offers each client a portfolio of 3–5 services, including forward logistics, reverse logistics, critical deliveries, and omnichannel solutions.

“We are the only platform in India offering such a wide range of integrated services,” Bansal said. “That’s a key differentiator for us.”

Looking ahead, Shadowfax aims to be at the centre of India’s digital commerce evolution whether through e-commerce, quick commerce, or emerging formats like video commerce.

“India already has the world’s highest consumption of reels,” Bansal said. “Like China, we could soon see more purchases driven by video. Whatever the format, if something is being delivered to someone’s doorstep, we want to power that.”

He said Shadowfax was among the first movers in quick commerce logistics and intends to maintain that innovation-led approach.

“Our focus is on building the most efficient last-mile and fulfilment experience in India,” Bansal added.