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India's internet economy has significant headroom for long-term growth, with rising digital adoption expected to drive expansion across online food delivery, e-commerce and logistics, while improving scale could support profitability, according to a research report by Morgan Stanley.
The global brokerage firm noted that India's internet stocks have already staged a strong recovery, with the India Internet market-cap index gaining about 20 per cent from its early-June low, compared with a 6 per cent rise in the Nifty 50. Over the last four months, the index has outperformed the Nifty 50 by around 18 per cent. Morgan Stanley said India's internet sectors remain positioned for structural growth, supported by increasing digital penetration, rising transaction volumes and greater outsourcing, although competitive intensity and the pace of monetisation remain key factors for profitability. Morgan Stanley expects India's food delivery gross order value (GOV) to reach around Rs 2 trillion by FY31, with online food delivery penetration rising to 20 per cent from 15 per cent in FY26. The firm also sees opportunities emerging in affordable food delivery, where lower average order values could be offset by lower overhead costs. The brokerage said India's e-commerce logistics market also has substantial room for expansion. E-commerce shipments, excluding grocery, are estimated to rise to 15-16 billion by FY30, with India's shipments per capita still significantly below levels seen in the US and China. Morgan Stanley expects the growth in e-commerce and increasing outsourcing to third-party logistics providers to benefit companies such as Shadowfax and Delhivery. Shadowfax's share of the e-commerce shipment market has increased from 8 per cent in FY22 to around 28-30 per cent in FY26, and the firm expects its 3PL market share to reach about 34 per cent by FY29 in its base case. The brokerage expects Shadowfax to grow revenue at a 28 per cent compound annual growth rate (CAGR) between FY26 and FY29, compared with 18 per cent for Delhivery. Express parcels are expected to remain the largest contributor to revenue for both companies. Morgan Stanley also sees increasing user engagement and monetisation as key drivers for e-commerce platforms. For Meesho, it expects orders per active buyer to rise to around 16 by FY29, with improving logistics spreads and advertising revenue supporting contribution margins. (ANI)
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