Allcargo Gati Ltd (BOM:532345) Q4 2025 Earnings Call Highlights: Strategic Growth Amidst Volume ...

• FY25 Revenue: INR 1,510 crores, a 2% increase from FY24's INR 1,479 crores.

• FY25 Gross Margin Improvement: 80 basis points increase year-on-year.

• FY25 EBITDA Growth: 34% increase compared to FY24.

• FY25 EBITDA Margin Growth: 110 basis points increase year-on-year.

• Q4 FY25 Revenue Growth: 9% increase compared to Q4 FY24.

• Q4 FY25 Gross Profit: INR 89 crores, compared to INR 93 crores in Q4 FY24.

• Q4 FY25 EBITDA: INR 12 crores, compared to INR 15 crores in Q4 FY24.

• Net Cash as of March '25: INR 109 crores.

• Total Tonnage FY25: 1.25 million metric tons.

• Q4 FY25 Tonnage: Close to 3 lakh metric tons, compared to 3.12 lakh metric tons in Q4 FY

Positive Points

• Allcargo Gati Ltd (BOM:532345) reported a 34% growth in EBITDA compared to FY24, indicating improved operational efficiency.

• The company has successfully onboarded new large marquee customers, reflecting confidence in its service quality.

• There is a strategic focus on MSME and retail sectors, which are expected to bring higher yields.

• The company has implemented price hikes, which have contributed to revenue growth despite lower volumes.

• Allcargo Gati Ltd (BOM:532345) is investing in modernizing its ERP and IT infrastructure to enhance operational efficiency and service quality.
  
  

  Negative Points

  • The total tonnage handled in Q4 FY25 decreased compared to both Q4 FY24 and Q3 FY25, indicating a decline in volume.

  • Gross profit for Q4 FY25 decreased compared to the same period last year, reflecting challenges in maintaining profitability.

  • The Air Express segment experienced a decline due to the loss of a large customer, impacting overall revenue mix.

  • Despite price hikes, the company faces challenges in achieving significant volume growth, which affects overall market share.

  • The restructuring process is ongoing, with pending approvals and hearings, which may create uncertainty for stakeholders.
    
    

    Q & A Highlights

    Q: Why is the express industry not growing in line with GDP growth, and are larger operators losing market share to regional players? A: Ketan Kulkarni, MD and CEO, explained that the express industry typically grows at 1.2% to 1.5% of GDP, which is about 8% to 9%. The organized sector is growing faster than regional players due to industry formalization and structural reforms. Allcargo Gati is seeing positive growth signs due to recent initiatives, despite slower growth in the past
    
    

    Q: Has Allcargo Gati implemented the price hikes discussed earlier, and have competitors followed suit? A: Ketan Kulkarni confirmed that price hikes have been implemented, as evidenced by revenue growth despite lower tonnage. He refrained from commenting on competitors' actions regarding price hikes.

    Q: Why has the Air Express business declined while Surface business has grown? A: Ketan Kulkarni noted that a large Air Express customer was lost due to pricing pressures, which impacted revenue. However, the company sees significant opportunities in Air Express and plans to focus on improving transit times and market strategies to grow this segment.
    
    

    Q: What is the strategy for increasing market share in the MSME and retail segments? A: Ketan Kulkarni acknowledged a structural flaw in the MSME strategy, which has been corrected. The company expects improved numbers in these segments, focusing on quality revenue and yield improvement.

    Q: What are the expectations for EBITDA margins and service quality improvements? A: Deepak Pareek, CFO, stated that the target EBITDA margin is 6.5% to 7% for the next financial year. The company has invested in service quality improvements, which are expected to enhance customer satisfaction and drive growth.

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