Gujarat Pipavav Port Limited ($GPPL)

Good morning, everyone, and welcome to Q4 FY '26 Earnings Call of Gujarat Pipav Port Limited. I'm Manish Aniothary, Company Secretary. And I have along with me Mr. Girish Agarwal, Managing Director; and Mr. Santosh Breed, CFO. We will start the call with opening remarks by Girish, and then we'll open the floor for Q&A. Over to you, Girish. Thank you, Manish.

I will first quickly talk about our results for the quarter and then the full year. It was another good quarter. Quarter-on-quarter revenue was up by 26%. EBIT was up by 50% and EBITDA margins were at 70%. However, there are 2 exceptional one-off items in this quarter results. One is the company received old scrips of 2017, '18, '18, '19 to the tune of INR 49.6 crores, which are sitting in other income. Also on the BG matter with GMV, we accepted the expert committee opinion and have given as a cost of -- we have taken a cost of INR 18.8 crores, which is as per the Expert committee's recommendation. Net of these 2 exceptional items, the quarter-on-quarter results, revenue was up by 6%, EBIT was up by 12%, and our EBITDA margins are at 65% -- for the full year, again, a good year. Overall revenues up by 17%, EBIT is up by 27% and EBITDA margins are at 61%. In terms of volumes, Go continued to do extremely strongly, both quarter as well as annual numbers are 39% higher quarter-on-quarter and year-on-year. Container was muted quarter-on-quarter was 4% lower. Annual was also 4% lower. Dry bulk quarter was 4% lower, Annual was 35% higher. Liquids was 5% lower for the quarter and annually 8% higher. The Board has recommended a final dividend of INR 5 per share. This is in addition to the interim dividend paid out of INR 540 -- in terms of quick guidance, we will refrain from the guidance for the full year owing to the Middle East situations. But guidance for the June quarter underlying performance looks like to be about 16% to 18% EBIT improvement over last quarter. I will stop now, and we will open for questions.

Firstly, if you could just repeat the comment about the nonrecurring items and what the recurring EBITDA margin would have been? We missed it because you were still committing to the call during this period. And then I'll come back to my questions.

Sure. We received ACIS scripts of the period 2017, '18 and '18, '19. The total value of those scripts is INR 49.6 crores, which is sitting in other income. Also on the BG matter with the GMB, we have taken a cost of INR 18.8 crores. This is pursuant to the expert committee recommendation, which we have accepted. Without these one-offs, revenue is up by 6%, EBIT is up by 12% and EBITDA margins are at 65%.

And this is for the quarter, I believe...

Yes, this is for the quarter.

Okay. And now moving on to my questions, right? Container shipping, again, we are seeing continued disruptions on the Middle East front. Do you have any visibility in terms of when you could see a recovery in container volumes?

For us to talk about the geopolitical situation, I don't have that visibility at least at this point in time. One of our service continues to be disrupted, which is the Middle East feeder. However, I think what we are seeing is certain other opportunities open up like transshipment, which we are trying to capture. We have also -- Maersk has also announced a new service called FI 2 starting early July, which will start calling Pipavav. I will request the others to be on mute, please. So I think things are moving in the right direction from a container volume perspective. But when and how much final impact of the Middle East will be there, I think we'll probably wait for a month or 2 to kind of come back to you.

Okay. That is very helpful. And with respect to the -- I know it's very difficult to forecast or predict how things will shape up in terms of volume recovery. But the service which you have seen continuing in the March, April period, is it fair to assume that those services are still continuing now in May and June and those are steady state compared to the...

Yes. So we had seen a disruption of 2 services in March, out of which now one is completely steadily performing. One service continues to not perform. This is, as I said, is the Middle East mass service. However, we now have a new service starting July, which is a Far East service called FI2. This is a mass service, which will start calling Pipavav off. So we will have a 9-month period in this financial year in terms of performance. The pro forma move that has been announced for Pipavav is about 1,000 moves a week.

Okay. A couple of other questions. Quickly on the realizations, if you could help us understand what the realizations are for this quarter? And have you taken any -- and are these realizations after building in any tariff increases? Or are you seeing any tariff increases to come here after...

Sure. So let me take that...

So we have taken a tariff increase in January this year and approximately around 3% to the revenue. As the real concern, if you look at the container realization, that continues to be in the range of 9,000 to 9,500 is after taking the tariff increase. But of course, the cargo mix has some impact because of which the reals are steady as compared to the previous quarter. For bulk it continues to be in the range of 50 to 60 and 50 to 60...

Okay. And the standard question on concession discussions, any update or status quo...

No, I think things are moving again, as I keep saying in the right direction. So there's no red flags. We continue to engage with the GMV. There's no further update at least to share at this point in time, but no red flags, all moving in the right direction, all our discussions.

Congratulations on wonderful performance against a very difficult geopolitical situation. I have a few strategic questions for you, Girish. One, in light of the ongoing geopolitical volatility and its impact on shipping routes, how is the management positioning the port to capture potential rerouting? And you did mention about service starting in July, but anything else that you are seeing in terms of traffic versus the risk of broader trade slowdown, if at all, you are seeing anything?

Okay. Let me answer that. I think from our perspective, as I said, from a container perspective, we are already seeing -- we've got a new service now starting July. But there were certain opportunities that we captured in the month of April and May, which you will see the results in the June quarter, which is more transshipment, Middle East transshipment cargo. So that was an opportunity that kind of presented itself to us, which we captured. In terms of fertilizers, which is again, which largely comes out of the Middle East, that was a challenge in March and April, but we're already starting to see fertilizers coming back, both urea and other types of fertilizers. It's, of course, dependent on the tenders that the government announces, but that is starting to come back. LPG also, which was very muted in the month of March and April, we are already starting to see now growth on the LPG. However, it is still muted growth. We still need to see a little bit more to try and see how LPG performs. Of course, it takes time because now the LPG, a lot of that starts to come from the U.S., which has a lead time vis-a-vis the Middle East. In terms of RoRo, while there was some hiccups for a very small period of time in March, that have all gone away, and we continue to perform strongly in Ro. I don't see any challenge on the side...

Good to hear that, Girish. Can you also provide update on the liquid jetty construction progress? And if I remember correctly, the RoRo staging area that was planned around June 2026 itself or on that bit, please?

Yes. So the RoRo staging area is on track. June end, in fact, maybe a little bit earlier, will be finished. In terms of liquid jetty, again, continuous progress. We are still expecting Q3 this year that the construction finishes. It's, of course, dependent on the monsoon. If it's a regular monsoon, we should be okay. But if it is a little bit tougher monsoon that it may go another month or so, but that's...

Okay. Good to hear. And now that we have FY '26 results out and significant infrastructure investment vision that we had outlined in terms of INR 70,000 crore CapEx, of course, pending the concession agreement, which I believe will happen. Any updates on that with the CapEx context?

No, it's too early to give a context on that INR 17,000 crore CapEx. I think we will wait for some time. Of course, internally, we continue to kind of build on the business plans, but it is too early to talk about that.

In tough...

Mr.

Question as per our concession with the Board, we are entitled to pay a specific waterfront royalty on the volumes which we handle, I understand that. Is this royalty currently some concession rate then what is there in the agreement? Is there any set which we are getting for this royalty currently at the moment? -- so how is this expected to continue assuming there's a renewal on our concession. So if we do the INR 17,000 crores CapEx, we will continue to get this set, sir?

We don't have an answer to that question is

And what are the likely terms or in terms of renewal, which are possible in terms of, say, for example, if royalty will go up or will there be a new bidding? Any likely outcomes?

What are the outcomes?

No, we don't have any answer to that question. This is purely up to GMP

Congrats for the great set of numbers. So I have 2 set of questions. First, on the side of Roacility.ximum capacity we can reach on the RoRo side on this? And the second question that lies is suppose we are doing the INR 17,000 crores CapEx. So on what segment do we expect to spend on it on the container side, be it on the liquid side wanted a clarity on that side.

So on the INR 17,000 crores, again, as I said, it's a very early stage for having a discussion on the INR 17,000 crores, but it's obvious to state that all the investments will be practically in every aspect of the business. There's no saying we'll invest in and not invest in 2. But again, as I said, we are still in the process of building a business plan. It's too early to kind of comment on that question. In terms of capacity, it's the question, what is the -- how much cars can you handle today?

No. How much cars can we expect to handle at max capacity? So we have a limited interline in now, right? So what is the maximum capacity we can build basically?

I'm unclear on the question. Are you saying how many cars can I handle today or you are...

How much we can build more...

I mean there's no answer depending on the volumes that we can do. We can go up to 0.5 million, we can go up to 1 million. If there is more needed, then we can further build. I mean that's purely dependent on how the volume, but there's no limitation as such.

The...

Okay. And can you please repeat the realization? I missed that.

The range of ,0090Uul560et metric

Just 2 questions. So first, just settlement that you accepted this go into the other expenses line item?

Yes, it's part of the exceptional item.

It's part of what, sorry? Exceptional...

Exceptional item.

Exceptional item. Okay. And the second question is for this quarter, Q-o-Q, there was 29% fall in total expenditures, including employee operating expenses and all of that. Can you explain why that was?

Expenses related to lower volumes of handerees,seair mainten-is. -- one-off...

Congratulations on a great set of numbers.

While we don't have a full year guidance, but for the quarter and for the 2 months gone by, can you give us some color on how have the volumes shaped up in the last 2 months on containers, on liquids and on fertilizers and RoRo as well?

Yes. So as I said, the EBIT is expected -- underlying EBIT, we expect for the quarter to be up by 16% to 18%. Expect containers to be up between 5% and 7% RoRo to be again roughly 45%, 50% up. In terms of liquids and bulk, I think it will be lower. I don't have that number handy. If you're okay, I'll come back to you on that. Unknown Speaker Sure...

Sure, sir. And secondly, my second question was more on the infrastructure side. So has the KGPL pipeline been connected to the port as of now?

No, not yet. I think last 8 or 10 kilometers are there.

Right. And secondly, there have been hearing about this diesel shortage impacting evacuation. In the last 2 months, have you seen any sort of material shift happening towards rail, especially around the Pipas port?

Sorry, which shortage -- sorry, I missed it.

There has been diesel shortage and diesel prices have gone up.

No...

We have not seen any impact on -- from a diesel diesel perspective. We continue to operate very normally. Also evacuation continues as normal, the percentage of evacuation rail road is very similar to previous quarter. So we haven't seen -- I mean, I don't see an impact at least from a perspective.

Congrats on good set of numbers...

I just -- you mentioned that we would be seeing liquid bulk lower. So do you mean lower growth? Or do we expect degrowth?

Numbers. Just give me a second. I'll come back with the numbers...

And can you tell us that at current levels, how many cars we can handle how many cars can handle?

Yes. So we are already doing about 50,000 cars. We can easily handle 300,000, 350,000 cars today. NK is already now building a much bigger PDI facility, the MOU signed. We expect that PDI facility to be operational sometime next year. That will push our capacity to 0.5 million. The waterfont capacity is no problem at all.

And on liquid side, we mentioned that liquidity would be by quarter 3 FY '27. Till then we would be seeing the volumes to be in the range of what we have seen in the last 7, 8 quarters, right? We cannot go beyond that 4 million something.

Can't go beyond...

Again, I don't want to give a number of the future. It will also depend a lot on the Middle East situation. Let's see how that develops. But yes, from a capacity front, we have broadly maxed out.

Bhav Patel you have your hands up. You still have some questions...

Not really.

OnIS--ill

Can you please repeat...

I'm.IS-o-- take I mean you already mentioned that things are going as per plan. But I mean, because it's broadly 2, 2.5 years left where are things there? I mean what are the kind of consenre?ter,?

I cannot tell you the conversations that are happening. That's not possible. But as I said, everything is moving in the right direction. I think you should take reassurance from that statement.

Any idea when we can see some at least clarity on

Sorry, I joined a little late. So there may be some repetitive questions. So my first question is, can you give the EBITDA for all the verticals for container, liquid?

No, we don't do that. Sorry, we don't split the EBITDA in that manner. We will not be in a position to give you that information.

Secondly, regarding the expanded capacity for liquid, have we got any firm commitments from any users or buyers?

No, we don't have any firm commitments.

Once it becomes operational, you said second -- third quarter of next year, right...

So we said the jetty will be ready potentially December this year. And then next year is when we should think about volume growth.

So what -- how will be the ramp-up...

I mean it's most of the ramp-up is happening in the next financial year. This is a 3 million jetty. We expect to, I think, get -- if I'm not mistaken, and this is something that we told earlier as well, we start with an addition of about 1 million metric tons in the next financial year.

I just wanted to know in terms of your dividend payout are we going to maintain the same level of payout going ahead?

Sorry, can you repeat your question, please?

In terms of dividend payout that we've been paying since last 3, 4 years, is the payout ratio going to be at a similar level going ahead?

No, we can't. We don't know about that. There are many factors dependent on the dividend payout. We will -- I mean, in general, you know the policy, we try and pay out the full performance that we generate. The payout, of course, is a Board decision, so we should let it be at the Board level rather than at my level.

Okay. And sir, second question, sorry for repeating this again. the discussion with Gujarat there any likelihood of any negative surprises on the end because sitting money to the table in terms of your investments, is there any that you could...

No, I told you maybe you joined later. there are no red flags. All discussions are moving in the right direction.

Mr. Jain, you have some questions...

Yes. Just a follow-up. How do we see realizations for volumes?

We don't really give any breakdown for the limited...

I have to estimate the growth for any thumb rule for the volumes for the realizations?

Realization we'll not be able to share with you, please. Volume, of course, we share.

Do we have any further questions...

Yes. Just last one question on CapEx upfront. We have planned INR 17,000 crores, but that is if we get a concession extension. But if we do not get, what kind of CapEx we are planning in FY something...

FY '27, the current plan is to ensure that all the CapEx related to the liquid is completed. That's the CapEx plan.

If you could give a quantifiable number, what could it be?

So the total spend is about INR 720 crores, out of which INR 250 crores is already paid out, the rest will be spent.

And anything on INR 17,000 crores CapEx we will be planning, how would we be planning that we would be taking debt or promoter would be money or what kind -- how are we planning that particular thing?

That cannot be shared. planning stage cannot be shared at this stage.

Any further questions from anyone?

I want to understand if the operating profit margins which are there now are sustainable not...

We believe our operating profit margins of about 59% to 61% is a reasonable assumption...

On an ongoing basis.

The reason for the improvement this quarter, like 70% this quarter?

So it has one-offs. Underlying is 65%. But largely, as Santosh was explaining, there's a cost escalation as well in some elements, which we expect to come back let me just answer the question that some people asked in terms of bulk and liquid. Bulk, we expect to decline anywhere between 8% and 10% quarter-on-quarter in the June quarter. Liquids, we expect to decline around 35% to 40% on a quarter-on- basis, June quarter.

All right. Anybody has any follow-up questions? It doesn't seem to be the case. Sorry, please go ahead.

Yes. So what is the outlook for container volume this quarter, sir?

A growth of 6% to 8% sorry, 5%...

You have some follow-up questions.

First of all, first question was on the Western corridor that light. So how much time does Mundra take versus what we take on that part? And secondly, since Mundra is -- lies in a very close proximity to where we stand. So what advantage on what segment do we carry upper hand in Mundra, if you can share a broad idea on this?

So in terms of DFC connectivity, we are roughly, I think, if I'm not mistaken, about 150 to 200 kilometers longer. From a time frame perspective, not too much because it's a direct dedicated. So it's really not -- and that's really not how customers are also seeing. I think the larger question is, are they more expensive, not expensive because from a time frame perspective, very similar. In terms of competitive advantage, I think we all know that Mundra is significantly better when it comes to infrastructure on the draft front vis-a-vis us when we handle container. But the rest, I think we are equal, if not better than Mundra in the other categories.

So the question is very basic. So guidance numbers for 1Q FY '27, these are versus the growth numbers versus 1Q FY '26. Is my understanding right? Yes.

Anybody else any follow-up questions?

Just one last question. Can I go?

Yes, please.

Yes. So if you can share concentration percentage based on if we say what percentage of business comes from Gujarat or say what percentage comes from Maharashtra. So can you share a broad percentage-wise number of revenue concentration and what...

No, we cannot share that information. And a lot of that information resides with the shipping lines rather than...

You have some more questions, you have your hand raised. Thank you, everyone, for your participation and good questions, and have a nice day. Thank you.

Thanks, everyone.

Thank you.