Gateway Distriparks Limited (GATEWAY.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '26 Earnings Conference Call of Gateway Distriparks Limited and Snowman Logistics Limited. 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 the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. Today on the call, we have Mr. Prem Kishan Dass Gupta, Chairman and Managing Director; Mr. Ishaan Gupta, Joint Managing Director; Mr. Samvid Gupta, Joint Managing Director from Gateway Distriparks Limited; Mr. Kartik Sundaram Aiyer, CFO; Mr. Rajguru Behgal, Chief Business Officer; Mr. Manoj Singh, Chief Strategic Officer. From Snowman Logistics Limited, Mr. Padamdeep Singh Handa, CEO and Director; Mr. N. Balakrishna, CFO. I would now hand the conference over to Mr. Prem Kishan Dass Gupta, Chairman and Managing Director from Gateway Distriparks Limited. Thank you. And over to you, sir.

Thank you. Good afternoon, ladies and gentlemen, and thank you for joining us today. It is my privilege to address you at the outset of our quarterly earnings call. I hope everyone has had an opportunity to look at our investor presentation and press release that is uploaded on our website and stock exchanges. I'm pleased to report that our performance during the quarter has seen strong year-on-year improvement. This is largely attributable to the absence of the Red Sea disruption that adversely impacted the first quarter of the previous financial year. Our volumes have been consistent, along with slight increase in market share in the regions where we operate. There are some geopolitical and geoeconomic conditions that remain, but we expect them to stabilize soon. India has already closed a trade deal with U.K. and is expected to close similar deals with U.S.A. and EU, which will improve EXIM volumes. It may not lead to immediate impact, but it will be good for long-term business as Indian exporters competitiveness improves. The business remains stable where our EBITDA per TEU for the rail business was around INR 9,100 per TEU, slightly down due to the higher empty and underframe running, lower double stacking and increased imbalance due to lack of exports. Our CFS business sees some improvement with an EBITDA per TEU around INR 1,500. Our focus on expanding our Inland container terminal network continues. However, land acquisition continues to be a challenge. These delays are unfortunate, but we remain committed -- we remain committed and are actively engaging on multiple fronts to finalize new locations by exploring domestic opportunities as well as asset-light models. Snowman continues to maintain its position as the market leader and as it adds further capacity in Calcutta, Krishnapatnam and Kundli in NCR, we have plans to add more capacity in both own and light asset model and continue our expansion in the 5PLvertical as well. With that, I now hand over to the moderator for the Q&A session. Thank you.

[Operator Instructions] The first question is from the line of Rehan Saiyyed from Trinetra Asset Managers.

Sir, in the first phase, your voice was breaking. So, I just want clarification on the P&L side like on the operating expenses increased Y-o-Y despite revenue growth. So are there specific cost headwinds in fuel, manpower, technology investment that we should expect to continue in FY '26 going forward?

Sorry, there's some echo or some disturbance coming when you're speaking something longer. Can you try again?

Sir, your voice is not audible?

Can you just please use your handset to ask the question, please?

Ma'am, I'm using handset only.

Actually, there is some echo from your line.

Yes. So, I want some more clarification regarding the operating expenses increased Y-o-Y despite revenue growth. So are there any specific cost headwinds in fuel, manpower, technology investment that we should expect to continue in FY '26?

These are general increases. Yearly, there is manpower and minimum wage and fuel increases. The hikes keep happening. So it's part of that only.

Okay. So it's like a recurring expense we are seeing in this quarter?

Yes. But then this quarter had more underframe and empty running. So, we do expect some improvement in margin going forward as the overall imbalance also improves.

Okay. And my second question is around the tech. The company has made significant investment in digital platforms and IoT-based monitoring. Could you please share any quintuple impact on cost saving or service levels from this initiative so far?

It's hard to quantify, but we continuously keep investing in IT just to stay ahead of the curve. Like we have OCR technology at ICDs now. We were the first to do RFID and GPS. But again, it's very hard to keep quantifying things like this. It's a continuous improvement that we keep working on.

Okay. Okay. The last question from my side. In the year, you highlighted the use of rooftop solar and renewable energy integration at warehouses. So, could you share any targets for renewable power usage in the next 2 to 3 years, its potential effect on margins coming there you have seen going forward?

So all our -- majority of our warehouses, say, 80%, 90% of all our locations in both Gateway's, Snowman's put together have solar. We've done this under the OpEx model so far where someone else invests and we just take the benefit. We take like a discount to the grid rate. But now going forward, we're evaluating, doing it ourselves where we invest in the solar and then it will be about INR 2 or INR 2.5 compared to something in the average is about INR 4.5 right now. Then we're also looking at electric vehicles for movement. That will also -- it's about -- the CapEx is almost double, but the OpEx is about 1/3, 1/4. So, there are savings there also. Other than this, we're also looking at LNG vehicles. So, that's also similar lines to EV. We're already running CNG vehicles. We have about 65 vehicles -- 65, 70 vehicles. So, that also is focused more on the greener side.

[Operator Instructions] The next question is from the line of Achal Lohade from Nuvama Institutional Equities.

My first question is, if you could help us understand in terms of the competitive intensity, the overall EXIM growth, if we have gained, maintained market share?

So the trend for the last couple of quarters has been roughly the same. So whatever market share we've been reporting, it's broadly along the lines of that only. No fresh competition intensity has increased. Anything like discount levels also remain more or less the same.

Right. If you could help us understand, if I see the numbers right, INR 319 crores of revenue in rail segment, which implies a realization of INR 34,200, which is down about 3% Y-o-Y. Is it entirely to do with the lead distance? Or is it to do with anything specifically on the pricing part?

No. So it's more a mix of empty versus lading. So, we've done more empty in the last quarter due to the imbalance. So, you'll see a decline in revenue per TEU because of that.

Would it be possible to get some sense how the empty are usually and what was it in first quarter?

We're not really sharing the breakup publicly for empty versus lading.

Right. But on an average, how much would that be typically? Would that be 15%, 20%? Or could that be 30%, 40%?

I mean, that's like I said, we're not getting into the split of lading versus empty.

Understood. And you said margin was INR 9,100 per TEU. I presume this again includes the other income. But ex of other income, how much would that be? Would that be closer to INR 9,000 per TEU?

Other income was very nominal this quarter. It's only about INR 2.9 crores, out of which majority of it is business related only. So, we're not measuring it other side.

Right. And in terms of the outlook, how do you see that in terms of the margins?

So, there is scope to increase double stacking. Possibly, we'll go back to INR 9,500 in the coming quarters.

Right. And if I may ask, in terms of the volumes, how do we see last 2, 3 quarters? We are seeing -- rather 4 quarters, we are stuck in that 92,000 to 94,000 TEUs on a quarterly basis. If you could give us some sense in the near term and from a medium-term perspective, how do we see this?

Generally, Q1 is weaker. I know last year was weak because of the Red Sea more than so. But for Q1, even to stay at the same level that we did for Q4, it's a good achievement. For even the rest of the year, we should see some growth coming in. We're still targeting a double-digit growth for the entire year.

Okay. Which implies a very steep ask for the balance 9 months. Is that still doable according to you?

Yes, I think it's possible.

Okay. Got it. If I may ask a further question with respect to the DFC, what is the update you have with respect to the connection at JNPT and b, how does it impact us?

Yes. Rajguru, this side. So right now, we have the same status. The last stretch of 100 kilometers, it is just to get operational. So, what we are expecting as per DFC, so it will get operational by -- like on the side, we are telling 31st December 2025. But when we spoke to them, so we are expecting that it should get completed by 31st March 2026.

Right. And when it gets connected, does it benefit us, hurt us in terms of -- given we are not really much present at the JNPT?

So it is too early to say because there are multiple factors that will come into play, how the shipping lines are going to do their vessel rotation and how the cargo, which is going to Pipavav and Mundra, how the exporter, importer they are going to ship because ultimately, it is the extra distance of 300 kilometers vis-a-vis Mundra and Pipavav. So, that will also come into play. And what pricing, shipping lines are going to come up and what the pricing the port authorities are going to come up vis-a-vis Pipavav and Mundra. So, that is something which will determine how much volume will get shifted. But we have a pan-India license and we have this advantage that after CONCOR, so we are only one of the private operators who have regular services towards JNPT. And definitely, we will foresee an advantage once this corridor starts.

The next question is from the line of Aditya Mongia from Kotak Securities.

I will go ahead with my question. The first question is you've talked about the double stacking portion declining for you in the quarter. Could you quantify the quantum of double stacking for the quarter? And b, why is it declining?

So it's 39%, and it's basically declined due to lack of exports. There's also realignment of trade. Certain volumes have increased towards Mundra rather than Pipavav, which is further increasing their balance. Also, there's a slight echo on your line. So, I'll just request if you're on speaker or something, please use the handset.

Understood. I hope this is better from my side. The second question that I had was, if you could share the individual market shares that you typically do for the key markets of Ludhiana, NCR and others, that would be helpful.

Yes. So basically, we have been able to retain the same kind of market share. At NCR, we have retained between 16% to 17%. And Ludhiana, we have retained 27% and at Uttarakhand, that is 37%.

Okay. The third question that I had was more on the guidance of INR 9,500 of EBITDA per TEU. At some point of time, this was INR 10,000 kind of guidance. Now, numbers have fallen to about INR 9,100. I understand there is an empty mix issue inside. But just wanted to get a sense of how to think through the steps that need to be taken to get to INR 9,500 and what is the outside chance of doing better than that?

INR 9,500 would be our normal only. So, that would just be with slight better trade volumes like export increasing and there were some double stack restrictions during the months of May and June. So, that is no longer there. So, we should probably get back there quite fast. INR 10,000 plus, we had kind of said when it would be connected to Bombay, the DFC. And also, we had factored in Jaipur coming in. But still, that being said, we can still look towards the INR 10,000 even when Bombay comes in.

Okay. The last question that I had was, I just wanted to get a more comprehensive response on Jaipur and outside. What are the key cases, including an outside Jaipur, wherein there is some issue linked to land acquisition? And what have been the progress in the last quarter gone by? Because I see several disclosures inside, which talk about beyond Jaipur, certain other issues in Snowman and the CFS side of things. So it would be useful to get a comprehensive response from the company on the same.

Yes. There's only one other land issue going on, which is in Krishnapatnam. So basically, GDL sold some land to Snowman and part of it got registered, part of it didn't get registered because there's some old survey from -- old records from the 1920s, which are being questioned by the local government over there. So, we filed an appeal over there to get this land registered, but it's not stopped any operations at all. So, we don't believe that this will have any effect for us. But it is an old case and we can't do anything about it. And we believe we're in the right because when GDL bought the land, it got registered without any problems. It's only when Snowman was trying to acquire from within GDL. So, that will get sorted out soon, hopefully. Jaipur, we've already disclosed what's there. There are no other land issues going on in the group. Generally, what we say, land acquisition remaining a challenge, that's the same issues that we mentioned that either pricing or clear title that we don't want any encroachment on it. It should have specific road access, connectivity to the railway station, the right length and the width and near the manufacturing hub. So, those were the constraints and we generally see lesser and lesser increase has been coming in, which is why we started exploring the asset-light model also, and we are in discussions with a couple of people where we do the rail part, but they will run the terminal. So hopefully, we can update you on that soon.

And any update on the sale of the land at the CFS? That will be my final question.

Sorry, the CFS sales you're referring to?

So the CFS portfolio, there were some land parcels or let's say some CFS that you would wanted to discontinue and sell as land for other purposes to players outside. Is there any progress being made on that aspect?

So, we are in discussion with some people, but we've not found the right valuation. And it's not a distressed sale, so we don't want to sell it at anything. And meanwhile, it's still generating good cash flow. So only when the right valuation comes in, we'll consider selling it.

The next question is from the line of [ Flan Alexandra ] from [ Alfa India Ventures ].

Sir, my question is regarding the segmental revenue trends for Snowman. So for the transportation and warehouse segments, there has been a slight change, like a single-digit change quarter-on-quarter. But for the trading and distribution segment, I can see a change of around 54% quarter-on-quarter. So, that seems to be far more than the other 2 segments. So, could you please tell me some more about the nature of this thing, what mainly drove it and how sustainable that will be for the coming quarters?

Yes. Padamdeep, this side. So, we have seen positive growth in our warehousing and distribution business that is attributed by the 2 customers we did last quarter and with the existing customers also, there has been a solid growth. So it is clearly reflecting on the segment and that also has given us something to our warehousing and distribution business.

Sir, your voice is not clear properly. I'm sorry to interrupt sir.

Okay. Is it clearer now?

Yes.

It's a bit better now?

Yes.

Great. So, I was saying that we have seen good increase from our existing customers, plus a couple of new clients which were added last year -- I mean last quarter of last year and they have also started gaining some momentum. So overall, the segment of Snow Distribute wherein we do the entire 5 years has helped us gain that momentum and maintain it. And as we see the projections from all these customers, it looks like there will be a positive impact going forward as well.

Okay. So, can you please give maybe some guidance for the 3 segments? How much growth will be expected in the coming quarters for the revenue?

So typically, quarter 1 is a little higher than Q2 if we see historically as well. And we expect to maintain the same pace as what we have done in quarter 1 and continue thereon to meet our annual budgets.