ALLCARGONSEFebruary 21, 2025

Allcargo Logistics Limited

7,409words
124turns
10analyst exchanges
1executives
Management on call
Ravi Jakhar
GROUP CHIEF STRATEGY OFFICER, ALLCARGO LOGISTICS LIMITED
Key numbers — 40 extracted
10%
take in growth, nor are we seeing any decline. The market growth rate seems to be hovering around 10% sort of a growth rate on the domestic logistics, which is Express and Contract Logistics. A large
Rs. 4,106 crore
I will now discuss the performance for Q3 FY '25. The consolidated revenue for Q3 FY '25 stood at Rs. 4,106 crores as compared to Rs. 3,212 crores for the previous year, representing a growth of 28%. For Q2 FY '
Rs. 3,212 crore
ce for Q3 FY '25. The consolidated revenue for Q3 FY '25 stood at Rs. 4,106 crores as compared to Rs. 3,212 crores for the previous year, representing a growth of 28%. For Q2 FY '25, the revenue stood at Rs. 4,3
28%
Rs. 4,106 crores as compared to Rs. 3,212 crores for the previous year, representing a growth of 28%. For Q2 FY '25, the revenue stood at Rs. 4,301 crores. The consolidated EBITDA for Q3 FY '25 stoo
Rs. 4,301 crore
crores for the previous year, representing a growth of 28%. For Q2 FY '25, the revenue stood at Rs. 4,301 crores. The consolidated EBITDA for Q3 FY '25 stood at Rs. 138 crores as compared to Rs. 111 crores for
Rs. 138 crore
Q2 FY '25, the revenue stood at Rs. 4,301 crores. The consolidated EBITDA for Q3 FY '25 stood at Rs. 138 crores as compared to Rs. 111 crores for Q3 FY '24, representing a growth of 24%. For Q2 FY '25, the sa
Rs. 111 crore
Rs. 4,301 crores. The consolidated EBITDA for Q3 FY '25 stood at Rs. 138 crores as compared to Rs. 111 crores for Q3 FY '24, representing a growth of 24%. For Q2 FY '25, the same stood at Rs. 135 crores.
24%
'25 stood at Rs. 138 crores as compared to Rs. 111 crores for Q3 FY '24, representing a growth of 24%. For Q2 FY '25, the same stood at Rs. 135 crores. Coming to the profit after tax, the company r
Rs. 135 crore
to Rs. 111 crores for Q3 FY '24, representing a growth of 24%. For Q2 FY '25, the same stood at Rs. 135 crores. Coming to the profit after tax, the company reported Rs. 10 crores profit during this quarter,
Rs. 10 crore
FY '25, the same stood at Rs. 135 crores. Coming to the profit after tax, the company reported Rs. 10 crores profit during this quarter, compared to Rs. 17 crores for the same quarter last year, and Rs. 38
Rs. 17 crore
the profit after tax, the company reported Rs. 10 crores profit during this quarter, compared to Rs. 17 crores for the same quarter last year, and Rs. 38 crores for the previous quarter, that is Q2 '25. Th
Rs. 38 crore
crores profit during this quarter, compared to Rs. 17 crores for the same quarter last year, and Rs. 38 crores for the previous quarter, that is Q2 '25. The consolidated net debt for the quarter ended Dece
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Guidance — 16 items
Ravi Jakhar
opening
“And we believe that going forward we would continue to see at or above market level performance on the top line.”
Ravi Jakhar
opening
“And there should be continued improvement on economies of scale and operational optimization to drive profitability in line with the guidance also provided by the Allcargo Gati Management.”
Ravi Jakhar
opening
“But from a medium-term perspective, there is no impact on the business of our scale since we are present across all the key geographies.”
Ravi Jakhar
opening
“And as a company that participates in the global trade across all the key markets, we believe the medium-term impact to be limited.”
Ravi Jakhar
opening
“We believe that this will be the year where we would be able to rationalize a lot of positions by outsourcing them from the current base locations to these outsourcing centers.”
Ravi Jakhar
opening
“However, from a medium-term perspective, we believe that these changes would allow us to bring down our cost of operations, and thereby, enabling improved profit margins.”
Ravi Jakhar
qa
“So that is where we believe the biggest opportunity for this year, assuming that we do not expect significant growth on the volume side, unless there's a change in the economic outlook.”
Ravi Jakhar
qa
“Once everything is done, the restructuring costs are one-off, while the savings will be permanent in nature.”
Riya Mehta
qa
“And till when do we expect this severance cost to take a hit on us?”
Vikram Suryavanshi
qa
“Or even now, it will be more like overall growth or industry growth, basically?”
Risks & concerns — 9 flagged
As far as the domestic business is concerned, we believe that the domestic market remains flat, so we are not seeing any significant uptake in growth, nor are we seeing any decline.
— Ravi Jakhar
And at this point in time, it is difficult to predict.
— Ravi Jakhar
We cannot say certainly the direction of the geopolitically motivated tariffs that may come in on other regions, and the impact of the same needs to be assessed.
— Ravi Jakhar
An end to a war in Ukraine would likely lead to the revival of the European economy, but that is an uncertain event, and we are not sure which direction that goes.
— Ravi Jakhar
Europe has largely been an area of concern from a growth perspective as the economy and trade in that part of the world has not resumed to normal levels still.
— Ravi Jakhar
What has happened is, over the last couple of years, with the trade outlook being weak and the growth in volumes and gross profits has not really been to the desired level, while the SG&A costs, despite all the reductions, there's always inflationary pressure on that.
— Ravi Jakhar
The one concern which possibly remains in the Contract Logistics business is the white space, which means that we have been growing, but that requires us to maintain some degree of white space, which would get absorbed over a period of time.
— Ravi Jakhar
So what is the management reaction about share price and every day decline of 5%?
— Praveen Batra
So as a promoter, as a help to retail investors, right, when the market is such a low, every day 5% or 6% decline, for more than last one year, every day 52 weeks low.
— Praveen Batra
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Q&A — 10 exchanges
Q
Hi Ravi, hi Deepal. Thank you for giving me the opportunity. So my first question is in regards with the FCL business, we have seen a good growth there. So which particular regions or which particular sectors are we seeing this growth coming in from?
Ravi Jakhar
Are you talking about the FCL business? FCL, yes. Yes. So the FCL business has seen good growth in Asia and India as well. These are the two markets, and then Latin America. These are the three areas which have seen good growth. The trends are largely similar for the LCL business as well. Europe has largely been an area of concern from a growth perspective as the economy and trade in that part of the world has not resumed to normal levels still. Right. Also, are we seeing a shift from LCL to FCL? The LCL to FCL shift typically happens on significant fluctuations in the ocean freight rate. At t
Q
Hi. I just had a few strategy-related questions with respect to Gati. So my first one was, it has been over four years since you acquired Gati, and the turnaround has taken much longer than expected. So now with this new team in place, what specific gaps have you identified, and why do you believe that things are now on track? So just please elaborate here.
Ravi Jakhar
So two points here. I would provide the Allcargo perspective, which is the shareholders' perspective. For specific Gati questions, we would need to refer to the Allcargo Gati, since it's also a public-listed company, and we typically respond to management queries in there. But to provide you a perspective, I would agree that the turnaround is delayed. Nevertheless, if we see the recent performance for this quarter, the reported EBITDA is 3x the last year, same quarter. And the debt, which used to be more than Rs. 400 crores when we acquired the company, today the company is sitting with a cash
Q
Sorry, it was actually regarding that income tax search, that answer has already been given. So no question there.
Management
Q
Yes. Actually, what about share price of Allcargo? And even so many companies loss making, their share market capital is higher than Allcargo. So what is the management reaction about share price and every day decline of 5%?
Ravi Jakhar
So as management, our focus is on generating profits and making all the relevant disclosures providing as much information as we can to the investors, we would continue to remain focused on doing that, we cannot make any comment on the share price. Sir, how long you keep on telling this, even loss making company TVS Supply Chain market capital is more than Rs. 5,000 crores above. You are climbing world LCL leader, but your market capital is Rs. 3,000 crores only. The stock price or market capitalization are not under the control of the company management and we cannot offer any comment on that
Q
Yes, good evening, sir. While talking about gross profitability in international supply chain business and fixed cost, it seems that somehow fixed cost has increased this quarter if you look at Q-o-Q as well as Y-o-Y. So is there any cost increase what we are seeing in terms of inflation or other network related cost also apart from what we discussed in terms of restructuring and service?
Ravi Jakhar
One more component therein is, a lot of countries also have bonus provisions in the last quarter and for countries which have performed well, there would be bonus provisions in December, because many countries run on January to December. In fact, globally that business is run on Jan to December for business standpoint, even though financial years could vary from one country to another. So that would be another aspect which could see sequentially, the December quarter could be slightly higher. Also, we have seen an increase in provisions, which is almost to the tune of Rs. 8 crores. So there ar
Q
Thank you so much for giving me an opportunity again. How would the Forex rate impact our business? Do we have back-to-back arrangement, or how does it work?
Ravi Jakhar
So most of our expenses and income on the global trade happen in U.S. dollars, such as our revenue received from the customers, as well as freight payouts to the shipping lines. And then we have certain local income, which is on local origin or destination handling charges, and corresponding to this, there are domestic expenses, such as local staff costs, et cetera. So in general, we have seen that there is a good arbitrage, which is inherent in the business model, and therefore, it does not make a significant impact. On the overall basis, since we report our numbers in Indian rupees, there sh
Q
So recently we got the notification from Gati that they want to increase the share capital up to double. So when they're planning to merge, then what is the use of to increase the share capital of the Gati?
Ravi Jakhar
Your voice is not very clear. Can you please speak a bit louder and slow so we can understand the question? We recently got the notification from Allcargo Gati that they want to increase the share capital to 2x. When they're planning to merge with Allcargo, what is the purpose of to increase the share capital? Yes. So increase in share capital is more of a technical requirement for enabling the scheme of rearrangement, which we have initiated in late 2023, and my colleague Deepal spoke about that about that, that it would get concluded most likely by April. So the increase in share capital is
Q
Yes. Actually, I just wanted some clarity on the term LCL yield index and FCL yield index. How do we calculate this? I understand the base is last year, but what does this mean, the term?
Ravi Jakhar
So LCL yield index is the gross profit of the LCL business divided by the total volume of LCL business in cubic meter, and we show a 12 months trend so far, if you see the data for January 2025, which will be published in the coming week or so, you will see January 2024 as the base 100, and it would show whether it has gone up or down on a monthly basis for the 12 months. For the FCL business as well, it is, the yield is the total gross profit from the FCL business divided by the volume in FCL and TEUs. So it is dollars per TEU and dollars per cubic meter shown on a base of 100 for the last 12
Q
Good afternoon, sir. Sir, just two questions from my side. Firstly, could you share what is the debt that is attributable to the Contracts with respect to business?
Ravi Jakhar
Sorry, what? Attributable to the contracts -- sorry, we could not hear the voice properly. The debt level, gross and the net debt in the Contract Logistics business. The total debt at Contract Logistics is Rs. 37 crores. Got it, sir. And could you share the cash flow from operations for nine months from this business? From this business? Yes. EBITDA is Rs. 38 crores. So the operating cash flow is around Rs. 23 crores, which is coming from EBIT and non-cash expenditure. But as you are aware, this is a growing -- just I will give you a full color in this. As you are aware that this is a growing
Q
Yes. Thank you all for joining on this call, and we intend to share as much information as possible. So if you have any further queries for request for data, information, et cetera, please reach out to our Investor Relations team, and wherever it is already in public disclosure, we would be happy to explain it to you. And situations where there is information, which is not in public disclosure, we would evaluate and see if we can include that in subsequent quarterly disclosure so that each and every shareholder or analyst can benefit from the disclosure. On that note, thank you very much. Than
Deepal Shah
Thank you.
Speaking time
Ravi Jakhar
44
Riya Mehta
24
Deepal Shah
14
Moderator
12
Vikram Suryavanshi
9
Chinmay Nema
9
Rushabh Shah
5
Praveen Batra
4
Nambi Vasudevan
3
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Opening remarks
Ravi Jakhar
Yes. Hi, good afternoon. Thank you for joining us on this call. I am joined here by my colleague, Deepal Shah, the Group CFO. At this point in time, we have been focusing on internal restructuring, and identifying opportunities whereby we can use technology and other strategies to keep costs in control. That has been the broad focus and would remain so in the next couple of quarters. From a company standpoint, we have the International business and the Domestic business. As is visible, we have demonstrated good growth over the last year for the same quarter across all the businesses. On a sequential basis, the international business usually has seasonality wherein it peaks in the September-ended quarter, and therefore, it is marginally down on a Q-on-Q basis, while the domestic businesses are improved on a sequential basis. And that is the reason why we see a strong performance year-on-year on both revenue and the reported EBITDA. As far as the domestic business is concerned, we believ
Deepal Shah
Thank you, Ravi. I will now discuss the performance for Q3 FY '25. The consolidated revenue for Q3 FY '25 stood at Rs. 4,106 crores as compared to Rs. 3,212 crores for the previous year, representing a growth of 28%. For Q2 FY '25, the revenue stood at Rs. 4,301 crores. The consolidated EBITDA for Q3 FY '25 stood at Rs. 138 crores as compared to Rs. 111 crores for Q3 FY '24, representing a growth of 24%. For Q2 FY '25, the same stood at Rs. 135 crores. Coming to the profit after tax, the company reported Rs. 10 crores profit during this quarter, compared to Rs. 17 crores for the same quarter last year, and Rs. 38 crores for the previous quarter, that is Q2 '25. The consolidated net debt for the quarter ended December '24 stood at Rs. 614 crores. The previous quarter net debt number reported was Rs. 553 crores, but that included a dividend cash available of Rs. 98 crores. So the actual net debt after the dividend payout would have been Rs. 651 crores, as compared to that, we have Rs. 61
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