JSW Infrastructure Limited (JSWINFRA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to JSW Infrastructure Limited Q1 FY 2027 Earnings Conference Call hosted by Investec Capital Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Veenit Pasad from Investor Capital Services. Thank you, and over to you, Mr. Pasad.

Thank you. Good evening, everyone. A warm welcome on behalf of Investec India to Q1 FY '27 Earnings Call of JSW Infrastructure Limited. We have with us the senior management team from the company represented by Mr. Rinkesh Roy, Joint MD and CEO; Mr. Lalit Strategic Adviser and Board Member; Mr. Nagarajan J., CFO; Mr. Vishesh Pachnanda, Head Investor Relations. Now I'll hand over the call to senior management for the opening remarks, post which we'll open the floor for Q&A. Thank you. Over to you, sir.

Thank you, Veenit. Good evening, everyone, and thank you for joining us for our earnings call to discuss the performance for the quarter ended June 30. The global economy continues to operate in an environment of mixed signals, geopolitical tensions, trade-related uncertainties and supply chain realignments continue to create volatility across markets. Against this backdrop, India continues to stand out as one of the fastest-growing Asian economies globally, supported by strong domestic demand, sustained government investments in infrastructure and a resilient manufacturing sector. We remain optimistic about India's long-term growth trajectory and lead the country's infrastructure and logistics requirements. We'll continue to expand meaningfully over the coming decades. Turning to our performance. JSW infrastructure delivered another quarter of healthy growth despite a dynamic and challenging operating environment. During the quarter, we handled 31 million tonnes of cargo, representing a Y-o-Y growth of 6%. Growth was driven by higher volumes across key commodities supported by increased group cargo and continued momentum across our ports and terminals. Notably, this growth was delivered despite a negligible contribution from our Pujara operations due to the challenging operating environment in the Middle East. Excluding Pujara, our India operations recorded an impressive 11% year-on-year growth in cargo volumes, significantly outfacing overall industry growth and validating the strength of our business model and deep customer relationships. Our financial performance remained robust, reflecting the strength of our diversified portfolio and operating efficiencies. Consolidated operating revenue for the quarter stood at INR 1,445 crores, representing a growth of 18% year-on-year. Operating EBITDA increased by 16% year-on-year to INR 674 crores, while maintaining healthy margins. demonstrating the resilience and scalability of our business model. The quarter was also significant from a strategic perspective as we continue to advance our growth agenda across ports, logistics and adjacent infrastructure. Our long-term ambition remains unchanged. We are building a platform that can support India's growing trade and logistics requirements by expanding our capacity from the current 186 million tonnes per annum to 300 million tonnes by FY '28 and further to 400 million tonnes per annum by FY 2030 or earlier, while simultaneously establishing a comprehensive pan-India logistics network. We intend to achieve this through a combination of greenfield development, brownfield expansions, port privatization opportunities and value-accretive acquisitions. A key milestone during the quarter was the receipt of environmental clearance for Murbe, Maharashtra, along with approval for real connectivity to the dedicated trade corridor. These approvals represent key milestones and strengthen the project's multimodal connectivity, supporting its timely execution and long-term competitive business. Across our development projects, execution continues to progress steadily. The slurry pipeline project has crossed a key milestone with 251 kilometers of pipeline lowering completed, representing approximately 83% strong execution momentum with the project on track for completion by March 2027. At [ Jatadar Port, Orrisa ], the construction activities are in full swing with the innovation agreement executed with the customer following the approvals received from the Government of Odisa. At Kemiport, we continue to make progress on statutory approvals and expect environmental clearance shortly. At Southwest Port, Goa, we received consent to operate for the enhanced capacity of 12 million tonnes per annum, up from 11 earlier. The expansion work at Mangalore container terminal has been completed as a result, capacity has increased to 6 million tonnes per annum from 4.2 earlier. Meanwhile, construction at our Tuticorin bulk terminal is progressing well and remains on track for completion within the planned time line. We also expanded our presence in the container segment through the award of the integrated development of the outer container terminal and [indiscernible] at Netaji Subhash Kolkata under the PTP framework. This project further strengthens our position in Eastern India and upon completion will increase our container handling capacity in Kolkata to approximately 1.4 million TEUs. Our brownfield expansion projects are also advancing as planned. At Gigao port major equipment packages have been awarded, while at Dharamtar port work on the converse system and barge and holders are progressing well. These projects will further enhance capacity and improve operational efficiencies across our network. In logistics, NAFTA delivered another strong quarter of strong operational and financial performance, driven by healthy volume growth and focused business development initiatives. It reported an operating EBITDA of INR 33 crores in Q1, an increase of 62% Y-on-Y, reinforcing our confidence in the long-term potential of the integrated logistics platform. We also continue to strengthen our logistics network with the commencement of operations at the Gati Shakti cargo terminal at Arkona, Tamil Nadu and interim operations at Cutini logistics facility in Karnataka. Beyond the existing fleet of 25 rail rates and 17 container rigs, including those operated through [indiscernible], taking our total fleet we have accelerated the scale-up of our logistics platform. As announced earlier, in April '26, we placed orders for an additional 25 container rigs and 15 rail rigs reflecting our confidence in the growth potential of the integrated logistics business. I'm pleased to share that we have already received the first 2 railway rigs under the order, marking the commencement of fleet expansion under this program. The balance rigs are lined up for scheduled delivery in a phased manner, which will further strengthen our real logistics platform and support the growth of our integrated logistics business. This expansion is aligned with the medium-term objective of scaling our fleet to approximately 110 rail rigs and 140 container rigs, creating a combined fleet of around 250 rigs over the next 2 to 3 years with a clear focus on asset utilization, returns and earnings visibility. A major highlight during the quarter was the successful completion of INR 7,503 crores qualified institutional placement, which witnessed strong participation from leading global and domestic institutional investors. The transaction reinforces confidence in our business model, execution track record and long-term growth strategy. The capital raise further strengthens our balance sheet and provides significant flexibility to accelerate our journey towards 400 million tonnes per annum capacity, expand our integrated logistics network and pursue value-accretive growth opportunities while maintaining disciplined capital allocation. Looking ahead, we remain focused on execution, operational excellence and disciplined growth with a strengthened balance sheet, a visible project pipeline and a growing logistics network. With that, I would now like to hand over the call to our CFO, Mr. Nagarajan, who will take you through the financial performance and other details. Thank you.

Thank you, Rinkeshji, and good evening, everybody. Let me first talk about our port business. In [ Q1 ] FY '27, the company handled cargo volumes of 31 million tonnes compared to 29.4 million tonnes in Q1 FY '26, registering a growth of 6 percentage Y-o-Y. The increase was driven by strong performance at Jaigarh, led by higher anchor customer volumes and increasing third-party cargo throughput from newer cargo segments, further contributed by robust throughput at [indiscernible] South West Coast and Enor bulk terminal along with interim operations at the Tuticorin terminal. Growth was partially offset by lower volumes at Fujara terminal due to challenging operating environment in the Middle East which impacted the third-party cargo volumes, which eventually stood at 48 percentage. Operational revenue for the port segment increased by 11 percentage during the quarter to INR 1,208 crores compared with INR 1,086 crores in Q1 FY '26. Revenue increase was driven by volume growth and a favorable product mix. Operational EBITDA for both segment stood at INR 601 crores, up from INR 561 crores jumped by 7 percentage. EBITDA was largely due by increased revenue and the EBITDA margin was close to 49.8 percentage, we are 51.8% a year ago. The deport EBITDA margin is mainly attributable to the lower contribution of volumes from [indiscernible]. Naukar delivered strong operational financial results in Q1 FY '27. Total domestic over volumes stood at 385,000 tonnes, up 40% compared to the same period last year, while Exim cargo volumes reached 83,000 TEUs, representing a 2 percentage growth. Revenue from operations for Navkar rose to INR 191 crores, up 38 percentage Y-o-Y, while operating EBITDA climbed to INR 33 crores, representing 62 percentage growth compared to the same period last year, showing substantial improvement, while net profit increased to INR 12 crores, a significant increase from INR 2 crores in the previous year. Overall logistics business, including Navkar and the rigs business has generated a revenue from operations of INR 237 crores compared to INR 138 crores in the same quarter previous year. Operational EBITDA for Logistics segment stood at INR 73 crores, up from INR 20 crores, an increase of 3.6x. EBITDA margin rose to 30.6 percentage for the logistics business from 14.5% earlier. Total consolidated operational revenue for the company stood at INR 1,445 crores, and the operating EBITDA stood at INR 674 crores, reflecting a Y-o-Y growth of 18% and 16%, respectively. Consolidated depreciation was INR 166 crores and finance cost was INR 95 crores in the current quarter as compared to INR 143 crores and INR 91 crores, respectively, in quarter ended June '25. PBT was INR 463 crores versus INR 473 crores, mainly reflecting a lower other income, given the continued CapEx spend for the growth projects. PAT was INR 358 crores versus INR 390 crores, driven by lower PBT and higher ETR. For F '27 and F '28, company plans to invest approximately INR 16,500 crores, with a significant portion, around INR 13,000 crores allocated to the port segment and INR 3,500 crores earmarked for logistics space. The company has incurred a cumulative CapEx outlay of approximately INR 6,900 crores up to June '26, including INR 671 crores spent during the quarter towards ongoing and existing growth projects. In addition, the company has already committed further INR 5,500 crores of CapEx by placing orders for machinery, long-lead items and other civil work towards the ongoing projects across ports and logistics segment. During the quarter, we successfully completed a landmark INR 7,503 crores QIP, attracting strong participation from [indiscernible] global investors. Given the QIP receipt of INR 6,555 crores into the company. As of June '26, we have a net cash position of INR 2,769 crores. This, coupled with steadily increasing annual cash flows from current asset base, we are well positioned to pursue a growth plan to enhance our present cargo handling capacity to 400 million tonnes and in parallel grow our logistics business. I'm also pleased to share that Mobi has assigned JSW infrastructure and investment grade rating of BAA3 from the existing BA1 with a stable outlook, reflecting our strong financial fundamentals, disciplined capital management and resilient business model. With this, I would request the operator to open the lines for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Bharani V. from Avendus Park.

My first question is on the cost escalation you put all due to the ongoing geopolitical crisis and how it has impacted our ongoing underconstruction projects like pipeline? That's my first question.

So the slurry pipeline work, as I mentioned earlier, we have crossed a very important landmark. We have now moved to 251 kilometers by end of June of pipeline lowering, and it has not affected any ongoing projects in any way. So there were some on and off issues with somewhere of LPG gas availability or diesel availability, but these were a normal part of project execution. So we have moved ahead and the projects are moving on quite nicely.

And Bharani, the total product cost always has a contingency component. So any such minor escalation get adjusted in that contingency component and eventually, it won't affect the overall project cost.

Sure. Understood. My second question is to note that you've got clearance for -- Can you take us on any being awaited, but where is the process and then you can expect it?

Could you be louder, please?

Bharani, I think you are quite part of the speaker. So if you can come closer and repeat your question.

Sorry for that. I was asking the status of getting environmental clearance for -- where it is at, when we can expect it, sir?

So KB clearance is currently, we have applied the Karnataka coastal zone management authority. So they are now examining the matter, and they'll be forwarding the case to MoEFCC. So once it moves to MoEFCC then further approvals will be afforded. So they should take another 3 to 4 months' time to get the environment clearance in place.

[Operator Instructions] The next question is from the line of Priyankar Biswas from JM Financial.

Congratulations, sir, on the QIP that have successful QIP recently. So my first question is like I understand that your Middle East volumes were impacted by the...

Hello.

Sorry to interrupt. We have the current participant disconnected. The next question is from the line of Shubh Arore from ICICI Securities.

Congratulations on good set numbers. And volume growth has been there in this quarter. So how do we see the volume growth for this year F '27?

So you see we are taking into account the loss of cargo handling at we are taking that into account. We should deliver you a number of around 127 million tonnes this year.

The next question is from the line of Priyankar Biswas from JM Financial.

Am I audible now?

Yes.

Yes. So sir, my first question is, if operations were normal and not impacted by the Iran U.S. incidents, so what sort of additional EBITDA you could have possibly delivered in this quarter?

So the port side, INR 601 crores which we have delivered now, that would have become around about INR 670 crores to INR 675 crores.

So INR 60 crores, INR 70 crores additional you were saying EBITDA?

Because FX has also gone up. It's a dollar earning. So keeping that in mind around INR 65 crores to INR 70 crores of incremental EBITDA we would have got, because the expense of INR 8 crores of is already baked in this lead, which is a drag. So incrementally, you would run that INR 70 crores, taking it to say INR 675 crores of operating EBITDA for the ports business.

Okay, sir. So in which case, if we see on an underlying basis and generally in the fourth quarter, you have the takeout also, so ideally, we are actually doing slightly better than the guidance. Is that the right way to look at?

Yes, you can say that. And if you look at it, even the India performance as we try to tell you the Indian port volumes, they showed a growth of around 11% in this period.

Our guidance of INR 3,000 crores, Priyankar, in terms of the EBITDA.

Okay. One more question since Kolkata is a new development. You have already provided like INR 740 crores would be required as the CapEx. So if I may ask, like at a steady state, what sort of revenue and EBITDA would be possible from this port, let's say from FY '30 onwards assuming the asset comes up in late FY '28?

It should be around INR 70 crores to INR 90 crores. It will be in that range.

EBITDA?

EBITDA, I'm talking about.

INR 70 crores to INR 90 crores EBITDA you can take.

So let me put it to you this way, that currently, the existing facilities have a 90% capacity utilization. So by 2030, when we expect full completion of all projects in area, so we expect at least 75% to 80% utilization in that place. So these numbers will be going up because these are coming in 3 distinct phases. The first one is the [ 70% ]. Second one is the outer terminal and third one is both 1 to 5. So if we look at all the 3 put together, these numbers will be substantially higher.

Priyankar, what I spoke about was only the Phase I.

So this INR 70 crores to INR 90 crores is Phase 1?

That's 7 and 8, so that's what I wanted to clarify to you, these are coming up in 3 phases, birth 7, 8, outer terminals 1 and 2 and then birth 1 to 5. So these all put together is 1.4 million TEU. And when we get all the 3 players by that time, the starting point would be 75% to 80% capacity utilization.

Okay, sir. So if I -- I'm just paraphrasing. So in the first phase, you should be able to get at least like INR 70-odd crores. Is that the right way to look at it? Like once you are done with the first phase, 0.45 million TEUs?

On full completion, you can take it to 90, basis the prevailing MSRs, which are there, and we believe it can go up in the next 2 to 3 years by the time this stabilizes. So as of now you can take it at 90, but overall, if you look at it for the entire 1.4 million TEUs, we are looking at around about INR 300 crores to INR 350 crores.

Correct.

Okay. INR 300 crores to INR 350 crores in the long term, when all phases were there?

Yes.

Okay. And if I could just squeeze one more in. Like I understand that you have got the environmental clearances for the DSP pace, right, for but what about the environmental clearance on the port itself that is Murbe, that is one.

That is what we have got. So the ECS for the entire project for Murbe, which includes the connectivity corridor.

Okay. So you should be able to now start construction, let's say, next year, simply in that case?

So we are looking at starting it in Q3. Somewhere by December, we should be starting the work, although all preparatory works we are targeting to start within a month.

Concession agreement will be signed in the next 2 to 3 months, order placement will start now, and construction will commence by, say, December and Jan.

So already tenders have been invited. So we'll be moving ahead quite fast from this.

Okay. Sir, any updates on Oman. So that's my last question because given this Gulf crisis, what I understand is a lot of Middle Eastern countries are actually pushing forward their projects, which keep the Gulf Strait of Hormuz. So any update there?

So as you have rightly stated, this port is outside the Straits of Hormuz, very strategically located. We have already invited bids on June itself for port construction. What is now awaited are some few details where the conditions precedent from their part has to be completed, after which the concession agreement will be signed and then we'll be moving ahead. So these will be all done parallelly. The award of the project, the concession agreement, so this should take another month or 2 to get it completed.

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

I'll go ahead with my first question. Just taking the lead from the last person, I arrive at an EBITDA margin at the port business, which actually improves Q-on-Q, if you add back the INR 60 crore amount, while you had some pass-through in some in fourth quarter. If 1, 2 numbers are better, could you help us understand where and which ports are driving the margin expansion on a Q-on-Q basis. But otherwise, it should otherwise be falling.

Yes, it is slightly driver, which has driven the revenue as well as EBITDA in this quarter. And I think that's only -- and third-party volumes also have gone up, primarily cargo mix, especially in [indiscernible] because we have handled as well as project cargo in that has been set in some incremental EBITDA in this quarter.

Sure. So just to clarify, these are obviously recurring volumes that have started coming. So whatever margin improvement is happening should sustain, right?

No. These are in this quarter, especially the ones on alumina and project cargo were there in this quarter, but I don't think these will be recurring in nature.

Okay. Understood. So the second question that I have also some have happened, especially I think by one year, the period has been deferred now. So I just want to get a sense of what are the key -- point from there on, which may lead to any further delay? Or is everything in control over there versus the FY '30 guidance that we have today? Because I understand that there's a deficit project to get up and running, that's .