Earnings Call Transcript - XNSE:ALLCARGO 2026-11-04

Operator

Ladies and gentlemen, good day and welcome to the All Cargo Logistics Limited Q2 and H1F527 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star, then zero on your touch-tone phone. I now hand the conference over to Mr. Shahru Garg. From Stellar IR Advisors. Thank you, and over to you, sir.

Shahru Garg, Head of Investor Relations

Thank you. Good afternoon, everyone, and thank you for joining us today. We have with us the Senior Management Team of All Cargo Logistics Limited, Mr. Kedan Kulkarni, Managing Director and Chief Executive Officer, Mr. Deepak Parikh, Chief Financial Officer, and Mr. Sanjay Punjabi from Investor Relations. The management will be sharing operating and financial highlights for the quarter-ended 30th September, 2026, followed by a question-and-answer session. Please note that this call may contain some of the forward-looking statements, which are completely based upon the company's beliefs, opinion, and expectations as of today. These statements are not a guarantee of the company's future performance and involve unforeseen risks and uncertainties. The company also undertakes no obligation to update any forward-looking statements to reflect the developments that occur after the statement is made. With that, I would now like to hand over the conference to Mr. Ketan Kulkarni. Thank you and over to you, sir.

Ketan Kulkarni, CEO

Thank you. Thank you, dear. Good afternoon, everyone, and thank you for joining us today. Our results, presentation, and press release have been uploaded to the stock exchanges and our website, and I trust you have had an opportunity to review them. When we spoke at the start of this fiscal during our Q1 call, we outlined our foundational philosophy of scaling all carbo logistics. That sustainable growth rests on disciplined execution, customer centricity, and the clear principle of deliver value and command value. That framework has guided the organization to a second consecutive quarter of profitability. Looking at the quarter gone by due to FY27 was essentially a tale of two distinct phases. During July and August, we witnessed general market softness and sluggish demand across several trade corridors. However, September marked a visible inflection with market activity and demand sentiment improving meaningfully. What is particularly encouraging is not just the market recovery in September, but the speed and responsiveness of our organization. Because of agile business teams and operating systems that we have institutionalized, we were able to quickly adapt to a network capacity, pivot resources, and capture volume momentum as soon as demand rebounded. As we shared during our last call, we remain firmly focused on continuous service excellence. Over the past quarter, our targeted interventions to improve transit reliability and reduce turnaround time have yielded tangible results on the ground. Superior service delivery has reinforced our ability to demand the right price in the marketplace. Backed by this improved service equation, we have witnessed healthier realizations across our core offerings. Let me reiterate that we will continue to maintain this strict service-led pricing discipline going forward. We will not compromise on yields for indiscriminate growth. On the cost front, we have maintained rigorous discipline across both our direct operating expenses and general and admin overhead costs. This tight operational control has protected our unit economics and enabled continued sustainable profit. Turning to our consultative logistics vertical, we remain steadfast in our guiding philosophy of delivering more from less. For our enterprise clients like engineering, customized asset-like solutions, and efficient supply chain systems. I'm pleased to report that this approach continues to gain traction, with the business clocking a healthy 5.8% revenue growth year-on-year for the quarter, reflecting deepening client-wallet share and strong reference ability in the market. Finally, on our digital and technology roadmap, a key highlight of this quarter has been the rollout of our new booking application. By embedding artificial intelligence directly into the booking journey, The platform simplifies complex workflows, significantly cuts down manual intervention, and accelerates order processing times. More importantly, it delivers an intuitive, seamless experience for our customers while structurally lowering cost to serve. To sum up, H1FY27 has demonstrated the resilience of our operating model. With service-led pricing impact, Disciplined cost structures and an agile commercial engine, we enter the second half of the year confident of driving our volume expansion and creating sustainable shareholder value. The macros. India's GDP growth for Q1 stood at 7.8% and is expected to continue growing in the similar range for the full year of FY27. This signifies stable underlying industrial and retail demand, underpinning domestic surface moments. For Q2 FY27, the macro backdrop was represented by the sluggish industrial activity during the monsoon months of July and August, followed, as I recently mentioned, an uptick in September. This is represented by high-frequency indicators like e-way bill generation, which crossed 141 million run rate. And GST collections, which maintain a 14.7 YOI in the month of September. Coming to all cargo logistics, we have started FY27 on a strong footing and have continued the performance momentum in Q2 FY272 with another quarter of profitable growth. Our strategy of focus on service and customer centricity along with operational discipline while driving structural cost efficiencies is providing us the desired reserves. We will continue to walk down this path. Our goal is not just to maintain profitability but to build on this platform. I would also like to take this opportunity to introduce all of you all to our Chief Transformation Officer and Managing Director-designate, Mr. Vijay Nahaira. Starting 1st of Jan, 2027, Vijay will take over as the company's Managing Director and Chief Executive Officer. I will be moving to a new role at the All Cargo Group. Vijay brings experience across financial services, pharmaceuticals, SMCG, e-commerce, and tech-led businesses, starting his career in supply chain at Hindustan Lever, and then moving into senior sales and customer management roles, also then subsequently senior leadership at India Bulls Real Estate, India Bulls Housing Finance, and India Bulls Asset Reconstruction Company, before joining All Cargo, where he was. CEO of Ozone Pharmaceuticals. Let us all welcome Vijay. Thank you. With that, I hand the call over to our CFO, Mr. Deepak Kari. Over to you, Deepak.

Deepak Parikh, CFO

Thank you, Ketan. I am pleased to present the financial results for the second quarter and half year ended September 30, 2026. As outlined, this quarter was characterized by operational agility, firm service-led pricing, and disciplined cost governance. The cumulative impact of these actions is clearly visible in our numbers. We have delivered resilient top-line expansion along with substantial operating leverage, tight cost stability, and strong bottom-line growth on both Year-on-year and quarter-on-quarter basis. For Q2FI27, our revenue from operations stood at Rs. 555 crores, registering a growth of 3.4% YOY, compared to Rs. 537 crore in Q2FI26, and an increase of 1.6% quarter-on-quarter from Rs. 546 crore to In Q1 FY27, for the first half of the year, H1 FY27, revenue reached Rs. 1,101 crore, up 7.1% year-on-year, from Rs. 1,028 crore recorded in H1 FY26. A defining highlight of our operating performance this quarter has been the rigorous control across all our costs lines. Which remained either flat or trended downwards despite the scale of business expansion. On the back of this direct cost discipline, gross profit for Q2FI27 expanded by 13% Y-on-Y and 6.7% quarter-on-quarter to Rs.174 crores. Our gross margin improved significantly to 31.4%. Representing a substantial 270 basis points expansion year-on-year vis-à-vis 28.7% in Q2 FY26 and a 150 basis point expansion quarter-on-quarter vis-à-vis 29.9% in Q1 FY27. EBITDA for Q2 FY27 grew by 24.2% YY and 8.5% quarter-on-quarter to Rs. 77 crore compared to Rs. 62 crores in Q2 FY26 and Rs. 71 crores in Q1 FY27. EBITDA margin expanded by 240 basis points year-on-year to 13.9% vis-à-vis 11.5% in Q2-FY26 and up 90 basis points sequentially from 13.13% in Q1-FY27. QBD for Q2 FY27 stood at rookies 24 crore. Thank you. With that, I complete the overview on the financial summary, and now I would like to open the floor.

Operator

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions, may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and 1.

Operator

Participants who wish to ask questions may press star and 1.

Operator

The first question is from the line of Pratili Khara from Param Capital. Please go ahead.

Pratili Khara, Analyst — Param Capital

Hi, thank you to the opportunity. I just wanted to understand on the volume degrowth that we see in Express as well as in consultative work, the warehouse and space, and the management has seen a reduction of 5.5% load on work. Because the other players in the industry have grown in terms of volume, and it has been very strong for everyone else, what is the reason of our degrowth, and if you could also highlight a little bit on our growth plans in terms of expansion, although I do understand our focus is on profitability.

Ketan Kulkarni, CEO

Yeah, thank you for your question. Though the line was a little weak, this is Ketan here. I understood the question as being on the volume front. So I will answer that now. We are in the process of deliberately kind of upgrading our portfolio mix. In the express logistics segment, our revenue has grown 7.7% YOY, and volume has stabilized now, and with that, we have also improved our realization per ton, indexed to about 107.5. So our core operating philosophy is delivering service and deserving the volume thereafter. During this period, a lot of shifting across cost structures that happened, chasing unviable low-margin tonnage, you know, destroys long-term value. Instead, we focused extensively on improving our net service levels, which is operating quality, which scaled to about 110.2 indexed on Q2FY27. Ensuring superior, reliable service quality for sticky, high-value growth customers. Further festive demand is expected in Q3. We just concluded the first month of Q3, which is October, and that looks very, very strong with good green shoots across all verticals and geographies. All this will naturally augment our volumes. And our focus going ahead will remain firmly rooted on high-yield and service-led execution. Does that answer you, ma'am? Thank you.

Pratili Khara, Analyst — Param Capital

Yes, I'm sorry. Am I audible?

Ketan Kulkarni, CEO

You are audible, but your voice is a little garbled, but please go ahead.

Pratili Khara, Analyst — Param Capital

Yeah, I just wanted to understand on the consultative side as well, what is our plan in terms of growth, and if you could mention if we have added any new clients, specifically for Express and Consolidated.

Ketan Kulkarni, CEO

So, as mentioned in the earlier calls, our growth ambition is to grow more than the market by one percentage point so that we… Keep adding market share on both the express and consultative side of the business. New business development on the express side in the month of October was the highest new business added ever in our history. So that pipe is firing very, very, very strongly. On the CL side of the business, we are embedded with very, very large customers, so there are two-pronged approaches to grow that business. One is the new business development, logos that have not worked with us previously, and the second is new business development existing, logos and organizations that we have worked with, where we have a strong relationship with them over the years. So both those... Line items into the new business funnel on the CL side are also strongly tractioning. You know, we are very strong in chemical logistics, wherein we are the market leaders. Two other verticals, e-commerce and automotive, are also a strength area for us. We differentiate very, very strongly when we enter with solutions. Thank you. All these interventions are allowing us to grow on both sides of the NVD and the NVDE on CL. Thank you.

Rutri, Analyst — Individual Investor

Thank you, everyone.

Operator

Thank you.

Operator

Before we take the next question, a reminder to participants that you may press star and 1 to join the question queue. The next question is from Saurav Rathod from Nightstone Capital. Please go ahead.

Saurav Rathod, Analyst — Nightstone Capital

Yeah, hi. Thank you for the opportunity. My question is on margin. Like, what is the margin of conservative logistics? Like, is it around 29.5%? And if yes, then what is the, like, brain-based margin you are guiding?

Deepak Parikh, CFO

Yeah, so on India's margin, the gross profit for Q2 was 30.6%, which is up nearly 1.5% from 29.1% last year. And on a cumulative, we are at 30.6%. And if we break down into the business-wise, if you see on a Y2D basis, Consultative logistics, we are at 36.5%, and on express side, we are at 27% loss margin.

Saurav Rathod, Analyst — Nightstone Capital

No, I'm talking about EBITDA, EBITDA margin.

Deepak Parikh, CFO

So EBITDA margin, 13.5% on a half yearly basis. If you split it down, then we are on consultative logistics, 29.7%, and on express, we are at 6.5%.

Saurav Rathod, Analyst — Nightstone Capital

So, like 29.7% is post-index for consultative. So, what is like pre-index you can see?

Deepak Parikh, CFO

Yeah, pre-index, if we look at consultative logistics, it will be 8.8%.

Saurav Rathod, Analyst — Nightstone Capital

Okay, so earlier it was like near breakeven, right? But it is now 8.8%.

Deepak Parikh, CFO

Yes, yes.

Saurav Rathod, Analyst — Nightstone Capital

Oh, we discussed that in the last few minutes. Yeah. Right. Thank you.

Operator

Thank you. Participants who wish to ask questions, please press star and 1. Ladies and gentlemen, to ask questions, you may press star and 1. The next question is from Ruthvi, who is an individual investor.

Operator

Please go ahead.

Rutri, Analyst — Individual Investor

Hi, thank you for the opportunity. I wanted to ask, which customer segments within contract logistics are currently seeing the strongest demand, and how do you see the business mix evolving over the next 12 to 18 months?

Operator

Thank you, Rutri, if I got your name correct for the question.

Ketan Kulkarni, CEO

We are seeing very, very strong traction in e-commerce, followed by auto engineering and chemical within the customer segments that we operate. Within the solutions we provide, we are seeing very, very strong traction in warehousing and transportation. Because of our strengths in all these three, as I said earlier on the call, these will be the core area for us to focus in the next 12 to 18 months. We are seeing good macro indicators that support all these three industries, and this is those triangulations. Our plans are also that we grow much, much more stronger in terms of the market share in serving these three industry verticals that form a major part of our industry currently. Thank you.

Rutri, Analyst — Individual Investor

Got it. So, I had one more question. So, with customers increasingly focused on cost efficiency and service quality, so how do you see the competitive intensity and pricing playing across the logistics industry?

Ketan Kulkarni, CEO

Thanks, and I would understand that this is also towards CL?

Rutri, Analyst — Individual Investor

Yes, it is to contract logistics.

Ketan Kulkarni, CEO

Wonderful. So we continuously review and optimize our customer, vertical, geographic, warehousing portfolio. We have a quarterly, half-yearly exercise where we beat out suboptimal contracts. And this disciplined pruning will kind of continue. We will consolidate our gross margins to expand further. And we are building a very high return, high efficiency asset base, not holding empty square footage. So all this kind of doubtales into enabling us to build a very cost-efficient. Improving margin business. Of course, supported largely by our tech intervention, which improves productivity, efficiency, and quality. So, the strategy will continue. It's a playbook that has worked very successfully for us, and we will continue down that journey.

Rutri, Analyst — Individual Investor

Okay. Thank you for the opportunity, and all the best for the coming quarters.

Operator

Thank you very much. Thank you.

Operator

A reminder to participants that you may press star and 1 to join the question queue. The next question is from Mr. Achal Lohade from the WAMA Institutional Equities. Please go ahead.

Achal Lohade, Analyst — Nuwama Institutional Equities

Yeah, good afternoon, sir. Thank you for the opportunity. Am I audible?

Ketan Kulkarni, CEO

You are audible, though the voice is a little soft, but we will manage to catch your question. Please go ahead.

Achal Lohade, Analyst — Nuwama Institutional Equities

Yeah, thank you for the opportunity, sir. The questions I had was, A, you know, with respect to both the segments, what kind of, you know, growth plans or growth strategy we have for, let's say, the next three to five years? What kind of growth and the margin profile these individual segments would have? And the mix we would have, actually, for the company. Yeah, that's my first question.

Operator

Sure.

Deepak Parikh, CFO

Thanks, Deepakir. So, as you know, I'll give you a background that we had outplayed a five-year growth plan in the analyst meet last year, September sometime. And if you see directionally, we had given a CAGR estimate of growing at 10% over a three-year trajectory, and then on the revenue front and growing further to 12% over a five-year trajectory direction. On the margin front, if you see the gross margin outlay, we had... Given a CAGR increase of 10% over three years, going up to 15% on a five-year trajectory, and on a PBT, we have given a CAGR increase of 20% over a five-year term. So we continue to work on that direction. As you know, and quarter on quarter, we have been building up towards that margin trajectory. One year on the implementation journey is already there. And on both the views, we are on tracking our progress against that, and we are on the path towards those guidelines which we have given to you.

Achal Lohade, Analyst — Nuwama Institutional Equities

And what about the capital?

Operator

Sorry, you would like to repeat yourself. Can you please repeat?

Achal Lohade, Analyst — Nuwama Institutional Equities

What about the Capex, annual Capex, we would look at incurring?

Deepak Parikh, CFO

So, annual Capex, we have been on the express side at 15 crore annually. This year too, we would be around in the range of 15 to 20 crore. That will include all hub-related and expansion Capex. And on the consultative logistics, the CapEx is linked to the new business growth and new warehouse, which will be coming in. So we have pipeline of those that would be done via operating these models, and that would be based on the outlay, if you see from here, one year down the line would be in the range of 20 crore.

Achal Lohade, Analyst — Nuwama Institutional Equities

I got it. Great, sir. Thank you so much for answering those questions.

Operator

Thank you.

Operator

Thank you. Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Jay, who is an individual investor. Please go ahead.

Operator

Jay, am I audible? Yes, you are, Jay.

Jay, Analyst — Individual Investor

Hi, thank you so much for the opportunity. So my first question is like the EBITDA grew 24% year on year in the second quarter, significantly ahead of revenue growth. So can you just tell me how sustainable is the current margin improvement and in the coming medium term, like roughly around next two to three years, how are we seeing the EBITDA margin, like what will be the potential of it?

Deepak Parikh, CFO

Yeah, thanks. So the EBITDA margin growth, as you rightly pointed out, from 13%, Q1 has moved to 13.9, which is significant growth from a quarter-on-quarter 8.5%. From the last year, yes, it is 24%. If you see last year and this year quarter, the major event is the price correction which we had implemented over Q1 and Q2. So the delta of that is largely factored if you see on this 24%. From, let's say, Q1 to Q2, the delta of 8.5% is very encouraging. As you know, that's a straight follow-through of the price increase measures, which has been seen on the gross profit level at 6.5. To add to that, there's a cost efficiency measures that are added further to the EBITDA addition. So, yes, our... The focus would be to continue on this trend. As per the guidelines, we have to go to a level of 15% on a basis till F528. So, directionally, we'll have to move in this trend to achieve that benchmark of 15%.

Jay, Analyst — Individual Investor

Thank you so much for answering the question, sir. One last question from my end. So, when we see the H1 EBITDA growth of 31% over the growth of 7%, so in terms of operating leverage, so what is the operating leverage that can be achieved from the current cost structure, if you can answer.

Deepak Parikh, CFO

There are quite a few actually we have dealt earlier also. If you see the EBITDA growth of 30 percent is a result of significantly of the operating leverage. If I see the revenue growth and the gross margin growth post the direct cost is 12 percent. If you see that the data between 30% and 12%, 18% is the result of operating leverage, which is witnessed in this half-year lead. A lot of effort is done on that front in terms of ensuring that your service quality is balanced out, your customer satisfaction is at the same pace of the price which the customer is offering us. So, that operating leverage from here on to move further, I would... We will go by our plan of three years on this. There also, if you see on the EBITDA growth trajectory of 15%, there will be a bit of element of operating leverage. But lastly, we have covered in this first half. Second half also would be in the same train.

Jay, Analyst — Individual Investor

Right, sir. Thank you so much for answering the question, so patiently, and all the best for your next quarter as well, sir.

Deepak Parikh, CFO

Thank you.

Operator

Thank you. A reminder to participants to press star and 1 to join the question queue. The next question is from Gaurav Agarwal from 9-1 Capital. Please go ahead.