GATEWAY - Gateway Distriparks Limited Share Price

The management at Gateway Distriparks provided a cautiously optimistic outlook in the Q4 FY 2024-25 earnings call held on May 27, 2025. Key forward-looking points from management include:

1. Revenue Growth in CFS: While there was a negative perception of CFS revenue due to accounting method changes, the management clarified that when adjusting for a one-off impact of Rs. 46 crores, FY 2025 revenue would actually show growth compared to FY 2024.

2. Consolidation of Snowman Logistics: Snowman, now a subsidiary, contributed Rs. 145 crores in revenue, with Rs. 25 crores in EBITDA and Rs. 3.5 crores in PAT, reflecting solid integration and performance.

3. CAPEX Plans: The company outlined a CAPEX of Rs. 100 crores to Rs. 150 crores for FY 2026, with around 80% expected to be funded through loans, maintaining their 80-20 debt-equity structure.

4. Warehouse Expansion: Snowman Logistics' new facilities in Kolkata and Krishnapatnam are set to commence operations in June 2025, with an expected incremental capacity of 6,000 pallets, enhancing their ability to handle growing demand.

5. Market Expansion Strategy: Management reiterated their focus on expanding rail-linked ICDs amid challenges in land acquisition, emphasizing a strategic shift towards asset-light models, including build-to-suit warehouses.

6. Operational Efficiency and Cost Management: Management acknowledged recent margin pressures due to a shift in the mix of business, specifically tied to the low-margin 5PL service, but highlighted ongoing efforts to manage costs effectively.

7. Market share Stability: The company's market share in the NCR region remains steady at 17%, with an improved share in Ludhiana at 27% as they aim for consistent growth while navigating competitive pressures.

These points indicate a strategic focus on operational efficiency, expansion in logistics capacity, and careful financial management amidst a complex market backdrop.

1. Question: "In the IP you mentioned on the facilities in Kolkata and Krishnapatnam will commence in June '25 and Q2 of this financial year respectively. However, on the second last page under the extension plan states that Krishnapatnam facility is expected to start operating in July '26, which is a Q2 of FY '27. Can you please clarify if these are different phases of the same plant or is there a change in the timeline? And what revenue growth targets has a company set in alignment with this increase in warehouse capacity?" Answer: The Kolkata facility starts in June '25, adding 6,000 pallets. The Krishnapatnam facility will operate in July '25, aligning with our growth strategy. The timeline was misinterpreted; both represent different phases of expansion. We anticipate a positive revenue boost from this increased capacity as we ramp up operations.

2. Question: "Despite increasing segment-wise revenue for the transportation service, we see a decline in EBIT from Rs. 52.88 lakhs to Rs. 5 lakhs. What is the reason for this?" Answer: The EBIT decline is mainly due to Q4 year-end provisions and slightly reduced margins this quarter. While revenues held steady, the additional cautious provision impacted profitability. Overall, the transportation business remains stable.

3. Question: "Can you clarify the planned CAPEX of Rs. 100 crores to Rs. 150 crores? Will the funding structure remain at 80% debt and 20% internal accruals?" Answer: Yes, we plan to maintain the 80-20 funding structure for our CAPEX. This approach hasn't changed, with 20% funded through internal accruals and 80% through loans to support our expansion initiatives.

4. Question: "Could you explain why cash conversion cycles are increasing in FY '25, especially concerning early payables?" Answer: Our decision to clear payables earlier varies with business dynamics and customer agreements. The increase is attributed to the 5PL business mix, reflecting a proactive approach to manage working capital effectively.

5. Question: "The margins in Snowman Logistics have dipped over recent years. What's causing this decline, and is it due to accounting changes?" Answer: The drop in margins is influenced by greater volumes from 5PL services with inherently lower margins and specific industry pressures. Changes in customer mix and costs have also contributed, particularly as industries performed unevenly during the year.

6. Question: "What efforts are underway to expand satellite terminals in Central India, considering previous aims to enhance Gateway Logistics?" Answer: We continue to pursue viable land acquisition opportunities for new terminals but face challenges. Our focus remains on securing projects rather than expanding merely for growth, with potential progress anticipated soon.

7. Question: "What's the impact of the Western Direct Freight Corridor on rail coefficient and the preference shift possibly affecting our JNPT volumes?" Answer: Recent congestion at Mundra and double-stack restrictions influenced rail volumes. Completion of the JNPT corridor is expected by March 2026, which should enable a future shift from road to rail, benefiting overall logistics performance.

8. Question: "What were the considerations for acquiring the Kashipur ICD, given the relatively low available volume?" Answer: Despite lower TEU potential, the ICD's four-to-five-year payback time frame aligned well with our strategic goals. As operations and services improve, we anticipate capturing a wider market share and better service connectivity.

9. Question: "Can you assure us about the relationship dynamics in your new 5PL partnerships, particularly with Kopi Kenangan?" Answer: We've conducted due diligence to assess Kopi Kenangan's business viability. Their rapid expansion and our contractual safeguards mitigate risks, allowing us to capitalize on growth while ensuring we don't bear the full burden of operational challenges.

10. Question: "What does the future CAPEX outlook look like for Gateway, especially with Snowman consolidating?"

Answer: For Gateway, we expect approximately Rs. 30 crores per year, while Snowman plans around Rs. 100 crores to Rs. 150 crores annually. These investments focus on enhancing operational capacities, including warehousing and vehicles.

This concise capturing of the Q&A section reflects key inquiries and responses while preserving the essential financial details and operational insights.