Allcargo Terminals Limited (ATL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Allcargo Terminals Q1 FY 2017 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, Suyash.

Thank you. Good morning, everyone, and thank you for joining us today. We have with us today the senior management team of Allcargo Terminals; Mr. Suresh Kumar, Managing Director; Mr. Pritam Vartak, Chief Financial Officer; and Mr. Sanjay Panjabi from the Investor Relations team who will present all cargo terminals Limited on the call. The management will be sharing the key operating and financial highlights for the quarter ended June 13, 2026, followed by a question and answer session. Please note, this call may contain some of the forward-looking statements, which are completely based upon the company's beliefs, opinions, 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 developments that occur after the statement is made. I now I hand over the conference to Mr. Suresh Kumar. Thank you, and over to you, sir.

Good morning, everyone. A warm welcome to everyone on the Allcargo Terminals Q1 FY '27 Earnings Call. The recent press release and presentation were uploaded on the stock exchanges and the company's website. I hope everyone has had an opportunity to go through the thing. Q1 unfolded against a backdrop of continued global uncertainty, including disruptions arising from the geopolitical developments and fluctuations in trade flows. Despite these challenges, India's trade and logistics ecosystem remain resilient, supported by steady economic activity, improving infrastructure and the country's growing importance and in global supply chains. Against this backdrop, Allcargo Terminal delivered a stable operational performance in Q1. Our container volumes grew 7% year-on-year, demonstrating the resilience of our business model and the strength of our customer relationships. More importantly, we continue to improve profitability, which has been an ongoing trend for the last 8, 9 quarters. As we move into the next phase of growth, our focus remains anchored around 5 strategic priorities. Let me take you through them. First, expanding capacity to accelerate growth. Over last year, which is FY '26, we increased our annual handling capacity by nearly 20% to approximately 1.03 million TEUs. This capacity expansion provides us the necessary headroom to capture future volume growth, organic growth on the back of India's story. Second, scaling volumes while retaining margins has been a priority. Growth for us is not nearly about increasing volumes. It is about growing profitably. We remain focused on disciplined pricing and commercial terms and effective resource utilization. The improvement in profitability during the quarter continues to reflect the effectiveness of this approach. Third, leveraging technology to elevate operations. You would recall that Allcargo Terminals was 1 of the early CFSs to adopt digital technology in both XM side of cargo clearance the my CFS is a proprietary app that we have, which has been well accepted by our customers, both direct and indirect customers. During the quarter, we continued the rollout of our smart yard management system across locations with the pilot phase happening in our largest facility, which is in JNPT. This initiative is designed to improve asset utilization, enhance operational visibility, reduce turnaround times and ultimately deliver a superior customer experience while optimizing costs. The fourth pillar is widening our footprint to capture emerging opportunities. We are all aware India's long-term logistics growth story remains compelling, driven by manufacturing expansion, infrastructure development and rising trade activity. We are positioning ourselves to benefit from these structural tailwinds. Construction of the Parana private freight terminal remains on track for completion by May 2027, work is in progress. While the tendering process for the speedy JNPT expansion where we got a renewal of the contract for 10 years, has been completed, and the work will start post monsoons. This will add approximately 60,000 TEUs of annual handling capacity for us in speed JNPT, which is the closest facility to the port in Nava sheva. Alongside these projects, we continue to evaluate opportunities to expand our PFT and ICD footprint in strategically attractive locations. Last and the fifth pillar is to deepen relationships to grow market share. Our long-standing partnerships with customers, shipping lines and other stakeholders remain a significant competitive advantage by consistently delivering reliable service and efficient turnaround times, we have continued to strengthen our positioning in the market, and we expand our share of wallet with key customers, also leveraging the overall integrated logistics solutions that the Allcargo Group offers. Looking ahead, we remain optimistic about the opportunities before us. While external uncertainties may continue in the near-term, India's underlying trade fundamentals remain strong. With expanded capacity, ongoing technology investments and the disciplined approach to execution, we believe Allcargo Terminals is well positioned to deliver sustainable growth while creating long-term value for all stakeholders. Before handing over to the call to Pritam, I would like to share a significant change, which is in transition at Allcargo Terminals. I'm very happy to share with you that we have a new Managing Director, Designit, which is Pana Cadri, who comes in from Adani ports that was his last assignment, he was the Chief Executive. He will take over the reins from me as I Superna and step down from a role of Managing Director by the end of this month. So Prana will take charge from September 1. We have requested him also to be part of this call, and I request you to continue giving him the support that you have extended to me. And the management team now through Pranav from September 1. Thank you, and I hand you over -- and a quick word from Pranav beforehand you over to Pritam.

Good morning, everybody, on the call. This is Pranav Coduri. I've just joined Allcargo a week back. Thank you for being on the call and look forward for our continued relationship and partnership...

Thank you. Thank you Pranav. Over to you, Pritam.

Good morning. Good morning, everyone, and thank you, Suresh. Welcome to our Q1 FY '27 earnings call. I will take you through the highlights of new financial results for the first quarter of the new financial year. The total volume handled for Q1 FY '27 stood at INR [ 176.4 ] reflecting a 7.2% growth year-on-year. Revenue for the quarter stood at INR [ 214 ] crores as compared to INR 187 crores for Q1 FY '26 and INR 208 crores for FY '26. EBITDA, excluding other income for Q1 FY '27 stood at INR 47 crores as compared to INR 35 crores for Q1 FY '26 and INR 44 crores for Q4 FY '26. This inclines an EBITDA per deal of INR 2690 for Q1 FY '27. The improvement in profitability came on the back of operational efficiency supported by technology improvements and by higher share of branch shipment containers volume plus upward rate revision at various locations. Going forward, we expect EBITDA per GEO to remain around INR 2,400 levels. Net profit for Q1 FY '27 was INR 6 crores as compared to INR 9 crore for both Q1 FY '26 and Q4 FY '26. The PAT was impacted by tax on dividends from joint venture companies and also previous year's tax impact. Going forward, tax rate is expected to remain at 25% as we have moved to concession tax regime from now onwards. With this, I would like to open the floor for the question-and-answer session. Thank you.

Thank you, [indiscernible].. Ladies and gentlemen, we will now begin with the question-and-answer session. [Operator Instructions] Our next question -- our first question comes from the line of Art Dusan individual investor.

[indiscernible] So my first question is what are the CapEx plan for FY '27 and FY '28.

Thank you. Thank you, Josh. Your line is not quite clear, but I hope we are audible to you.

Yes, yes, you are, sir.

So your question was about CapEx for FY '27. This is a -- FY '27, '28. This is part of the 3-year plan in which we have identified key projects, and Pritam will share some of the highlights on the numbers with you.

I will link this question to the 3 years plan, [indiscernible] , which we are currently at. So for our plan [ 2030 ] basically, we had estimate of INR 400 crores of CapEx requirements. And this includes various projects which we have planned from parameter to align and [indiscernible] expansion at NPA and also Mudra expansion. Some of these projects would -- have actually started and the CapEx expenditure are good basically been getting from this financial. In speedy JP, we are expected to 20 crores of CapEx in this financial year, plus substantial amount of CapEx for product [indiscernible] in this financial year and in the next finance. Overall, there is a requirement of close to INR 400 crores of CapEx. Various funds requirements, various funding plan for the INR 300, INR 400 crores CapEx has also been in place. Recently, we have raised an equity of INR 120 crores. Out of that INR 25 crores we have already called and close to INR 90, we get called, which will be utilized for financing this CapEx plan. We have existing accrual close to INR 50 crore that will be utilized for the CapEx funding. Existing business continue to generate INR 70 crores of cash flow on an annual basis. And that will also be used for funding this CapEx expansion plan. There could be certain debt requirement in the range of INR 100 crores to INR 150 crores, for which we have already tied up with various banks and [indiscernible] But to answer your question, we have planned for close to INR 400 crores of CapEx expansion CapEx for this financial year. Close to INR 100 crores of that CapEx we should incur in the current financial year.

Okay. And like how much would be from internal accrual and how much will be from debt or like -- do you have the bifurcation for that? Any plans for that?

Yes. So maximum funds will be raised from our existing balance which we have maintained, around INR 50 crores. Future cash flow over a period of project execution period will be close to INR 150 crores to INR 200 would come from -- my will come from the existing approval. As I told you, close to INR 90 crores would be used out of the equity which we have already raised in the past. And the debt requirement would be in the range of INR 100 to INR 150 crore.

Okay. Great. And my next question is regarding the EBITDA per TEU. So once the ICD is fully operational, what are our targets for that?

So if we are talking about Farmer ICD...

Yes.

So the EBITDA for Partager ICD would be significantly more because we will be also -- we'll be also factoring or participating into rail revenue for Partager business. So currently, we are looking to maintain our EBITDA per TEU in the range of 2,400 and that we have been able to maintain successfully for last few quarters. In our 3 years plan, we have targeted EBITDA per TEU of INR 2,750, that's including Faruk project. So we would be with Paruna project going away. That is the target EBITDA quality we are looking to maintain.

[Operator Instructions] Our next question comes from the line of Debra an individual investor.

Sir, I just want to know that do we get any business from our group company, right? Example, Allcargo Global, where they do LCM and FCL. Yes. For LCL business, yes, we use our CFS to handle the LCL containers or cargo logistics. That business is there at JMP, Mura and Chennai on the location. We provide storage as well as handling services to -- for all cargo. It comprises close to 10% to 12% of my overall revenue. And margins are on a similar level as we get it from our third-party customers. So yes. To answer your question, we do get business out of LCL and more cargo.

Okay. In addition, Mr. Devraj, also relevant to note that the Allcargo Group, through its other listed entities of products and solutions which are adjacent to what Allcargo Terminals does. So while we present solutions to customers, there is the Oceanside logistics, the freight, which gets taken care by Allcargo Global, Allcargo Terminals, that's the port side logistics work. And then you've got Allcargo logistics, which takes care of Express and the 3PL, the consolidated logistics. So there are a set of customers who participate in all these products and solutions with us while we remain separate entities to them. So that is, in some way, a cross-sell opportunity for us at an entity level, which our teams do.

Okay. Noted, sir. But sir, it was very difficult to understand, right, for a long-term shareholder that, like there is 4 businesses, which were carved out. And we must get feel that there were some inside the group, 1 company gets the business. But now as we are separately listed, so that was -- my question was coming from that point of view and how we will get more business. And it's okay, I'm done. So my question is to the DFC. How is the DFC benefit our ICT business and rail?

Thank you for this question, and this is a thought which keeps coming up in our quarterly conversations. So if you were to look at DFC, I'm sure, as an investor, you have looked at where the DFC starts and Mundra is a very important cog in the wheel and then you have got NPA, the Navachab connectivity, which has happened, but still not fully functional in a manner in which on -- when you look at CFS, the kind of catchment area in the markets that we end up supporting typically 200, 300, 350-kilometer range. So Mundra, we can look at it that way, rail position being high in Mundra, 1 of the highest in the country. JNPA, there is a scope for all coalition to become better. Largely, the JNPA CHS has catered to a 200, 250-kilometer radius. You have Vivendi Pune, a lot of these industrial clusters is what we cater into. With the DFCC, obviously, there could be an increase in port volumes, which can trickle down into CFS in the form of BPD DPD or the regular storage ahead of the exports which happened. So we expect the DFCC to improve port efficiencies, which is the stated purpose. It gives customers choice it gives customers speed. And as part of the value proposition for a customer as part of the logistics chain, we expect those benefits to rub off on CFSs like us. And as you know, we are strategically located in locations on the DFCC and now Farrukhnagar the next 1 year will be the latest addition to that. Mundra, we are present through 2 facilities, Navisheva also we are present through 2 facilities. So that is our view about how DFCC will have an impact, largely positive on our business.

Okay. So sir, rail line is connected to the farmer and will be the CTO, right?

Yes. So there is a PFT and an ICD that we will have in Farrukhnagar. So there will be a rail line connectivity. The PFT work is in progress. That will get completed before the ICD gets started. March '27 is the deadline for the PFT to be commissioned. So we will operate that as a stand-alone PFT for initial months before the ICD gets fully operational. And as you would know, we also have a strategic investment in ORCL. Allcargo terminals holds about a 7.5% stake in HRC which gives us maybe in the next 1, 1.5 years' time when the whole process -- project is done. It will give us preferential access to DFCC, which will also help customers and consignee to save time when they move cargo from Northern India to Mundra. So that's what we are looking forward to. This is a little ahead as we get closer to the commissioning of the PFT and the ICD we will share with you more details about how we plan to leverage that new facility.

[Operator Instructions] Our next question comes from the line of Omkar with Cote Capital.

I'm I audible?

Yes, you're audible.

[indiscernible] I have 2 questions, actually, One question on the answer very broadly in last question. So 1 question I have about the EBITDA margin. And you guys are pricing improvement over a period of last 2, 3 years, 17% to now 23%, up 20% in the first quarter. Is it -- 1 question is sustainable at 22 or the way you are doing the operation excellence. Do you see a further improvement in the margin profit or product on a content generally report of time because that's what we target is to [indiscernible]. Can you speak about the businesses in Germany, and can you tell me about the more operational excellence happening in the company? And what's the guidance for 2 years.

Sure. Sure. Ankara. I think it's very relevant point, and we are happy that over the last 8 to 9 quarters, the efforts that we are putting in, in terms of both commercial yield management and optimizing costs, both are working hand-in-hand to deliver this upward trajectory. So that's the first thing. So what are the things that we have done until now? I think commercially, understanding the cargo mix, what's the kind of cargo which comes in 40, 20, all those things over a period of time, we have optimized it to an extent, which is really hitting the sweet spot, and that is something on the commercial and the cargo mix side. On the cost side, I think by being part of our pan-India CFS, we obviously have certain cost advantages, key costs like transport, key costs - the other key costs in terms of equipment and security, we managed to negotiate pan-India therefore, end up getting rates which are very competitive, that is also something which flows down into our bottom line. The other thing is simply because there is capacity utilization, which has consistently improved. So if you were to go back 3 years ago up post the COVID period, our capacity is used to over around 65% to 70%. From that, we have built up our capacity significantly. And the capacity utilization has also kept pace. So last year, we were at a capacity of about 8.3 lakh TEUs. We built it up to around 10.1 lakh TEUs. But the capacity utilization from a 60%, 65% in 3, 3.5 years back, covers at a healthy 80% to 85% at this point in time. And there are a couple of our facilities, which are really completely fully utilized, like our Chennai facility and 1 of the facilities that we have in Mundra. Therefore, the scale efficiencies start to come into play. So if you were to look at it, it's a conscious effort over the last 8 to 12 months, both on the revenue, commercial management, yield management using the right kind of scale efficiencies to optimize costs. We have also introduced technology in the form of myCFS, which more -- which is more in terms of customer convenience rather than any direct impact on the cost. But I think because of that, we end up getting more stickiness from our customers churn reduces, and therefore, when customers stay with you for a long period of time, and we end up having a larger wallet share. That also adds to building up our EBITDA profile. So broadly, these are points that we have worked on, and we will continue to do these things to ensure that our margins remain at this level. And to final point about what is kind of guidance that we have preterm short while back said that with the ICDs becoming part of the portfolio in about 1.5 years' time, there will be a natural increase which will happen. Even without that, we expect the profitability numbers to hover around the current level. Because as you know, the market is very competitive. And therefore, beyond the point, I don't think we can push yield management, and I think we are at a very ideal spot at this point in time. So we will endeavor to maintain profitability, EBITDA per TEU numbers in the range of INR 2,400 crores to INR 2,530. I hope this answers your question.

No, absolutely I got that. I was looking at FY '20 exploration and when you see revenue of EBITDA to INR 75 crores, you're roughly targeting 20% EBITDA margin. and cost [indiscernible]. So just want to understand that this is a onetime or sustainable because you obtain the efficiency part and very relevant for your business. So that's, my curiosity that are we targeting 20 or 22.

[Operator Instructions] our next question comes from the line of [ January Sherman ] individual investor.

Sir, my question is since such a high cash rich business, any plans of coming out with a dividend payout policy?

So Pritam will take that question. Thank you.