AVG Logistics Limited (AVG) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to AVG Logistics Limited Q4 FY '26 annual results conference call, hosted by Kirin Advisors. this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. Also, please note that today's meeting is expected to last approximately 40 to 45 minutes, including the discussion and Q&A session. I now hand the conference over to Mr. Harshil Ghanshyani of Kirin Advisors Private Limited. Thank you, and over to Harshil.

Yes. Thank you. Thank you everyone. Regarding the conference call, on behalf of Kirin Advisors, I welcome you all on the conference call of AVG Logistics Limited for Q4 FY '26. From the management team, we have Mr. Sanjay Gupta, Managing Director and CEO. We have Mr. Rajesh Rohilla, Chief Financial Officer. Now I hand over the call to Mr. Sanjay Gupta. Over to you, sir.

Thank you, sir. Good afternoon, esteemed investors and management to AG Logistics Limited Q4 '26 earnings call. We sincerely appreciate your continued trust and support as we continue to strengthen our position as a technology-dri integrated multimodal logistics solution provider. A Logistics leading integrated logistics solution provider in India offering end-to-end supply chain services across road, rail, warehousing, oil chain, liquid logistics, third-party logistics, 3PL operations. Since our inception of 2010, we have built a strong pan-India network comprising over 70 branches, more than 3,000 owned and hired vehicles, over 7.4 lakh square feet of warehousing space as a diversified customer base spanning FMCG, food and beverage, cement, retail, telecom, steel, automotive, pharma and industrial sector. Our integrated multimodal capabilities continue to enable efficient, reliable and cost-effective logistics solution for customers across India. we continue to execute on our strength growth initiative during the quarter. We strengthened our multimodal capability through our entry into the rail-based liquid logistics segment, expanding into a high-growth market and reinforcing our ability to offer safe, efficient and sustainable transport solution for the chemical and allied industries. We also advanced our infrastructure expansion with the strategic acquisition of land parcel in Himachal place called Tan for warehouse purpose. This investment will support future warehousing and logistic capacity, enhance our regional presence in North India, improve operational efficiencies and strengthen relationship with key customers. Further, we reinforce our commitment to sustainable logistics through our collaboration with National India and Ashok Leyland for deployment of CNG powered vehicle. This dedicated green logistic corridor not only reduce carbon emission, but also improve operational efficiency and long contract with the customer, reflecting our continued focus on building environmentally responsible and future-ready logistics solution. Also, the Indian logistics industry continued to benefit from strong structural support driven by sustained government investment in infrastructure, increasing multimodal connectivity formalization supply chain and the continued implementation of initiative under the National Logistics Policy and the -- these developments are expected to improve efficiency, reduce logistic cost and create significant opportunities for integrated logistics players with nationwide capabilities. Our multimodal strategy remains cent of our long-term growth road map by effectively integrating road, rail warehousing, cold chain and supply specialized logistics solution -- we aim to deliver greater efficiency, lower transit cost and improve reliability of our customers. The recent expansion into rail further this integrated approach and open new avenue for growth in specialized logistics segment. Sustainability continues to be integral part of our business strategy, along with the deployment of fuel -- we are also continuously evaluating initiatives that improve fuel efficiency, optimize vehicle utilization, reduce carbon emissions and promote environmentally responsible logistic practice. We believe that sustainable operation not only contribute positively to the environment but also create long-term operational commercial advantage for the company. This year, we are focusing on asset. So we are trying to improve the running condition of the vehicle so that we can take maximum revenue by asset -- looking ahead with the global economic uncertainties and evolving market conditions, they continue to create short-term challenges. The long-term fundamentals of the Indian logistics sector remain highly increasing, rising manufacturing activity, increasing consumption, continued growth in e-commerce, government-led infrastructure development and the ongoing shift towards organized logistics continue to provide a strong foundation for sustained industry growth. With our establishment network, nationwide network, diversified service portfolio, experienced management team and disciplined approach towards execution, we remain confident of delivering consistent growth while maintaining financial operational efficiency -- we will continue to pursue opportunity that enhance shareholder value, strengthen customer relationship and reinforce AP Logistics position as one of the India's leading integrated multimodal logistics solution provider. I would like to now invite our CFO to take through detailed financial performance for the quarter.

Good afternoon, investors. I'm Rajesh Rohilla, Chief Financial Officer with ABG Logistics Limited. Coming to the financial performance, we are pleased to report a strong [indiscernible] achieved growth across both the revenue and profitably. During Q4 FY '26, we recorded total revenue of INR 176.61 crores, [indiscernible] year-on-year. EBIT stood at INR 34.72 crores and increasing 45% year-on-year while EBITDA margin expanded by 349 basis points to 19.66% profit after tax stood at [indiscernible] 104.78 year-on-year with PAT margin growing by 252n basis points to 6.06%. For the full year, financial year '26, we achieved total income of INR 532.48 crores, representing a growth of 5.07% year-on-year. EBITDA increased to INR 112.45 crores, up 14.27% year-on-year, with [indiscernible] margin improving to 19.31%. Profit after tax stood at INR 26.17 crores, registering a LD growth of 22.71%, while PAT margin expanded to 4.4%. These figures reflect our continued focus on rational excellence, prudent cost and impact and the strength of our integrated multi-modal [indiscernible] . I would also like to share a few thoughts on the direction in which the company is progressing. Over the past 2 years, our [indiscernible] frequency in and building strong repeat. We believe that sustainable growth in the logistics sector is given by distal execution operational excellence and the ability to consistently deliver premium service levels. Accordingly, we continue to focus on growing turnaround banks, optimizing network supply and expanding our execution capability across our business verticals. One of the key strength of AVG logistics continues to be our diversified business model across multiple logistics segments, including transport, multimodal logistics, cold chain, warehousing, liquid logistics and value-added supply chain solutions reduces dependence on any single service line or customer segment. This divers allow us to respond effectively to changing market dynamics while providing customers with integrated logistics solutions through a single service platform. We are also witnessing increasing demand from customers for customized and integrated supply chain solutions rather than stand-alone Large enterprises today are looking for logistics partners who can optimize their end-to-end supply chain, improving inventory management ensure timely deliveries and provide greater visibility across the movement of the goods. Our integrated services offering supported by our nationwide network and experienced operational team position us well to capitalize on the structural shift in customers' requirement. Another important area of focus is customer retention and share expansion. We continue to work closely with our existing customers to identify new logistics requirements across different geographies and vertical -- this approach has enabled us to strengthen long-term partnership generating incremental business opportunities from our existing client base. We believe that deep customer engagement remains one of the most effective drivers of profitable and sustainable growth. Operational discipline continues to remain at the core of our business philosophy. We are constantly evaluating opportunity to improve fleet productivity, reduce empty runs, optimizing freight planning, enhance warehouse productivity and improve asset utilization. These initiatives not only improve operating efficiency, but also strengthen our competitiveness in an increasingly dynamic logistics market. As supply chain across India continue to become more organized, customers are increasingly prioritizing compliance. safety standards service reliability and technology enabled operations. While selecting logistics partners, AG Logistics consistently investing in building robust operational processes, compliance framework and quality standards that help us maintain long-term relationship with leading domestic and multinational customers. Going forward, we remain focused on expanding our presence in high-growth sectors such as FMCG, food processing, pharmaceuticals, chemicals, retail and industrial logistics. We also see meaningful opportunity emerging from the government's continued emphasis on manufacturing infrastructure, developing dedicated freight corridors, industrial corridors and multimodal logistics rated. We seingancfive Overall, we remain confident in the long-term outlook for both the company and the Indian logistics industry. Our strong customer relationship, diversified business portfolio, expanding infrastructure, experienced leadership team and unwavering commitment to operational excellence provide a solid foundation for sustained and profitable growth in the years ahead. With these remarks, I would like thank you once again for your continued trust and support. We remain committed to delivering consistent performance and creating long-term value for all our stakeholders. Thank you. Over to you.

Ladies and gentlemen, we will now begin with a question-and-answer session. [Operator Instructions] First question comes from the line of Mayur with [indiscernible] Ventures.

Yes, can you hear me?

Yes, we can hear you. Please proceed ahead with the question.

So I just wanted to know like we have closed FY '26 with a revenue of INR 578 crores. So what revenue are we targeting for the next financial year?

Our focus is on achieving sustainable and profitable growth. Based on our current order book, customer pipeline and expansion into new business segment, we expect to deliver healthy double-digit revenue growth in FY '27. And we are confident that our existing customer base and new customers, which we are identified pipeline along with the new business more or less around 20% is to achieve 15% to 20% growth in the next year.

I want to know what was the CapEx in this financial year and the projected CapEx for FY '26 [indiscernible]

Yes, the CapEx is done for the liquid logistics train we have started this financial year. One more we are targeting in FY '27. And besides that, we have added CNG [indiscernible] -- so besides that, we are also adding some regular vehicles, which is as per the requirement of the customer. So a 100-plus vehicles we have added last year and we are targeting in the next financial...

Okay. And can you also provide more details on the INR 100 crore CapEx plan?

Yes, basically the CapEx is done for the liquid logistics [indiscernible] we are targeting in FY '27. And besides that, we have added, first of CNG, EV and LNG per which are sustainable as well as supporting our zero emissions. So besides that we are also adding some regular vehicles, which is as per the requirement of the [indiscernible] so around plus prices we have added last year and same we are targeting in the next time yes.

Our next question comes from the line of [indiscernible] Shah Consultancy Limited. Please go ahead.

First, on the revenue target. So are we expecting to achieve what is the revenue target we are expecting to achieve in next financial year?

Next 5 years.

Yes, yes, correct.

Actually, we have yesterday, we have uploaded our vision of 2030 with INR 1,250 crores turnover. And by 2030, we have the vision for the next 4 years

Whether we want to increase our income from warehousing segment also logistics will remain our main focus segment...

No, no. Total as a multimodal [indiscernible]

Sir. Also in your previous call, you have mentioned that we are providing the supply chain management service also. Can you please give brief details on this? And are we focusing on scaling up this or this is a good margin segment?

Yes, it's a good segment because we are supplying the -- managing their warehouse and business movement -- inventory movement, et cetera. So margin is there, but it is a highly responsible work because earlier companies pointing their team and now they are giving to the 3PL companies.

Our next question comes from the line of Josh Agarwal, an individual investor.

So there is a significant increase in the previous months. So how that has impacted the business in future?

Can you repeat the question, please?

Yes, yes. I am asking for there has been a significant increase in the diesel prices, the fuel prices. So how that has impacted the business?

No, no. Fuel prices as very important cost and cost in our industry. But maximum customers contracts include the fuel escalation clause. So all the contracts are having the rider and the percentage of the diesel consumption is mentioned in the contract. So there is no much impact on us due to increase in diesel price. We are getting the increase from the customer as and when the diesel increasing. few days, we have to manage our own within a week time or 15 days' time, they are increasing our rates.

Okay. Okay. So what are our targets in green energy? So as we are investing in EV or CNG trucks?

Yes. Sustainability is an important part of our long strategy. So we have already starting buying the CNG vehicle, LNG vehicles and electric vehicles. And customers are also insisting us to deploy alternative fuel vehicles for which we are trying our level best. But one condition is from our side, we want a long-term contract because there is a huge investment in the EV and LNG vehicle. So whichever customer is providing us a long-term contract of 3 to 5 years or 7 years, we are buying the vehicles and providing them for their services. So we have a huge plan for investing in electric and CNG LNG vehicles. And future fuel will be like alternative fuel only because ultimately, we have to come out from the diesel and diesel maybe polluting and other things, this EV and LNG vehicles are less polluting and emission...

Sir, do you think that the EV trucks will be sustainable in future, suppose if it is a long distance, if the distance is long, suppose maybe...

Yes. As of now, their range is around 150 to 200 kilometers in charging point. But like Delhi to Arista, Chennai to Bangalore, they are 500-kilometer journey. So what we are doing, we are investing in the infra also. So we are putting charger in between. And we are taking like a diesel vehicle is taking. Similarly, the vehicle will be charged at the middle point -- so ultimately, like if you are going from Pune to Mumbai to Mumbai or even Ahmedabad to Mumbai, there are chargers are available and we can charge the vehicle and can go. So ultimately, the charges will come out -- infra will come and there will be no problem for running the vehicle long route also.

Okay. So what is the capacity that the EV vehicle can carry...

There are one of vehicles, is trailers. Trailer can carry up to 40 tonnes at one time. And small vehicles can carry up to 9 ton, ton, 3 ton, 1 tonne. So maximum vehicles as of now in the industry is using within the range of 150 kilometers. But now we are getting the contract for like Chennai to Bangalore route and that is around 400 kilometers. So we are putting infra in between middle way so that both this vehicle will run and can go up to 400, 500 kilometers.

Okay. Just want to have an idea like if it is a 40-tonne EV vehicle and the contract for 5 years for 500 kilometers. So what will be the impact on the P&L it is better from...

It is better from the vehicle because my operational cost is very less because the asset is very high compared to diesel vehicle, but operating cost is very less and maintenance is not there. So EV profit is much better...

Okay. Okay. One last question. Like we have also started one liquid logistics segment. So can you give a brief detail on what is that and what are the margin look like in that segment and how we are going to expand that segment?

Liquid logistics means carrying transport of the liquid material. So there are 2 type of -- earlier we don't have any liquid tankers with us. It is definitely tankers of tanker with chemicals is transport and it is by road and rail we can do. So it is a huge demand in India. And as of now, we are only 180 tankers. But gradually, we have to increase up to 1,800 tankers. So that is around double of the capacity. So we are -- there are 2 options we can buy it from import from China or we can take the lease in India also. So we have already purchased. And third one, we are trying to take on will increase.

Okay. I just want an idea about like just wanted to know if you are purchasing a vehicle and then the -- like when we get to see the positive return on that vehicle? What is the time line for that?

No, my vehicle is earning to the day 1. So we are taking a maximum 90%, 80% loan from the bank or NBFC. So my truck is earning from the day 1 and we are paying the EMI. And over a period of time of the 5 years or 6 years, that EMI will also close whereas the life of the vehicle is 10 years in the NCR and major 15 years in the small cities. So earlier we are running in the route of 2,000 kilometer and 2,500 kilometer -- and later on, we will shift these vehicles to a lesser route of 500 to 1,000 kilometer -- so vehicle is profit making from the day 1 itself. we are not paying the EMI from our pocket. EMI is self-dependent vehicle is self-dependent. If we buy the vehicle, it will the money from the day 1.

Our next question comes from the line of Manikandan with Thermo Capital Private Limited.

Reversal gain of INR 19 crores which is recognized in the last quarter of the financial year '26 recurring income or onetime income by virtue of adjustment of accounting standard the normalized finance publish...

let me clarify this. This is a normal business because we had entered into a long-term contract for our require [indiscernible], we have completed period on this contract, which has been canceled during the financial year. So the expenses all whatever the require we are doing in the P&L impact of that. On the one side, it is showing as income. On the other side, it is depreciation and the finance cost. So you can see it is operational income. This is not a windfall.

Is it going to be recurring in nature I understand by virtue of Indian railways this effect was to be given in the financials as per my under inguration, normal result is the doubt I have...

Have taken opinion from a lot of professional firms on this. Actually, it is operational income. They have given opinions from the PC. So it is actual operational other income have. is gaining [indiscernible]

To add tax on that to diminish [indiscernible]

Yes. Actually, previous year, we have added expenses against the contract we have paid taxes in previous year. This year, it has been reversed as our revenue.

Basically the picture of the company...

Sorry, I can't...

No, these are the book to show the picture of the company. As far as tax is concerned, these are not recurrent.

Recurring because we are entering multiple long-term agreements on a regular basis and sometimes due to the requirement, it gets terminated in between also. So it's a very regular and recurring nature. It's not an exceptional thing. So it's very natural. So it can happen to any year, this year, next year, another year. So it's all as per the Ind AS requirements, requirements.

Our next question comes from the line of an individual investor.

I just have some couple of questions. So can you please brief us on the Haldiram contract that you are entering into?

Yes. We got -- recently we got the contract from Haldiram Nagpur and they are the leading FMCG brand. They are supplying towards Maharashtra and Gujarat and Orissa, Chhattisgarh and Telangana, Andhra, Karnataka. So there is a huge requirement and upcoming festival season. So they have given us the contract for 3 years, extendable to another 5 years for the 100 vehicles dedicated supplies to them. is initially we have given 10 vehicles 10 vehicles contract may further by another 2 to 3 months after the deployment of these vehicles. So these are very large customers and having a lot of movement from Nagpur to pan-India state I have already told 3, 4, 5 states, they are sending...

Okay. And sir, which industries are you targeting to fulfill revenue targets? -- so which industries will be targeting...

Yes. We are basically A, we have developed with the FMCG companies. Now we are into beverage, liquor industries, steel, cement, pharma, chemical and industrial and solar power industries. So there are many industries are there a lot of opportunities are there like solar power, liquor, are the major transport required for the companies for the raw material and finished goods. So these are the industries which we are trying to catch up for growth.

And sir, just one last question from my side. So we have delayed our financial results for the Q4. So what was the reason for the delay? It does not really indicate a good...

Yes, you're right. The delay was only due to the procedural and audit related requirements. As our business has grown, the audit process has become more detailed and require additional reviews. So it took some additional time in those reviews and consolation from our branches. And after completion of the review, the financial measures were placed before the Board of Directors. We remain committed to maintain high standards of corporate governance and timely disclosure. We'll try to keep it well within the time lines.

Our next question comes from the line of [indiscernible]

We are not providing [indiscernible] now LNG is their own LNG, LNG now we have joint venture with 50-50 buy that truck from the [indiscernible] manufacturer which we are buying the LNG vehicles. So we have made a separate logistics company for that name is Carbonite Logistics Private Limited, that is 50% subsidiary of the A and 50% subsidiary of the Group. So nowadays, the customers are asking for the green logistics like Tata Steel and other cement companies, there is a huge demand for the long-term contract they are giving. So we are having a very high growth plan in this company of Group because Group is very big group of INR 1,000 crores. So we [indiscernible] maximum next month or so.

Ladies and gentlemen, due to the time constraint, that was the last question for today. I now hand the conference over to Mr. Harshil Ghanshiani from Kirin Advisors for the closing remarks. Thank you, and over to you, Harshil.

Thank you, everyone, for joining the conference call of AVD Logistics Limited. If you have any queries, you can write us at [email protected]. Once again, thank you, everyone, for joining the conference call.

Thank you, Harshil. Ladies and gentlemen, on behalf of Kirin Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.