'Shadowfax Didn’t Slow Down Growth to Become Profitable', Says CEO Abhishek Bansal

Profitability, which has become the new metric for start-up success, was not an end goal for Bengaluru-based logistics platform Shadowfax; it was the starting point. “The last-mile logistics company has now reported profits for 10 consecutive quarters,” said Abhishek Bansal, cofounder and CEO of Shadowfax. 

In an interview with Outlook Business, Bansal said the company’s margins have been expanding by 30-50 basis points every quarter since it started achieving profitability. And the profits came even as Shadowfax continues to grow across e-commerce and hyperlocal deliveries segments. 

At a time when logistics start-ups have struggled to balance scale with sustainability, the founder stated that Shadowfax is positioning itself as a rare profitable outlier heading into the public markets. In H1 FY26, the logistics platform’s consolidated net profit surged nearly 114% to ₹21 crore from ₹9.8 crore in the same period previous year. 

The company attributed the profits to strong revenue growth. According to Shadowfax’s RHP, operating revenue zoomed 68.4% to ₹1,805.4 crore in the first six months of the financial year 2026 from ₹1,072 crore in H1 FY25. 

“We didn’t slow down growth to become profitable,” Bansal added. The company posted growth of 65-68% in the first half of the year, well above its historical average of 32-33%, which shows that profitability was driven by operating leverage rather than restraint. 

Profitability At Scale

Bansal explained that building a nationwide last-mile logistics business requires significant upfront investment in hubs, technology and delivery infrastructure, resulting in high fixed costs in the early stages. As shipment volumes rise, however, asset utilisation improves and incremental revenue begins to flow through to the bottom line. 

“With the current pace of growth and additional scale expected over the next few years, the company is on track to move into a much stronger EBITDA profile,” he told us. 

And operating leverage doesn’t show up evenly across every business segment. E-commerce is a relatively mature segment for Shadowfax, as it contributed more to profitability, roughly 70% of its overall business. 

On the other hand, hyperlocal is still smaller, contributing about 20% of revenue. On a percentage basis, hyperlocal margins are still lower than e-commerce, though hyperlocal is growing at 75–80% year-on-year, driven by the quick-commerce industry.

Where Growth, Margins Are Coming From

As per the company’s red herring prospectus, the top five clients accounted for about 75% of its total revenues in the six-month period that ended on September 30, although their share has been gradually declining.  

“Diversification has been underway for over a year. In FY24, 88% of revenue came from select customers. Last year, this number came down to 74%. We are deploying significant capital toward growing SME and D2C customers,” he added. 

In addition, the company is also investing in dedicated sales and marketing teams to work with new-age D2C brands, which Bansal said is their primary diversification strategy. These D2C brands include online-first companies and offline brands selling directly through digital channels. 

D2C brands, last year, contributed around 25% of Shadowfax’s revenue, and they are still the fastest-growing segment among its customers. 

He added that the strategy is not just about diversification, but about improving margins as well. “D2C brands pay for speed and reliability, and that helps us expand yield.”

The margin story, however, is not only about customer mix. “Operating leverage is the second major lever,” Bansal said. He explained that once the network and infrastructure are in place, fixed costs do not rise at the same pace as volumes. “As the business scales, asset utilisation improves, and incremental revenue flows through to the bottom line,” he said. This, he believes, is what has allowed Shadowfax to keep growing aggressively while still improving profitability.

The third lever, according to Bansal, is value-added services. “We are investing heavily in premium delivery options such as same-day and next-day services,” he said. “Customers are willing to pay a premium for these offerings”. 

The company has also moved into critical logistics, handling high-value, time-sensitive shipments. “This is a category where we see strong demand and better pricing power,” he said, noting that such services broaden the addressable market and support better margins.

Bansal also pointed to cash flows as proof of the business model’s strength. “We turned free cash flow positive in H1 FY26,” he said, calling it a “healthy sign” of sustainable growth. He emphasised that the company is generating cash even as it invests in expanding capacity, which is a rare combination in the logistics sector.

“In FY25, we were operating cash flow positive. At the free cash flow level, including capex, we were negative by about ₹35-40 crore. In the first half of this year, we generated around ₹146 crore in operating cash flow and over ₹80 crore in free cash flow”. 

Moving forward, Bansal pointed to the company’s recent performance as a guide. Shadowfax recorded growth of 65–68% in the first half of the year, significantly higher than its historical growth rate of around 32–33%. 

Those historical growth levels, he said, should be viewed as a conservative base case for the next four to five years. He also expects momentum to be supported by sustained demand across both core segments, particularly as quick commerce reshapes last-mile delivery economics.

The IPO Playbook

Post-IPO, Shadowfax plans to invest in D2C brand growth, expand volumetric logistics such as white goods, and set up new sortation centres and capex. The company plans to deploy around ₹120 crore in capex annually for the next three to four years. The RHP shows that the company has earmarked about ₹423.4 crore for network infrastructure.

Shadowfax has slightly reduced the size of its initial public offering to ₹1,907 crore, compared with the ₹2,000 crore it had planned earlier. The issue comprises a ₹1,000 crore fresh equity raise, while the remaining ₹907 crore will come from an offer for sale by existing shareholders, including Flipkart, Eight Roads, TPG NewQuest, Nokia Growth Partners, Qualcomm Ventures and Mirae Asset.

The IPO is scheduled to open on January 20, with a price band fixed at ₹118–124 per share. At the top end of the band, the Bengaluru-based logistics firm would command a post-money valuation of about ₹7,169 crore, below the ₹8,500–9,000 crore valuation range it had previously been targeting.