TVS Supply Chain Solutions Limited (TVSSCS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the TVS Supply Chain Solutions Limited Q1 FY '27 Earnings Conference Call, hosted by PhillipCapital India Private Limited. [Operator Instructions] Please note that this conference is being recorded. Before we begin, a brief disclaimer. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectation of the company as on date of this call. These statements are not a guarantee of future performance of the company, and it may involve risks and uncertainties that are difficult to predict. I will now hand the conference over to Mr. Vikram Suryavanshi from PhillipCapital India Private Limited. Thank you, and over to you.

Thank you. Good morning, and very warm welcome to everyone. On behalf of PhillipCapital, I'm pleased to welcome you all on the earnings call of TVS Supply Chain Solutions Limited. We are happy to have the management with us here today for question-and-answer session with the inducement community. The management is represented by Mr. Vikas Chadha, Managing Director; Mr. R. Vaidhyanathan, Global Chief Financial Officer; and Mr. Karthik Venkataraman, Head, Investor Relations. We'll begin this call with opening comments from the management, followed by interactive question-and-answer session. With this, I hand over call to Mr. Karthik for opening comments. Over to you, sir.

Thank you, Vikram. Karthik here. Good morning, and welcome all to TVS Supply Chain Solutions Earnings Call -- for [indiscernible] calls for the quarter ended June 30, 2026. I hope everyone had a chance to look at the financial results, which were posted on the company's website and on the stock exchange. We have with us today Mr. Vikas Chadha, Managing Director; Mr. R. Vaidhyanathan, Global CFO. We commence comments the call now with opening remarks from our management along with the business performance update. It will be followed by an open forum for question and answers. Before we begin our customary remark, I would like to point out that some of the statements made during this call may be forward-looking in nature and must be viewed in conjunction with the risks that the company faces. A disclaimer to this effect has been included in the investor presentation, and I request and hand over to Mr. Vikas Chadha, Managing Director of the company, to make the opening remarks. Over to you, Vikas.

Thank you, Karthik. Good morning to all of you. Firstly, let me welcome all of you once again to earnings call to discuss the as I would say, the robust performance for quarter 1 FY '27. For the benefit of those [indiscernible] who might be joining the analyst call for the first time. Please note that TVS SCS Supply Chain Solutions is a tech led and asset-light supply chain solutions provider. We have 2 main business segments, namely the Integrated Supply Chain Solutions, or ISCS, as we call it, and Global Forward Solutions, forwarding solutions of the GFS segment. We operate across 4 continents, Asia, Europe, North America and Oceania where we offer customer-specific solutions in the 3PL space and also offer 4PL services in select markets. For more details about the company, you may please refer to our website, www.tvsscs.com/invest relations. Coming to the performance of our company. Quarter 1 FY '27 marked the past-breaking performance for us. I don't think we could have asked for a better start for TVS SCS -- for [ TVS SPS ]. We crossed INR 3,300 crores in revenue, the highest quarterly revenues with a growth rate of 29% on a year-on-year basis. We achieved an adjusted PBT of INR 32.1 crores, a sizable increase from INR 18.8 crores in quarter 1 FY '26. For this tremendous performance, I would like to thank all our customers and vendor partners and most importantly, are employing and other stakeholders without whom we could not -- we would not have been able to achieve these key milestones. There has been a sustained upward trajectory on year-on-year basis across regions and segments. In the ISCS segment revenue from operations grew by 22% over last year, India and Europe had a healthy growth aided by new business wins, enabling our overall performance and improved profitability. North America business registered revenue growth aided by the large project that went live last year. Moving to the GFS segment, revenue grew by 50.6% over last year, fueled by significant growth in volumes and new business wins. Team GFS did exceptionally well on Oceania volumes and especially in India. Net-net, for quarter 1 FY '27, our consolidated revenue grew by 29% to INR 3,335.2 crores on a year-on-year basis and grew 10% on a sequential basis. As you heard earlier, I'm very pleased to state that both the segments delivered double-digit growth in this quarter. On the profitability [indiscernible] for quarter 1 FY '27, the adjusted EBITDA was INR 232.2 crores as compared to INR 173.3 crores on a year-on-year basis and a very good growth of 34%, registering margin improvement of 30 bps to 7%. Continuing our last quarter wins were INR 500 crores, we had yet another landmark quarter where we have beaten our last quarter numbers on new business wins. This has been earned from new logos as well as new business from our existing customers across both the business segments. Our new business wins accounted for 21% of our quarter 1 FY '26 -- '27 revenues. We have completed the acquisition of Swamy & Sons 3PL in quarter 1, and our results for [ Corteva ] include its performance for 40 days in the quarter. As you might be aware, we have already announced a joint venture with Ala Group following the MOU entered earlier in the year, which will help expand our footprint in defense and interest-based supply chain solutions. We firmly believe that this new partnership allow us after access to growing verticals, new geographies and upstream opportunities in the value chain. We continue to be early adopters of technology and have integrated AI and robotic [indiscernible] operation. We have recently implemented Oracle ERP for our India [ SCS ] business, which will help us make processes faster and allow customers and vendors to integrate with our systems well. On the warehouse side, we continue to add more automation and robotics. Our transport management solution is now fully integrated with vendors and customers, providing efficient procurement and analytics that spokes to our customers. With this, I now hand it over to Vaidhy, our Global CFO, who will take you through financial highlights for the company.

Thank you, Vikas. Good morning to all. Thank you for joining us today. This quarter, on a year-on-year basis, revenue grew by 28.7%. Adjusted EBITDA grew by 34% and adjusted PBT grew by 70.7%. Before I get into the detailed financial performance, I would like to call out a few key highlights. Our performance came strongly due to the new revenue from new contracts as well as the benefits of the cost actions that we took last year. GFS business posted a strong EBITDA margin of 4.1%. This was due to our strategy of pushing more volumes in select lanes in addition to the cost organization initiatives that we implemented last year in this segment. The margin was also aided by better sourcing efficiencies. I also want to highlight the significant growth recorded in the ISCS business. Overall ISCS's EBITDA margin was marginally lower 8.1% due to the initial implementation costs that we incur for the new contracts that we onboard. This will tabulate in the coming quarters, as those sites become fully operational. Now I will take you through the detailed highlights of our financial performance for Q1 FY '27. Our consolidated revenue for the quarter reached [ INR 3,352 ] crores versus INR 2,592.3 crores in Q1 FY '26 and [ INR 3,32.1 ] crores in Q4 FY '26 reflecting a year-on-year growth of 28.7% and a sequential growth of 10%. India geography registered an impressive 44% year-on-year growth aided by record new business wins and significant volume in the [indiscernible] business. From a segment perspective, ISCS segment delivered strong year-on-year growth with revenue at INR 2,417 crores in Q1 FY '27 versus [ INR 1,098 ] crores in Q1 FY '26 and INR 2,283 crores in Q4 FY '26. Displaying a strong year-on-year growth of 21.9% and a sequential growth of 5.9%. The growth was due to sizable revenue from the new business wins. GFS segment [indiscernible] revenue of INR 918 crores in Q1 FY '27 compared to INR 609 crores in Q1 FY '26 and INR 749 crores in Q4 FY '26, marking a significant growth of 50.6% year-on-year and 22.6% sequentially, largely led by the growth in the ocean freight volumes in India and the benefits of a [indiscernible] moving upwards. Material related costs increased from INR 484 crores in Q1 FY '26 and INR 653 crores in Q4 FY '26 to INR 666 crores in Q1 FY '27 primarily due to the new distances in India and increasing volumes in North America and the Europe market. The movement in material costs and other related costs are in line with the change in the business mix in the ISCS segment. Now moving to the cost structure, fright clearing forwarding handling expenses increased from INR 68 crores in Q1 FY '26 and INR 813 crores in Q4 FY '26 to INR 991 crores in Q1 FY '27 which is in line with the volume growth in the GFS segment. Employee costs on a year-on-year basis, employee costs increased from INR 619 crores in Q1 FY '26 to [ INR 66 crores ] in Q1 FY '27 due to the cost inflation and in line with the revenue growth. The cost increase was also partially offset by the savings through the cost takeout initiatives. On a sequential basis, the employee cost was INR 641 crores in Q4 FY '26. Subcontracting costs increased from INR 381 crores in Q1 '26 and INR 407 crores in Q4 FY '26 to INR 444 crores in Q1 FY '27. This is in line with the revenue growth from the new customers. Other expenses moved from INR 257 crores in Q1 FY '26 and INR 297 crores in Q4 FY '26 to INR 329 crores in Q1 FY '27. This rate was primarily driven by the highest rental charges due to the increase in the short-term use renders. Depreciation of write-off used assets under [ India 116 ] increased year-on-year with depreciation increasing from INR 93 crores in Q1 FY '26 and INR 108 crores in Q4 FY '26 to INR 114 crores in Q1 FY '27. Interest costs and lease liabilities under India 116 increased from INR 20 crores in Q1 FY '26 and INR 25 crores in Q4 FY '26 to INR 26 crores in Q1 FY '27. The increase in depreciation on leased assets and interest on lease liability is on account of the additional space taken for the new business wins. On the profitability front, our adjusted EBITDA grew by 34% year-on-year, with margins expanding by 30 bps to 7%. Sequentially as well, adjusted EBITDA grew by 4.6%, demonstrating the consistency of the underlying earnings trajectory. With respect to the segments, ISCS delivered a strong performance in Q1 FY '27 with adjusted EBITDA of [ INR 196.3 ] crores at 8.1% margin, up from INR 164.1 crores, an 8.3% margin in Q1 FY '26. GFS delivered an improved performance in Q1 FY '27 with adjusted EBITDA of INR 38 crores at 4.1% margin, up from INR 13 crores a 2.1% margin in Q1 FY '26 and INR 18 crores a 2.4% margin in Q4 FY '26. The margin improvement in GFS segment reflects the volume growth in India. The sense of the cost optimization initiatives previously undertaken in this segment and also due to the benefit of better sourcing arrangement in the GFS segment. We delivered an adjusted PBT of INR 32.1 crores in Q1 FY '27 compared to INR 18.8 crores in Q1 last year and INR 13.9 crores in Q4 FY '26, reflecting the results of growth and the operating leverage. PAT for Q1 FY '27 was INR 22.5 crores as compared to INR 71.1 crores in Q1 FY '26. Kindly note that Q1 FY '26 included an EBIT gain from previous ILP. Excluding the inventory and the exceptional items in Q1 FY '26, operational PAT was INR 8.8 crores recording a year-on-year growth of [ 156% ] in Q1 FY '27. With this, I will hand it over to Vikas for the business updates. Thank you.

Thank you, Vaidhy, for the detailed analysis. I'd like to briefly touch upon our business development performance and pipeline strength, which reinforces our growth outlook. In quarter 1, we reported new business wins, which is an all-time high in a quarter of INR 543 crores, which represents 21% of our quarterly revenue, a clear sign of traction across key geographies. Our order pipeline remains robust at INR 7,500 crores plus, giving us a view of the road ahead for the coming quarters. Across both ISCS and GFS, we saw wins from several marquee customers. On the ISCS side, we secured mandates from India and major international markets, including a leading Asia-based renewable energy provider, a specialist clean energy solution organization a leading kitchen appliances manufacturer, a leading Indian consumer beverages company, glassware and consumer product specialists in India, a premium motorcycle manufacturer in load a global retail media and alergytics company in Europe. These wins reflect the diversity of our expanding customer portfolio the strength in our tech-enabled execution and the trust our customers continue to place in TVS SCS ISCS, which acts as a testimonial of our delivery capabilities. Particularly, India continued to deliver exceptionally well on new business development with multiple large strategic wins across the mobile, consumer products and industrial. These wins will drive revenue growth in the quarters ahead, especially in the ISCS business where our positioning continues to strengthen across production, aftermarket and distribution-led supply chains. On the GFS, we added several customers, including Global Sustainable packaging solutions company, a multinational telecom equipment provider, a top engineering and technology experts a leading industrial automation and robotics player, a leading home appliance to seller. With this, we are now open for questions.

[Operator Instructions] We take the first question from the line of Sucrit Patil from Eyesight Fintrade Private Limited.

I have 2 questions. First question, Mr. [indiscernible]. Beyond the rigor outlook, what are the top 2 to 3 execution priorities you're focusing on in the next few quarters? And alongside that, what do you see as the biggest risk in demand shifts, global competition or regulatory changes? And how are you preparing to manage them while strengthening TVS supply chain position in the logistics and integrated supply chain [indiscernible]. Just want to understood guidance on this. That's my first question. [indiscernible]. Thank you.

Let me, first of all, very good question. And let me answer it in both the part. The first question -- the first part that you asked was what are the top priorities in the next 2, 3 quarters. So I would say our top 2, 3 priorities, the #1 priority is growth. And we have had growth from our existing customers by increasing the volume. We have also done a very good job of getting new business and also building our pipeline that continues to remain our #1 priority, and we will continue to grow our volumes with our existing customers and also growing and expanding our customer base. I would say the second because priority is set. We have invested a lot in technology in terms of warehouse automation and integrating and AI and providing customers deep inside, they do their securement and their inventory, et cetera. We continue to work on this and especially we also deploy it in our business in India. We have both flexibility and we will be able to do a much better job on this. I would say, our third strategic priority for the coming 2, 3 quarters with partnerships and executing on the partnerships that we have already invested in and also looking for further partnerships. As you know, we acquired Swamy & Sons that acquisition is well on track and has got integrated. Our partnership with [ ALA ], Italy for defense aerospace will get -- is getting executed and will start business in H2. And hopefully, you will see further more partnerships coming because we firmly believe that in the value chain, we can go faster in new geographies and also upstream opportunities by getting into partnerships. Your second question is on the [indiscernible] risk that we see going forward. I think like any of the company at this moment, the biggest risk that I see is [indiscernible]. And because of where the financial markets are today or because of the bad situation, we have only seen first-level consequences of all of this today and if tomorrow there is -- there are major supply chain disruptions causing recession, that will be the biggest risk. I would say, but we will not be the only one thing that is that the risk is going to be broadly brand across all the countries and across all the geographies how we are mitigating that is we are in very close touch with our customers. Fortunately, a lot of the supply chain work that we do embed into the volume, the manufacturing volumes of our customers. So we have got a very good visibility as to what is happening and how they are proceeding I would like to say that at this moment, we don't see these risks playing out. But if there is something that will happen tomorrow, we will be one of the first ones to know it, and we can take the action productivity in terms of optimization, et cetera.

My second question is Mr. [indiscernible]. Again, along the similar lines, just want to understand from a financial point of view, what key risks or challenges do you anticipate in the coming quarters? And what specific measures are being taken to manage margin, cash flow and strengthen the balance sheet, especially in areas like fuel cost volatility, receivables and compliance.

Sure. Thanks, I think the question that you made with respect to the margins and the risk to the margins, I think we would talk about listing example of the fuel cost I think the way we do the contracting with the customer is that as and when there is a fuel cost increase. it is passed on to the customers. I think that is how the contract things have done, not just in India, but across all these geographies, I think that is the contracting is done with the customers. So whatever is the increase in the fuel cost it has passed out to the customers. Of course, there could be some time lag in terms of making it in, but ultimately, it gets passed on to the customers. So the other guests, I would say, is more in terms of the manpower availability. I think this is probably a full year [indiscernible], not just a particular season. Each geography has a different risk in terms of an availability and there we focus on this in terms of having dedicated teams, which ensure that the manpowers are available at the right time and any increase in the cost is also passed on to the customers. I think that is how we manage the risk. Of course, there are other the risk in terms of interest is on for us, which we manage it from a treasury point of. But operationally, these are the risks -- that is how we manage it so [indiscernible].

[Operator Instructions] We take the next question from the line of Saumil Shah from [ Paris ] Investments.

Yes. Hi, team. Good morning. I wanted to ask on the ISCS side because, I mean, our revenues had increased quarter-on-quarter year-on-year. But when we look at our EBITDA, it was down. So what was the reason for such lower EBITDA for this quarter? And how shall we look at the remaining quarter of this year?

Okay. I will take this [indiscernible]. I will take this I think. The revenue can be very strongly on because of the new contract that we onboarded both in Q4 as well as in Q1, we obviously have to incur few implementation costs or transition cost. Initially, when we onboard this contracts into our system. That is why we have to incur some additional costs. And that is why you will see a margin at EBITDA from a percentage point of view, but as these projects get up and turning, I think these costs will go away and we should start seeing the margin moving in the upward trajectory. And I'm not too stressed about the marginal drop in the ISCS EBITDA margin. Once these projects are up and coming, the margins will start moving upwards.

I would just like to add to this that you can view this as a onetime and -- going forward, I don't think this will have any reflection on our future margins. It will be back to above 9%.

Okay. Correct. So when we are guiding -- I mean, we have been guiding for a few quarters that we shall be reaching at 4% PBT level by Q4 of this year. So how should we look at it? Because we are still at around 1% PBT for this quarter. So for the balance quarters, will it gradually increase towards the 4% PBT margin by Q2?

Look, let me answer that question. First of all, we have an aspiration to grow our revenues by mid-teens growth this year. And quarter 1 has been absolutely supported on. Our margin is also improving from [ 0.7% ] to 1%. And compared with the quarter 4 and quarter 1 and quarter 1 generally is a start of the year, a softer quarter. So achieving 1% really is very, very good there. Going forward, this will definitely improve as our revenue grows and as we have new opportunities, we definitely are pending and going towards the 4% aspiration that we have set ourselves. Whether we will reach that 4% in this year-end, I would say it's our aspiration. But FY '28, definitely, we will be achieving our aspiration of 4%.

Okay. Okay. Okay. And on the partnership with [ ALA ] Group for defense and aerospace. So how are we looking at this? Has the event started gaining? Or what could be the revenue potential?

Look, we aspire to each almost INR 2,000 crores in year 5 of the operations. At this moment, the first -- aerospace and defense is a highly regulated and have certified vertical. So at this step, what we are trying to do is or what we are doing is that we finalize that warehouse, we have hired some of people who are getting trained in Italy and we will get the certification of the warehouse because without that, you cannot start the business in India. And by certification, it means that every part that is shipped out of the warehouse is completely tracked where it has gone right from the source till the installation. So all of that work is in progress. You will see some revenue coming in the second half of this year. But as I would say, this is the beginning of a partnership, which will also [indiscernible] more as the aerospace and defense sector becomes more localized and that is one of our government which is initiated. So going forward, we will have much bigger numbers. This year, H2, we will have our revenues commenced for this particular venture.

Okay. And sorry, what did you say by year 5, we can have INR 2,000 crores. I didn't understand.

Yes, we believe that the potential of this particular joint venture is to -- in the fifth year of running operations, we can deliver INR 2,000 crores out of this particular joint venture. It's a huge market, aerospace and defense. And just to elaborate that our ALA [indiscernible] so why we are so confident is one that ALA already has contracts with Boeing, Airbus, [indiscernible] and many of these large customers, so as we establish the operations -- certified operations in India, a lot of those contracts will ultimately be transferred to the joint venture. And these customers are buying today. We already had discussions with them, and they are looking forward to local supply being available, which will enable faster delivery and just-in-time delivery for them. So that is why because the existing business is only there, which -- the JV will do. That is why we are quite confident of achieving this number in the outer [ 5th ] year yes.

And on the EBITDA side, will it be EBITDA accretive or it will be on the similar lines as of now?

This industry being regulated and entry barriers are very high. This will definitely be margin accretive. ALA Group as such was lifted some time back, and you can look at their financials, their PBT levels almost in high single digits. So this will be margin accretive for us. The customers in this industry pay for quality and pay for availability and traceability. So with all these elements that come along in the supply chain, the pricing tends to be on the higher side.

Okay. Okay. And if I may ask the last question. A few days back, there was some [indiscernible] update between a few of our companies with TVS SCS supply chain. So how shall we look at it as a shareholder, what kind of equity dilution we can have? Or I mean, what kind of benefits we can approve through that?

Okay. So all these things are already 100% subsidiaries of TVS subchains solutions. And we are only merging these entities into a single entity. One is [indiscernible] is that there is a lot of reduction in the company's cost, right? Because today, each of these are [indiscernible] entities. We have a separate audit in cost, other complaints costs. Once we move into a single entity, I think there will be some savings on the company's cost. The second thing is obviously at the operational level, today, we go to the customer to have a different legal entities. Once the [indiscernible] that happens, I think we'll be able to go to the customer a single legal entity, [indiscernible] supension operational as there could be a lot of ease of doing business. But at our overall, I mean there will be no dilution because obviously are 100% subsidies of previous [indiscernible] solutions.

Thank you. We take the next question from the line of Ankur Poddar from Svan Investments.

Congrats on a great set of numbers. Most of my questions have been answered. Just one thing I wanted to understand is, as you mentioned that there were a couple of new contracts in the last couple of quarters in the ISCS business because of which the margins were impacted as the costs are upfront. And as we scale up, the margin should normalize. So just wanted to understand what are the time lines by which whenever a new contract is added like does it -- how many quarters does it take for us to give stable margins?

Thanks, Ankur. Let me answer that question. Look, we are a specialty supply chain, integrated supply chain solution provider. Our contract that we signed with our customers are to solve their problems and deliver the value that they seek from this partnership. So all contracts are a bit unique in nature because some may have more implant work to be done, more [ subassembly ] work to be done, which could have a little longer gestation period like maybe 2 quarters. Some contracts are more on the aftermarket side and scale up the operations of plenished good, where the registration period is just maybe 1 quarter. So in summary, we are not talking about years here. We are talking about just 1 or 2 quarters depending on how the contract is. So -- and you can understand like when a new project is starting, you will first establish the warehouse, you will set up the work while the volumes are not coming in. So some of the costs go in as the volumes jump, we go back to our additional activated margin. So 1 to 2 quarters is what I would say.

Understood. And my next question is on our GFS business. So we have seen good volume growth this quarter as well as jumping up the margins to the guided levels. Were there any one-offs due to the war in this case? Or are these margins going to be sustainable going forward?

So our freight volumes grew all across in India as well as in rest of the world. We saw more volume growth on the Ocean side, but [indiscernible] also saw substantial volume growth. So a lot of the work that we have done this quarter is also to do with the new wins that we have had with our customers. And a lot of this has been incremental in nature. Also remember, our margin is not only a reflection of the new business that we are doing, but also all the cost optimization work that we have been doing in terms of consolidating our vendor base, et cetera. So while the growth may not be so high going forward, I'm still confident of a very high double-digit number. But I would expect the margins to remain around this number and not get diluted too much.

We take the next question from the line of Kunal Sabnis from Nine Rivers Capital.

Sorry to hop on the same ISCS margin, I mean you have been adding new business each quarter and that has been -- you will have certain start-up costs every quarter, right? It's a little surprising to see that sequentially, even with revenue growth, your EBITDA margins are down by about from 9.3 to about 8.1. That's a huge -- if it's only related to start-up costs, that's a big start-up cost, right? I mean, could you explain what's the one-off here?

Yes. Thanks, Kunal. [indiscernible] what happened in Q2 long, have been so we also get the benefit of the price correction that we get from the customers. That is typically in Q4, we also have the a lot of price correction that we get from the cost, otherwise, we will see a good margin [indiscernible] and as Vikas explained to you is generally a soft quarter where no volumes would come down. And we also have the impact of these implementation costs in a few of the large contracts. So that is why I would [indiscernible] between Q4 and Q1. Q4 having the benefit of price corrections from the customers, which is not there in Q1, plus the impact of the implementation cost.

And Kunal, I mean, as I was explaining just to answer your question, we are a specialist player. And when we enter into contracts, some of the contracts, we are required to do more, initial work to make it deliver the SLAs that we have for the customers. So it is not something that I'm worried about is it's not something that anybody should be worried about because as these projects start rolling up and delivering the customer volumes, we will be completely back on track.

So this move back to 9%, is it like a -- that should happen in, say, quarter 2? Or it's more like year-end phenomenon?

No, we will sequentially improve the margin. And I am fairly confident that in quarter 2 itself, we will achieve 9%.

Net using sequentially going up, and our plan is to take it about 9.5% to 10% by Q4.

Sure. So the other thing is on growth. Both your businesses, ISCS and GFS has have grown much faster than what the previous guidance or discussions have been, and that's very heartening. How do you see this -- the compact between growth versus margins? Do we -- are we now gunning more for growth and margins will sort of be a byproduct, which sort of eventually will come through? Or I mean, what are your thoughts on that?

So we very firmly believe in profitable growth. We are not a company that will run after growth ignoring the profits, all our projects that we build and that we pick up are accretive to our existing margins. So all of -- you will see our growth having a fast profit growth having a faster -- bigger multiple as compared to our revenue. So we are aspiring to achieve in the full year mid-teens growth on the top line and the margin will be definitely growing at a faster pace than that.

We take the next question from the line of [ Vinay Java ] from [ Vadis ] Capital.

Sir, like the previous participant asked that we are aiming for 4% PBT margins, that will be 3% PAT margins, right?

Yes, that 25% effective tax, [indiscernible] it will be about 3% PAT, yes.

And this delayed in that margins are due to macro headwinds like the U.S. than more. I'm assuming?

It is a combination of factors in -- one of the geochemical things where I think as Vikas mentioned, in terms of overall recession, geopolitical risk and as well as the term loss/. GFS, we saw a 4% EBITDA margin. And ideally, we'd expect this to be about 4.5% to 5%. And we want to hit that at least a 5% EBITDA margin in GFS [indiscernible]. So I think it was a combination of all factors.