Allcargo Logistics Limited ($ALLCARGO)

Ladies and gentlemen, good day, and welcome to the Allcargo Logistics Limited Q4 and FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Suyash Samant from Stellar IR Advisors. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and thank you for joining us today. We have with us the senior management team of Allcargo Logistics Limited, Mr. Ketan Kulkami, Managing Director and Chief Executive Officer; Mr. Deepak Pareek, Chief Financial Officer and Mr. Sanjay Punjabi from Investor Relations. The management will be sharing operating and financial highlights for the quarter and the financial year ended 31st March 2026, followed by a question-and-answer session. Please note that this call may contain some of the forward-looking statements, which are completely based upon the company's beliefs, opinion and expectations as of today. These statements are not a guarantee of the company's future performance and involve unforeseen risks and uncertainties. The company also undertakes no obligation to update any forward-looking statements to reflect the developments that occur after the statement is made. I now hand over the conference to Mr. Ketan Kulkarni. Thank you, and over to you, sir.

Good afternoon, everyone, and a very warm welcome to our Q4 and FY '26 earnings conference call. Thank you for joining us today and for your continued interest in Allcargo Logistics. Our financial results and earnings presentation for the quarter and the financial year ended March 2026, have been uploaded onto the stock exchanges, and I trust you have had the opportunity to review the numbers. I will share a brief overview of the macroeconomic environment, while global growth has moderated, India still continues to demonstrate resilience. According to the IMF, domestic economy is expected to grow at about 6.5% in FY '27, supported by strong consumption, sustained public CapEx and improving private investments. The continued policy focus on infrastructure development is improving logistics efficiency and supporting higher freight movement, creating a favorable environment for organized players like Allcargo Logistics and others. High-frequency indicators remain encouraging. E-way bill generation reached 140.6 million in March 2026, reflecting a 13% year-on-year growth, while GST collections stood at INR 1.78 lakh crore, up 8.2% year-on-year. These indicators, along with strong private consumption trends, point to a sustained momentum in domestic trade and supply chain activity. In line with evolving consumption trends, especially the rapid expansion of e-commerce and quick commerce, we have strengthened our network and operational capabilities. We currently handle over 10 million packages per month in this segment, supported by integrated capabilities across fulfillment, sorting, transportation, along with technology-led interventions such as warehouse management system and route optimization. We are also focusing on strengthening our presence in clusters in Bharat, the Tier 2, Tier 3 India. Various clusters have been identified and industrial areas have been identified for further intervention and stronger go-to-market programs. We are working with several active customers and are looking to further solidify our position. Our strength lies in our understanding of the logistics complexities for large industrial clusters as well as small businesses through innovative solutions. We are empowering these businesses to expand their reach and enhance operational efficiency. The businesses we work with and support and partner are across industry verticals. Technology and digitization continues to play an important and central role in our operations, driving better visibility, coordination, production, execution and resilience across the value chain. To further strengthen our execution and growth strategies, we have recently onboarded. Mr. Amit Chhari as Chief of Operations, Express division. He is a transformative leader with deep expertise in B2B Express Logistics with the market leader, in network strategy and large-scale operations. Simultaneously, we have also onboarded Mr. Samir Ahuja as Chief of Sales, Express Division, a seasoned professional with over 3 decades of experience in driving business growth and managing key customer relationships across telecom, retail and logistics. Their extensive experience will be instrumental in scaling our business, enhancing operational excellence and driving customer acquisition and retention. Looking ahead, while we are cautious on the near-term outlook due to the current geopolitical scenario, we remain focused on efficiency-led profitable growth with continued emphasis on strengthening our core network and expanding transportation and also full truckload capabilities. With integration now largely behind us, we expect our EBITDA and PBT to grow ahead of revenue in the coming quarters. With that, I would like to hand over the call to our Chief Financial Officer, Deepak Pareek, who will take you through the financial performance in greater detail. Once again, thank you very much for sparing your valuable time coming on the call. Over to you, Deepak.

Thank you, Ketan, for the comprehensive overview on the performance for financial year FY '26. Good afternoon, everyone, and a warm welcome to all our participants on the Q4 and FY '26 earnings call. I would like -- I will now take you through the financial performance for the quarter ended 31st March 2026. During Q4 FY '26, Allcargo Logistics handled a total volume of 3 lakh metric tonnes under the Express business unit. Realization per metric tonne stood at INR 12,037, reflecting an increase of 3% on year-on-year and 4% sequentially. Moving to the consolidated financials. Revenue for the quarter stood at INR 514 crores as compared to INR 513 crores in the corresponding period last year, and INR 516 crores in the previous quarter. Gross profit for the quarter stood at INR 154 crores compared to INR 149 crores in the corresponding period last year, which is broadly in line on a sequential basis. EBITDA for the quarter was reported at INR 60 crores, a strong 41% growth from last year and broadly in line sequentially. On a full year basis, revenue stood at INR 2,058 crores, registering a growth of 5% over the previous year. EBITDA for the year came in at INR 233 crores, reflecting a healthy growth of 16% year-on-year. Turning to the Express division. Revenue for the quarter stood at INR 362 crores as compared to INR 343 crores in the same period last year and INR 364 crores in the previous quarter. For the full year, Express business revenue stood at INR 1,442 crores as against INR 1,416 crores in the previous year. Moving on to the Consultative Logistics business, the total warehouse space under management stood at 8 million square feet as on March 2026. Revenue for Q4 FY '26 was INR 151 crores, reflecting a growth of 3% year-on-year. On a full year basis, revenue for the Consultative Logistics business stood at INR 615 crores, registering a healthy growth of 17% year-on-year. With that, we conclude our opening remarks. We would now be happy to answer your questions. Thank you for your continued participation and support. Thank you. Over to you.

[Operator Instructions] Our first question comes from Ravidutt Javgar with EquiPoise Capital Management.

Yes. Hello, am I audible?

Yes.

Yes, I would like to know the expected listing date of Allcargo Global? Since you mentioned in the previous con call that the listing would be completed by quarter 4 of FY '26, but there has been no update so far. So could you please provide an update on the status? Are there any issues or challenges causing the delay?

Yes, thank you. I would request Sanjay Punjabi, who handles Investor relationship from both the entities and the group of Allcargo to respond, please, since it is related to Allcargo Global.

Yes, sir. The line for Sanjay has dropped. I'm just reconnecting him. Please stay connected.

Yes. So we'll hold the question. Please hold the question, let him reconnect and then we can.

Yes, Okay. I will come back to the queue.

The next question comes from the line of Vikram Suryavanshi with PhillipCapital India.

So how is the opportunity for increasing wallet share for our logistics and margin -- levers for margin expansion if you can highlight, I think that would be helpful.

Sorry, Vikram, you will have -- you'll have to, again, repeat the question. Your voice was breaking.

Is it audible or should I...

Yes. It is better, audible now. Tell me.

Okay. So one I was talking about the opportunity to increase our wallet share in businesses, how much scope is there and how we are targeting that? And then the levers for margin expansion, particularly for B2B, Express side of business?

Thank you. Very good question to begin the call. You said how are we increasing our market share and also our market expansion. So if I understand you correctly, market expansion will be a key lever to improving the market share. There are two ways to look at market share. One is the revenue market share and the other is the volume market share. So we are very focused on both and whatever market share expansion or market expansion strategies that we have, whether it is focusing on large KEA, Key Enterprise Accounts, whether it is focusing on MSME or on retail, we are very clear that all new customer onboarding and all organic growth in all the 3 segments in surface and air will all be very, very positive on the margins and the bottom line. So it's going to be a calibrated call, the focus whilst it will always be on gaining market share, growing faster than market, a lot of weightage will be on improving the profitability of this expansion and the share. Does that answer your question or would you like me to detail this a little more for you?

A little detail on the margin expansion in terms of particularly for, say, are we still seeing the levers for gross margin improvement with, say, pricing or customer reorientation of contracts? Is there any further scope significantly? Or have you seen the pricing discipline in the system, overall system has come back, which is helping us to improve market or at operating levers, so how is that basically stepping up for us in terms of gross margin improvement possibility, in market pricing stability side or any other operating leverage you have?

So I think your question is more towards the Express division, so I will answer. I will answer for that division because I need to be clear there. So a lot of work has happened in the last 6 months. And in fact, we started off the year with GPI activity to improve the rupee per kilo that we were getting from the customers. We introduced a lot of measures. We introduced the metro congestion charge, which is a charge for value when we do urban logistics. Urban logistics in large metros is becoming more and more difficult to do because of infrastructure, et cetera. We introduced the next round 0, where we are rounding off the weight of the customer's shipment to the next 0. We introduced AER charges, which is Allcargo Extended Reach charges for about 1,100 difficult-to-do pin codes and we did this simultaneously when we subdivided our 19,000 pin codes into 32,000 pin codes to have granular operational capabilities and also granular pricing to the customer. So all these have had a positive impact on the yield and the RPKG over the last 6 months, and it has improved to a level that we are very, very comfortable now where we are with RPKG. And while doing that, we are also cognizant with the huge cost pressures that we are seeing on various aspects of the business, due to the West Asia crisis and also the morning announcement today. We are fairly well covered on that. And there is a plan to cover that much more as we get ahead into this financial year in Q1 and Q2. So our margin expansion plan is on track on the Express side of business. And we are very comfortable the way we have kind of executed it.

Got it. In terms [indiscernible] business side, how would the CapEx in terms of adding the square foot or capacities? Or will it also have a mix of like asset-light model in terms of growth aspirations there and how would the CapEx will look like on that part of the business?

Yes, I will request Deepak, our CFO, to come in. Over to you, Deepak.

Yes. Thanks, Ketan. So Consultative Logistics has seen a remarkable revenue growth in the current year, 17% growth from -- in this year is phenomenal. That growth has happened on the back of mix approach of asset light and some component of asset heavy component because we have expanded the transportation vertical last year. Quarter -- as we mentioned on the call, under this segment, we have started doing full truckload business. So that has given a melt-up of revenue. On the -- so that's the asset-light piece which is there. There are component of in-plant services, which we do. That's also an asset-light piece. On the warehouse piece, pure play, 3PL, we have moved to an asset operating lease strategy from April 25, and that has been helpful in terms of CapEx outlay. We have conserved cash due to that. But in the current year -- next year, if you see on the expansion bit, we have a plan to add 0.5 million square feet additional on the warehouse space and that would be done largely on an asset-light approach. That will add to a significant capacity. But nevertheless, I think the focus on the Consultative Logistics is to enhance the gross margin share. So the growth, which is already achieved last year, we would -- I think we are very comfortable with that. And now we want to deepen up the margin realization on that business further.

Got it. And just last question to clarify. Is there any white space or under utilization of existing capacity within that where we can still see further growth possible or it's almost like running at full kind of utilization with existing...

So it's -- this industry, white space is a requirement as per the running stock. We are well below the industry norms. We track that metric very closely and we are comfortable on that count.

Hi, everybody. Elrik, am I audible?

Yes, sir.

You are audible.

This is Sanjay Punjabi. My line had dropped earlier, I'm sorry. I will just address the question on Allcargo Global's listing. So the -- we've received the necessary approvals from both exchanges and SEBI as well day before yesterday. And all we need to do now is file the revised information memorandum with authorities with the audited annual financials, and we can expect the listing to happen in about a month's time from now on.

Thank you, sir. [Operator Instructions] The next question comes from the line of [ Ravidutt Javgar ] with EquiPoise Capital Management.

The same question related to Allcargo Global. Is there any financial information available for us to understand about the Allcargo Global business right now for the quarter end -- for this quarter end?

So [ Ravidutt ] [indiscernible] coming 2 weeks. And the information memorandum will carry all the information on the financials as well. So in the next couple of weeks, once the IM is filed, information on the financials will be available to all.

Yes. Okay. And one more question for Allcargo Logistics, that the recent increase in the petrol and diesel prices announced today, how do you expect this impact to the Allcargo Logistics business? Should we expect any slower growth or subdued margin in H1 FY '27 as a result of higher fuel cost?

Look, this is an element of cost, which is already built in, in our contracts with the customers. As you know, we are strong B2B players, and we have tight contracting with all the -- all our customers. And this element of cost is a pass-through as -- along with other costs which are built in as a part of contract. So we don't see a challenge on that count.

Yes. And further to Deepak's answer, we have a very transparent diesel price hike pass-through mechanism, which is already up on our website, customers can refer to it any time, and that kind of allows them to predictably calculate what the pass-through will be also. And also monthly, we announce what is going to be the DPH percentage applicable on their billing. So it's a very transparent customer-friendly mechanism that we have. So we are very well covered on the morning announcement.

[Operator Instructions] Our next question comes from Anil Raju, an individual investor.

I hope you are able to hear me.

Yes, Anil, go ahead, please.

When I see the balance sheet, EBITDA is improving to INR 233 crores, but PAT remains INR 6 crores. When we expect meaningful bottom line improvement?

Yes. Anil, if you see the improvement at the PBT level pre exceptional items, you can see clear -- very well see, there is a 96% improvement, which has already happened in this year. So the buildup of growth is already in place. And if you see the -- going next quarter, that will be visible in terms of the entire contribution.

Okay. Another question, what concrete milestones should investors track over next 4 to 6 quarters which is Allcargo's growth turnaround and the integration strategy succeeding well or not?

Only metrics for investors to track is the EBITDA improvement. Our EBITDA has shown an improvement from 10% to 11% we have achieved in this year and progressively, we are committed towards that value creation and enhancement of shareholders' value.

And another last question, any comments on the dividends?

Dividend is a function -- a decision of Board and the shareholders. And at the right point of time, we will recommend that to the -- to the shareholders, yes.

The next question comes from the line of Parag Vatsal from Kingstone Capital Management.

I wanted to know the split between Express and Contract Logistics, post [indiscernible] EBITDA?

We have given our disclosure on Slide #22. That would give you some help. And split on that account, we can ask the Sanjay to touch base with you. I think, Sanjay, if that would help.

Sure. I'll get back to you after the call.

Ok, sure, I will take it offline then.

[Operator Instructions] The next question comes from the line of Chinmay Parab, an Individual Investor.

Am I audible?

Yes, Chinmay, please be a little louder, though.

Hello, is this better now?

Yes.

Yes. My first question is regarding the EBITDA. As we can see the EBITDA for the full year, FY '26, has grown by 16% Y-o-Y, and EBITDA margins are improving to 11% despite largely flat quarterly revenue performances. So what were the major drivers behind this sharp profitability? And how sustainable are those margins going forward?

Yes. Chinmay, thanks. Deepak here. If you can see the breakup on year-on-year basis, the gross margin -- gross profit has increased by 2% from last year. That is one lever at -- adding to the EBITDA improvement. That comes on the back of the operating efficiency, which we had mentioned in the last call, with the integration of Express and CL that there would be -- there is an opportunity to do that. Also, if you can see the employee expense and other expenses, there has been a significant rationalization, which has really helped the company to get into the EBITDA trajectory, which we were aspiring that has given the 16% growth. So it's a combination of both on the cost, though, we understand the revenue has been at 5% growth. On a combination, if you see CL has grown exceptionally well and Express has remained flat, but on overall, the EBITDA value creation has happened at 16% growth.

As we see the quarter 4 performance, our top line basis, it's largely flat. So just getting to know from your side, like how are we seeing this going forward? Like do you see these margins to be maintained? Like what kind of trend can we expect?

Yes. So the trend continues to be favorable. We are seeing from the month of March onwards, the pent up volume, which is happening, even March, April. Last quarter, if you see Jan and Feb, we had flattish kind of months, but the volume trend is at par with the industry levels. Coupled with that, we had done what Ketan mentioned in the opening remarks about the price action, that has -- that is giving us a revenue bump up. So mix of that, the reaction will be visible in this Q1 of this year. Anything, Ketan, you want to add?

No, I think you kind of covered it. We are very optimistic about Q1 FY '27 numbers. And as I said earlier on the call, growth is the only elixir of the business going ahead and to qualify profitable growth. So you'll only see improvement in margins going ahead.

I would like to point out with respect to Express volumes. They remained largely flat during FY '26 with [indiscernible] Express volume witnessing moderation sequentially. So what were the key demand challenges that -- during the year that we have faced and what does the management expect with respect to volume acceleration?

Yes. Express volumes, if you see we're about -- yes, Q-on-Q, there is a growth, year was flat. But if you see the Q-on-Q, they are up about 2%. And that's -- and at the same time, if you compare that to the revenue, you'll see a better uptick on revenue, and that kind of reflects the focus we have had on bringing quality revenue, quality customers that impact the margin. So those are the calls we took. We went more after profitable customers. We even weeded out a few nonprofitable customers, so we did that calibration. And as we start Q1, we are in a very comfortable place that all customers that we do business with are going to add to our profit margins going ahead. So we had to recalibrate a few segments and customers, and that's what we have done. Hence you'll see that revenue growth is higher than the [indiscernible].

Got it. So -- but as we are coming to Consultative Logistics revenue, it has grown by 17% Y-o-Y in FY '26, significantly outperforming the overall business. So which sectors and service offerings are driving this momentum? And does the management expect similar growth trends in FY '27?

By similar, I don't want to qualify the word, but we will definitely see much better growth than you are seeing in the year gone by and in the quarter-on-quarter of last year to this year on the Express side of the business.

And which sectors and service offerings are driving this momentum?

Sorry?

Which sectors and service offerings are driving this momentum?

Okay. So the momentum being driven largely by our surface business, but Air will also be a continuing focus. And yes, this is on the Express side you asked me, right, or on the CL side?

Express side.

Sorry, Express.

Yes, yes.

Yes. So surface will be the growth driver on the product side with tonnage as a focus area. And the sectors that are essentially driving this is auto and engineering, pharma and also diversified industries. These are the 3 sectors, we are seeing the growth on.

Okay. And one last question from my side. The company has highlighted strong traction in e-commerce and quick commerce and cluster focus expansion strategies during FY '26. How are these initiatives contributing to customer acquisitions, wallet share expansion and maybe market share gains as well, can you shed some light on that?

Sure, definitely. The e-commerce and quick commerce business that you're referring to happen on the Consultative Logistics side. So we run sort centers, fulfillment centers, cross-dock centers for all the large e-commerce and quick commerce businesses. So if you draw a list of the top 3 e-commerce players in the country, we do the business with them. If you draw the list of the top 3 quick commerce companies in the country, we do business with them. So this is essentially on the CL side. On the Express side, we don't do any B2C deliveries for quick commerce or e-commerce.

[Operator Instructions] Ladies and gentlemen, as there are no further questions for today, I would now like to hand the conference over to Mr. Ketan Kulkarni for the closing remarks.

Thank you. Thank you very much, and it was great interacting with everybody on the conference, and we look forward to your continued support and participation on our next earnings call. Thank you, everybody.

Thank you, Deepak here, to everybody for participation.

Thank you, thank you, everybody.

Ladies and gentlemen, on behalf of Allcargo Logistics Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.