ALLCARGO - Allcargo Logistics Ltd Share Price

Management's outlook for Allcargo Logistics reflects a cautiously optimistic view amidst recent geopolitical and economic uncertainties. They noted a notable rebound in international trade following a temporary 90-day pause in tariff actions. The firm is witnessing a promising domestic economic landscape, with the Express business seeing double-digit growth.

For the fourth quarter, Allcargo reported a consolidated revenue of INR 3,952 crores, reflecting an 18% year-on-year increase, while EBITDA grew by 16% to INR 115 crores. For the fiscal year 2025, consolidated revenues increased by 24%, with EBITDA growth at 12%. The profit after tax stood at INR 49 crores, albeit lower than the previous year, impacted by a significant forex loss of INR 33 crores resulting from currency fluctuations.

Key forward-looking points shared include:

• The international supply chain business experienced a 1% increase in LCL volumes and a 7% growth in FCL volumes amidst a market contraction.
• Air cargo volumes surged by 30%, marking a robust performance.
• The Express segment reported a revenue growth of 2% with an impressive 34% growth in EBITDA, attributed to cost optimization and the reduction of loss-making customers.
• The company reduced gross debt by INR 66 crores in the second half of FY25, resulting in a net debt of INR 472 crores as of the reporting date.
• Management anticipates improved margins in Contract Logistics as occupancy levels rise post the conclusion of certain contracts.

Overall, the management signifies confidence in the company's adaptability to market conditions and an expectation of a normalized supply chain environment in the upcoming months.

Question: "When can we expect the relisting of the newly formed entities after the NCLT approval?"

Answer: We have our next potential final hearing with NCLT in the first week of July. Typically, from there, we estimate it should be about a 2 to 4-month process for the relisting of the newly formed entities.

Question: "In the Contract Logistics business, we have seen significant reduction in margins. So what is the reason? And what is the outlook there?"

Answer: The margins reduced due to significant expansion in quick commerce, which doesn't match the historical margins of our specialized chemical logistics. Additionally, we have high vacancies linked to a specific upcoming contract expiry. We expect these vacancies to normalize, which will help improve margins, though they may remain below historical averages.

Question: "What would be the gross debt or international supply chain business now?"

Answer: The gross debt in our international supply chain business is approximately INR500 crores. This consists of about INR470-480 crores in working capital debt and around INR80-90 crores in long-term borrowing, with the remaining debt on the India side being about INR200 crores long-term and INR300 crores in short-term borrowings.

Question: "Are we seeing that working capital is getting straightened out, or is there pressure on the working capital side?"

Answer: We have seen a reduction in working capital due to improved collections and management, especially with lower average freight rates. Our reduced working capital requirements also help interest costs. Steve can elaborate further on our strategies around working capital management and cash pooling.

Question: "Is there a possibility that trade resumes after 90 days, and it might take more time to normalize due to supply chain disruptions?"

Answer: Yes, we expect some disruptions post-90 days due to capacity realignment in trade lanes. These realignments can lead to congestion and impact supply chains, particularly in the U.S. While demand will likely remain strong, it may take at least 3 months to normalize this situation.

Question: "What was total capital expenditure in FY '25? And what is planned for FY '26? Can you break it up between international supply chain and contract logistics?"

Answer: For FY '25, our capital expenditure for the International Supply Chain was about INR30-60 crores. For FY '26, we don't foresee significant non-IT capex as we plan to sign operating leases rather than invest directly, especially in our contract logistics business. IT improvements on systems will occur, but overall cash outlay remains nominal.