Patel Integrated Logistics Limited (526381) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Patel Integrated Q3 FY '25 Earnings Conference Call hosted by PhillipCapital. [Operator Instructions] Please note that this conference is being recorded. This conference call may contain some 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. I now hand the conference over to Mr. Vikram Suryavanshi from PhillipCapital. Thank you, and over to you, sir.

Thank you, Sejal. Good evening, and a very warm welcome to everyone. Thank you all for being on the call of Patel Integrated Limited. We are happy to have the management with us here today for a question-and-answer session with the investment community. Management is represented by Mr. Mahesh Fogla, Executive Director; and Mr. Avinash Paul Raj, Company Secretary. Before we start with the question-and-answer session, we'll have opening comments from the management. I will hand over the call to Mr. Mahesh Fogla for opening comments. Over to you, sir.

Thank you, Vikram and his team for arranging this call. A very warm welcome to all who have taken time from their busy schedule to make it convenient to attend the call. I thank all of you. Let me first give the financial numbers, some highlights of the financial numbers. And then I will go into some operational things also and the budget announcement, which happened in the very last week only. That is the way I will explain the thing. So let me first give the financial numbers. Our gross operational income in this quarter is INR 105.88 crores compared to INR 99.38 crores in the immediate last quarter. Quarter-on-quarter, there is an increase of 6.54%. Quarter-on-quarter, increase in the gross operational income including GST of 6.54%. And in the same quarter of the last year, gross operational income was INR 90.63 crore and year-on-year increases of 16.83%. That means almost 17% increase on year-on-year on gross operational income. Going by the cumulative nine-month figure, we have a gross operational income including GST is of INR 302.16 crores against nine months of the last year of INR 241.54 crores. These nine months, INR 302.16 crores, we have achieved against the last year of INR 241.54 crores, giving us an increase in the nine months to nine months of 25%. And accordingly, the EBITDA, we are getting EBITDA of two quarter-to-quarter, let me first explain. This quarter, we have achieved the EBITDA of INR 2.35 crores against last quarter or immediate last quarter of EBITDA of INR 2.19 crores, giving us an increase in EBITDA of 7%. EBITDA in the last quarter of the -- same quarter of the last year was INR 2.07 crores. Hence, in this quarter, we have a year-on-year increase in the EBITDA, quarterly increase of EBITDA of 13.54%. Similar nine-month figure of EBITDA of the current year is INR 6.68 crore against the nine months of the last year of INR 6.32 crores, giving us an increase of 5.75%. This year, nine months cumulative EBITDA is INR 6.68 crores. Now coming further to the profit after tax, we have in this quarter, quarter under review, I mean quarter under review, in this quarter, which I mean always is actually from October to December quarter, where we have published the details today only. We have a PAT, profit after tax of INR 2.17 crores compared to immediate quarter of last year of last or immediate quarter of the last quarter of this year only, immediate quarter of this year only, last immediate quarter, which I mean by July to September of INR 2.03 crores, giving us quarter on quarter increase in EBITDA of 7.30%. We have in the same quarter of last year profit after tax of INR 1.49 crores and in year-on-year increase in the PAT, quarterly PAT increase is 46%. Nine months cumulative profit after tax is INR 5.74 crores against nine months of the last year of INR 3.87 crores, giving us profit after tax increase of 48.30, 48% increase in the PAT of nine months to nine months year-on-year. Accordingly, our earnings per share, EPS increased by -- our EPS for this quarter is INR 0.33 per share against immediate last quarter of this year was INR 0.31, giving us increase in EPS of 6.45%. We have an EPS in the same quarter of the last year was INR 0.23 giving an increase in the EPS of 43.48%. Increase in the EPS year-on-year, quarterly percent is 43%. Accordingly, nine months EPS in this financial year, we have INR 0.86 per share compared to the last nine months of the last year, we have INR 0.60 giving us increase in EPS of 43.33%. This are the financial numbers which give us an increase in quarter-to-quarter, also in year to year. Now, let me come to some operational things which we've done in the last few months. First of all, we are a company which want to play very prudent and conservative, although not ignoring the growth mindset. Hence as a part of this control measure, we have implemented in our company, the system for better outstanding control, what I mean by that, now there will be no manual intervention if any debtor is going beyond the credit period approved as per the contract, his or her account will be get blocked. And only after getting the money or after the very senior management intervention, this account will get unblocked. So, it will definitely in a very -- it is a game-changing approach for us to control the debtor outstanding because we don't want debtor outstanding to increase for achieving the turnover and it will ensure all-round discipline in our all the more than 100 locations all over India to ensure financial discipline as well as look for the new customer and not that we depend on some few customers and continue to do the activity. We are a proactive company and we want to take a proactive approach always. As I was mentioning last time, the freight, we have launched a mobile app. We have launched a mobile app in the name of FreightPILL. Yes, this mobile app got stabilized in this quarter now. And now, as a part of that, virtually now all bookings are done through the mobile app only and there is no manual booking, hardly very, very few, which will also get reduced as time progresses. 99% of things are happening in the system only. This will also help in preventing any leakages. And as a part of the digitalization measure, we want to be in the forefront. So in our industry, I think probably we are one of the first companies which implemented this measure. Correct. Now, after implementing all this also, as you can see we are increasing in the turnover also happening, our profits are also happening. So, it's not that for the sake of control, we are forgetting the growth only. We are fully aware of the growth of the business. Let me -- before going further, let me give you some more operational data about the load we achieved in this -- load I mean volume in our business. How much load we achieved in this quarter compared to the last quarter and last year. We have a two type of business. One is that we call ourselves a domestic business, and another is international. Just to explain somebody who joined first time in our con call, although I may have explained in an earlier con call also. Domestic means the good movement within the India. And international here, we mean by that, goods moved out of the country. So, in the domestic, we have a load or the volume in this quarter of 12,210 against the last year -- or against the last immediate last quarter of 12,784. And international, we have again 2,165 tonnage in this quarter against last quarter of 1,939, giving us a total tonnage of 14,376 against the immediate last quarter of 14,724. This small dip in the volume if you can see, because of the regional impact, because the nine-month figure, if I go by nine months figure there is overall increase in the volume also. I will now come back to the nine-month figure. Nine-month figure., in the load, volume is 37,611 tonnage in nine months against the earlier nine months of 36,983 in the domestic front. In the international front -- pardon me. My throat is not doing well, so I may or may not be able to, if anything clarification required, I will request you to, you can ask me anytime if anything is not clear to you. International load we have for the nine months 6,023, compared to earlier nine months of 4,970 and on domestic plus international cumulative, we have 43,635 for nine-months ended 31 December 2024. So we have achieved a volume of 43,635 compared to earlier nine months of 41,953. So we have increased in the volume also from 41,953 to 43,635. Yes. Now let me -- apart from the numbers, let me now talk about something else also, not to bore you with dry numbers only. As we all know that government has announced the budget in the -- as early as on the 1st February 2025. Our honorable Finance Minister has also mentioned that 120 new locations will be connected by air. This will definitely have a huge positive impact on our operation as we are a pan-India company. And wherever the cargo facility in the airport will be there by default we will also be there. It will definitely increase our network and our operation, our scale of operations, and overall, definitely all will lead to the increase in our revenue as well as load because if everything increase because we are a major player in our area of operations and if any network increase is there, we will get benefited. We already have more than 100 location and if 120 more are getting added up, it will definitely -- as we can see by number, it will give a huge, huge positive impact to our thing. Further continuing with the union budget. As we all know, shipping industry has been already given infrastructure step up in this budget. We are very much confident that similar will be given for the aviation sector also. Aviation sector is also one of the pillars of infrastructure and the government is very bullish about aviation. They are coming out with a new airport in Bihar as we know, announcement was there. We also in our location where we are sitting now, Navi Mumbai International Airport is coming up. This will definitely increase the overall movement of goods through air in Maharashtra. And we are definitely will be getting our share of pie and being an established player and being a very old player in our area of operation, it is expected that we will also get benefited by this. Further, in one of the post-budget interview, our Honorable Union Finance Minister mentioned in one of the post-budget interviews that union government is looking to bring aviation turbine fuel, ATF, under GST. Why is it significant because aviation turbine fuel as we know is very major cost component of the aircraft operation. Around 30% to 40% of the cost of operation consists of ATF. And if it comes under GST, then definitely the cost of operation of the aircraft comes down bringing the overall efficiency in the aviation sector and improved profitability of all people. However, the caveat was she mentioned that the state government who are also member of GST council, also have to agree for bringing the ATF under GST and which we think that all state governments, all people in the country now want the growth. So sooner or later, ATF will also come under GST and we are expecting that will give further benefit to the hyper growth in aviation sector. We are thankful to the Union Finance Minister that they have reduced the income tax rate for all people. This will definitely lead to the increase in consumption and this will definitely lead to higher disposable income in the hands of the people. With higher disposable income, there will be more increase in consumption or the travel requirement or the savings. This will give further benefit to the economy. And as the consumption increases, there will be more movements of the goods. If there is a more movement of goods like electronics goods or something else, which will move by air also, there is more movement of goods through the air. And we being a pan-India company, we are very confident that we will also get benefited by this. So we have a very positive outlook for this as well as our company and for the aviation sector. And another positive thing which I want to share with you all concerned that we had a demand of GST of INR 33 crores, which I'm happy to share has been dropped earlier yesterday on the 5th February 2025, completely dropped. This will now help us in focusing our energy and our capital for investing in the warehouse or whichever or whatever other areas where return on capital will be higher. This will help us in not only depend on the air freight business, it will also cushion ourselves from only depending on the air freight business. We are very actively considering we will definitely have air freight business, but we want to increase our new vertical also. So there will be a growth from both verticals. As I was earlier mentioning we have a property there, which in this quarter also the development happened. As I could not talk much because final dotted agreement it has to be signed, but this type of things take time. But when it happens, it will happen definitely in a very good way. The discussions are in an advanced stage. We are actively pursuing how to monetize our non-core assets. And I hope very soon, I will be able to give you some good news on this account also. Things are looking, as the economy is growing and as the favorable union budget, we all are expecting that things will be looking in a very, very positive way. For the reality, as we know, we also have a very sizable realty. So in this budget, realty also given a benefit only, positive for the realty. So overall, this is also beneficial for us. By this, I conclude my observation. Very happy to clarify anything which I missed.

[Operator Instructions] The first question is from the line of [ Majid Ahmed from Tradewalk Research ].

Yes. I hope I am audible. Greetings to the management. I think we had very good quarter. So, my first question that I have is, you are saying that you are looking to invest in high ROCE businesses. So, which segment are you looking to invest? [indiscernible]

Sorry to interrupt, sir, your voice is not clear. We can't hear you.

Can you hear me now?

Yes, sir, please continue.

[indiscernible]

No, sir, we can't hear you. Ladies and gentlemen, we have lost the connection of the current participant. We will move on to the next participant. The next question is from the line of Ankur Sawaria, who is an individual investor. Please go ahead.

My first question is that even though our revenue is increasing, how come our operating margin is not increasing? It is going down. It was about 5% at one point of time, and now it has reduced to about 2%, 2.5%.

Yes, correct. We are aware of that one. If more happens, as you can see that there are two products mix. One is the domestic, one is the international. International although money come very fast, but margins are lower. So, we are aware of that one. So, we are now thinking of changing our product mix further again to focusing more on the domestic so that our product margin can improve. Yes, I agree with your point. Thank you. Your observation is correct.

My second question is, sir, even though some of the promoters have sold their shares in this quarter, how come the promoter's share has increased? This is something I'm not able to understand that during the quarter, the shareholding of the promoter is showing as more than last quarter, but the promoter has sold during this quarter.

Yes. Between October to December, we have a right to do so, where promoter has subscribed more than their quota, okay? For that reason, they have got a holding and then they have sold some shares. But definitely, the subscription was much, much higher. And as a result, net-net, they have increased their holding.

Why is the promoter selling again and again, sir, for last 2, 3 quarters?

Look, there was some selling, I agree with you. I'm not denying your point. But at the same time, if you see, promoters have infused more money than they sold, correct?

Yes, sir.

Yes. And there were some personal requirements that the promoter was there. For that, they sold some shares, I agree with you. But at the same time, I'm not expecting now -- I will not be able to comment much on that one, but my expectation now that there will be not much further will be.

So what do you foresee, sir, in the next 2 to 3 years, where do you foresee the company to go, sir?

Company to grow, grow, grow, nothing else. I have the same vision like you, to grow, grow the company.

Sir, even we are hoping for the same that the company grows. The only thing that -- so what I see is that, again, I'm repeating myself for last quarter, I said the same thing that value-wise, the company is far more valuable than the market cap as of now. But the market always gives value to the company that is growing. So value-wise, we are okay, but growth-wise, we are not okay. So as a shareholder, what we envision is that the company grows far more so that the shareholder also gets something out of the share price or the dividend. But the dividend is too less. That is why we want that the share price should reflect in the value of the company.

Yes. Look, you are fully correct. What is in our share price, but not fully in our control, as you know also. Now all the small cap, nano cap, whatever maybe you could talk about, all have their share of the brunt. But what we have in our control is that company, to grow the company, to take whatever the non-core asset, how to monetize. That is in our hands, which we are, yes, I told last quarter also. This quarter also further movement happened. But till the agreement gets signed, it's difficult for me to tell anything to you guys. But yes, I can assure you we are working on that direction only.

[Operator Instructions] The next question is from the line of Vikram Suryavanshi from PhillipCapital.

Before I ask my question, I think the earlier participant was trying to ask the question. His question was since we are focusing on high ROCE business as well as the new business opportunities, the question was regarding which could be the new business areas we can focus going forward?

Yes, correct. But the objective is that, Vikram, what I mean by that? We are right now more or less majorly in the B2B, okay? We will be going by our logistics sector or the warehouse only. I'm not telling about something we will go by unrelated sector. But there also, we will go more into the B2C into B2B where definitely margins are higher. That I mean by that.

And how is the development of this Pune location and if you can give some further update on that?

Yes, definitely very upfront with you. And as I was mentioning that we unfortunately got in the middle the roadblock of GST. That roadblock got removed. yesterday only. Okay. Now we can that capital which we have -- because regulatory compliance was supreme, now that capital got free, now we again can actively look into that our Pune thing.

And in terms of obviously, we have grown on 9 months, but you rightly said that Q-o-Q domestic was a seasonal impact. But is it also apart from seasonal competition impact because somehow we see overall volume growth is not that high. So is it like an industry phenomenon? Or is it a competition and also there is a bit amount of margin pressure? So if you can talk about some competitive intensity and how we are able to grow market share going forward or what kind of growth rate we can look in terms of volume?

We have a 9-month to 9-month growth in the volume, definitely. Quarter-to-quarter, there is a small blip there, okay? But at the same time, I can assure you that, yes, we are also more or less mirror of the economy also as we were all seeing that the economy was a little slow down, which has now been corrected also by the budget also. Momentum and everything in pickup. So we have not lost market share, just to tell you directly because things are there, we are very focused on our market share and all this one. And as the location gets improved and things get improved, number of locations get increased and consumption gets increased, this volume will come back again definitely, and we are expecting the growth in the volume only.

But is there any way we can increase the market share and really do a much better growth rate and demonstrate that in volume going ahead? Obviously, everyone will have expectations of growth, but how we can bring it into reality? Is there any way we can work in terms of market share gain or some strategy?

Yes, for definitely yes, we are internally also discussing. Look, we have just to tell you right now also double-digit market share in our area of operation. Okay. So, it's not that we don't, we have a major share of markets that were double digits in the industry, which is very competitive industry. And we are having double-digit market share is also not something very, had to be looked, had to be considered also. That's the reason. One thing is that we are expecting the overall pie will increase. Another thing which we are doing as I am mentioning you, we want to, apart from the turnover we are also looking into how to increase our margin. And just now your previous speakers also talked about the margin, and we are very much focusing on the margin, how to increase the margin. And the load will come definitely, Vikram, load is not a challenge. But to pick up which load can some time become a challenge. Because in the market what will happen, this type of industry, everybody is willing to give you load in a credit period, high credit period, everybody will give you load. But we don't want to take that one. We want to be also prudent enough to choose which one to do and which one not to do because we are looking for a long-term sustainable growth and not a shortcut measure. So, definitely, the things are looking good, and we are in that direction only. That's why we are also apart from the B2B, we are looking into B2C also.

And last from my side, in terms of margin improvement, we do understand that as the economy picks up, volume pick up, margins will improve. But is there any possibility for further cost optimization or efficiency gain to improve margin? Or it will be more based on the volume growth going forward?

About the cost optimization and working capital management, as I was mentioning in my remarks, we have implemented software to meet the financial discipline all over India. Because we know, I am not sounding arrogant, we are just humbly telling customers will come to us. But sometimes they delay in payments and all this one, which will block our working capital, which is further because we are not taking any new loans as you know, we are a net debt-free company now. So we are also in the focus of collecting our money faster so we can churn our money faster and increase the business.

Got it. And what would be your cash balance?

Cash balance right now, if I go by my cash flow, statutory cash flow, net-net after loan, and everything INR 8 crores is there already there apart from some liquid investment and all this one.

Ladies and gentlemen, the next question will be from the line of [ Majid Ahmed from Tradewalk Research ].

Am I audible now?

Yes sir, now you are clear.

Yes. So my first question is, in this current quarter, there has been a classification of a loss of INR 45 lakhs. Can you specify what is it?

Sorry, sir, couldn't get you.

So for this quarter, which you have reported, there has been a one-off of INR 45 lakh. I just wanted to know what is it? Like what is this INR 45 lakh this quarter?

INR 45 lakh, where you are seeing in the results only no?

In the results yes, for this quarter.

For this quarter, yes, correct, correct. This we are actually getting the accounting adjustment what I am referring is the gratuity and leave encashment. Gratuity and leave encashment provision which are long term which always come below the line we call it. This INR 45 lakh is basically that one only, and we have certain investment also in blue chip company which mark-to-market we have to do as per the regulation. So, that is temporary mark-to-market losses are there.

Okay, then my second question is that, sir, you're looking for growth and looking for margin expansion. But for us as investors, we need to have a good hindsight of understanding about what could be the range of the revenue growth and what's the possibility of margin expansion. Can you quantify numbers or give a range so that it will be much easier for us to understand?

As one of your speakers only talked about that we have right now the PAT margin of 2.5%, correct? We are gradually want to increase definitely over a period of time, not in 1 month or 2 months or 1 quarter or 2 quarter, double it, definitely double it.

Okay, to double it. How about the revenue growth? Revenue growth guidance can you give?

Sir, revenue growth, will be happening also. But just to be honest with you, we already got the revenue growth this year, 9 months to 9 months, 25%. Okay. So revenue growth...

Will it be maintained, this 25% will it be maintained in the coming years or it will be more?

We will all try to maintain it. But to be honest with you, it will come by own. But we are not very much concerned about the revenue growth. It will come, sir. We are more concerned about the margin expansion now because ultimately, we are not a start-up company, which will burn the cap. We want to make the money.

[Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.

I once again thank you all of you who have asked the question or who have heard the call for taking out their time to hear the call. Most of the points I already spoke about in my opening remarks. I can only tell you that we have noted your concern and we are very much aware. Management is totally professionally managed and every staff of the company is very much dedicated to the growth of the company. And we assure you that things will improve only from now on. Thank you.

Thank you. On behalf of PhillipCapital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.