AVG Logistics Limited (AVG) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to AVG Logistics Limited Q1 FY27 Earnings Conference Call hosted by Kiran Advisors. As a reminder, all participant minds 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 this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. And now in the conference, over to Mr. Harish Kwasawi from Kiran Advisors. Thank you, and over to Mr. Kwasawi.

Good day. On the behalf of Crane Advisor, I welcome you all to the Q1FR27 conference call of AVG Logistics Ltd. From the management team, we have Mr. Sanjay Gupta, managing director and chief executive officer, Mr. Rajesh Rohitjia, chief financial officer. Now, I hand over the call to Mr. Sanjay Gupta for opening remarks. Over to you, sir.

Yeah, thank you. Good morning. Good day, everyone. Thank you for joining us today and for your kind, continued trust and confidence in ABG Logistics. Let me start by saying that we are happy with the day 27 has begun. Q1 has given us a great start. Not just in terms of business growth, but also in terms of progress, we are making a building. A stronger, more diversified, and technology-driven logistic business. Revenue grew 6% on year in Q1, while pet grew by nearly 30% for us. Important point is that profitability has grown much faster than revenue. These tell us that the work we have been doing on execution, asset, utilization, and operational efficiency is beginning to show results. But I would like to look beyond the numbers today. Our focus for year 27 is very clear. Grow the business by sweating of the assets, deepen customer relationship, and build new growth engines. During the quarter, we have secured a long-term contract from Aldirang Nagpur for the development of 100 dedicated vehicles. This is an important addition to our FMCG business and strengthen our presence across Western, Southern, and Key Eastern market, including Odisha, Bihar, and Jharkhand. Most importantly, it demonstrates that confidence that large customers are placing in ABG to manage their logistic requirements at scale. We also see significant opportunity to grow our business with existing customers. Today, customers are increasingly looking for a logistic partner who can manage multiple parts of their supply chain rather than simply provide transportation. Display directly to our strength. We are using real-time vehicle tracking and our in-house technology solution to give customers better visibility, better control, and more flexibility. For us, technology is not just about adding another feature to our service. It is about improving the way we operate and making our business more scalable. At the same time, we are deliberately building the new business around our core logistics platform. Liquid Logistics is one such opportunity. We entered the strength because we see strong demand and relatively limited organized competition. We have already started building capabilities to intend to scale this business meaningfully over the coming years. Customers are increasing for cleaner transportation solutions. We are responding through CNG, LNG, and electric vehicles. During Q1, we also entered into a joint venture with Radhanath Group to assimilate energy-powered transportation across sectors such as steel, metal, and cement. We see this as a long-term opportunity, not just a sustainability initiative. As a customer moved towards cleaner supply chain, we believe AVG can play an important role in helping them make that transition. India's logistic sector is undergoing a structural transformation, manufacturing is growing, consumption is increasing, e-commerce continues to expand, supply chains are becoming more organized, and the government is investing heavily in infrastructure and multi-model connectivity. Initiative such as PM Shakti, Gati Shakti. And national logistic policy, along with the development for freight corridor and logistic infrastructure, are creating a much larger opportunity for organized logistic companies. Recently, government has also started the DFC Dedicated Freight Corridor, where the operation has already started by us through Dedicated Freight Corridor organization. We have built a pan-Indian network. A diversified customer base, more than 3,000 owned and hired vehicles, over 70 branches and more than 7.4 lakhs square feet of warehousing capacity. We are now adding technology, specified logistics and alternative fuel capability to this platform. This gives us multiple leadership for growth. As we said in our previous earning call, our objective for 27 is to deliver approximately 15-20% growth. We remain confident in this objective, supported by our existing customer base, new customer pipeline, and expansion into a new business segment. We also remain conscious that growth has to be Responsible growth, our focus is on deploying capital against real customer opportunities, improving the productivity of our existing assets, and maintaining operational discipline. We want very new investment to strengthen our ability to serve customer ads, create long-term value. We have also continued... To balance growth investment with shareholder return, with the board declining its dividend of Rs. 1.20 per equity share for 26. As we look ahead, our message is simple. The opportunity in Indian logistics is large, and ABG is building the capability to capture a larger share of it. We have a healthy pipeline, new customer opportunity, new business segment, and a clear strategy for the years ahead. We remain optimistic about the road ahead and confident in our ability to deliver constant growth and create long-term value for all stakeholders. With that, I would now request our CFO, Mr. Rajesh Rohilaji, to take you through the financial performance of year Q1-27 for the detail of our financial and operational performance. Thank you.

Thank you, sir, and good afternoon to everyone. I will take you through the key financial performance for Q1-FY-27. Followed by our operating performance, cost management, balance sheet, and capital allocation. Let me start with the headline numbers. We reported revenue from operations of 132.48 crores in Q1 FY27 compared with 125.02 crores in Q1 FY26 representing a year-on-year growth of 5.97. What is particularly increasing is an improvement in profitability. PPT increased 24.42% year-on-year to 8.71 crores, while SPAT increased 29.98% to 6.46 crores. PBT margin improved by 98 basis point to 6.58% and FAT margin improved by 89 basis point to 4.87%. So while revenue growth was moderate, the strongest growth in profitability reflects the benefit of better operational efficiency, asset utilization, and post-discipline. This is an area where we remain very focused. We are continuously working on fleet productivity, reducing empty run, improving freight planning, optimizing turnaround time, improving warehouse productivity. In a logistic business, these may look like small operational improvements, but together they can have a meaningful impact on profitability. Customer quality and customer depth are also important to us. We are looking at growth only through new customers. We are not only looking at growth through new customers, we are also working closely with our existing customers to identify additional requirements across geographies and business segments. This allows us to increase wallet share while leveraging the network and infrastructure we already have. During Q1, we raised 52.93 crores through the right issue. This provides additional resource for working capital and general corporate purpose and gives us greater flexibility to support our expansion plan and customers' requirements. We are also maintaining a disciplined approach to our balance sheet. As of March 26, net debt was approximately 173 crores. That equity stood at 0.67 times and the current ratio was approximately 1.97 times. With the right issue, we have further strengthened our financial position as we go into the next phase of our growth. Our approach to CapEx is also disciplined. We invested 62 crores in FY26 and targeting 50 crore plus in CapEx in current financial year FY27, with additional fleet requirements fulfilling through the operational lease of the vehicle, particularly in EV segment due to heavy CapEx requirements. This is primarily linked to the business opportunity, including additional vehicles for new and long-term customer contacts, specialized logistics, and technology-related requirements. The Aldi Ram contact is a good example. The deployment of 100 dedicated vehicles is directly linked to a customer requirement and a long-term business relationship. Similarly, investment in EV, CNG, LNG vehicles are being evaluated alongside longer-term customer contact, giving us better visibility on utilization and return. Co-host management will remain a key priority through the year. We will continue to focus on fuel efficiency, maintenance, fleet utilization, empty run reduction. Trade planning, warehouse productivity. At the same time, we will remain disciplined on working capital and capital expenditure. Fuel is an important cost for our industry. However, a significant portion of our customer contact has few escalation clauses, which help us manage the impact of change in fuel prices. We also continue to focus on maintaining a balance approach to capital allocation. On one side, we are investing in the next phase of growth. On the other, we remain committed to shareholder return. The board has declared a dividend of 1.20 per equity shares for FY26 subject to shareholder approval at the 17th annual general meeting. The record date for determining eligibility for the dividend is September 18th. 2026, the register of members and their transfer books will remain closed from September 19 to September 2026, both states inclusive in connection with the ATM. We believe this reflects a balanced approach investing in the business while also returning value to the shareholders. Looking ahead, we remain confident about the opportunity in front of us. The logistics industry is benefiting from the manufacturing, growth, infrastructure, spending, increasing consumption, e-commerce, and formalization of supply chains. The development of dedicated trade corridors, industrial corridors, and multimodal logistics infrastructure should create further opportunity for organized logistics companies. In FY27, management has set an objective. Of approximately 15 to 20% revenue growth supported by our existing customer, new customer pipeline, and expansion into new business segments.

Our job now is to execute this plan with discipline.

We want to grow, but we want to grow efficiently. We want to add capacity, but we want that capacity to be backed by business. And we want to expand new segments while maintaining the financial discipline that has supported our progress so far. Q1 has given us a positive start. We will remain focused on improving operating efficiency, strengthening cash generation, deploying capital carefully, and building a stronger business quarter after quarter. We believe the combination of our core logistics business, new customers, wins. Specialized logistics, green transportation, and technology gives AVG multiple avenues for sustainable growth. Thank you for your continued trust and support. With that, I hand it back to the moderator for the Q&A. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on the trust on 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 a question. Ladies and gentlemen, we will wait for a

moment while the question queue assembles. I'm going to ask the question. First question is from Line of Taxi Shinde from Shah Consultancy. Please go ahead.

Yes, ma'am. Can you speak a little louder, please?

Okay. So, I have a few questions with me. The first one is, the company has reported revenue growth of around 6% year-on-year in Q1.

So, what is the outlook for the revenue growth in FY27?

Yes, good afternoon. We are very positive about the revenue growth. Of year 27. On the basis of our current business, new contracts signed by us, additional fleet capacity, working towards sustainability, we are expecting revenue growth of around 15 to 20% for 27. And this growth will come from our existing customers and new customers and new contracts. We have, I think you are aware that we have added new fleet and assets in the last year, which will give us the revenue, less revenue in last year. This full year, they are giving the revenue. So, we will support higher revenue as they will fully utilize during the 27.

Okay. So, how much of the growth is organic versus the growth coming from the new customer and the contacts?

We are working towards the new business and increasing the business of our existing customers. So, our target is to make 15-20% growth. So, around 7-8% growth will come with the new business and around 8-10% growth will come through existing customers. So, new contract, expansion of our business, the actual contribution may depend on ending of the new contract and development of the vehicle. We are sincerely working towards sustainable logistics, which is LNG, EV, and CMG. So, a lot of vehicles has been added, and further, we are having a plan to add new vehicles. So, overall, growth will come 15 to 20 percent.

By both ways, like existing customers and new customers.

Okay, sir.

And is there any seasonality in the business that investors should consider while analyzing Q1 performance?

Yes. In logistics, there is some seasonality in our business. Generally, Q1 and... Q3, normal operating quarters, while 4, quarter 4 usually have better volume. If you see the previous history, quarter 4 is always better due to higher demand for some of the industries we serve. Therefore, quarterly numbers should be looked at a manner of full financial year. We expect the higher volume in quarter 3 and 4 and overall performance of the year. If you see all our old 26, 25 or 24, these years quarter 4 and 3 are much better than quarter 1 or 2.

Okay, thank you for answering the question.

Thank you. Next question is from the line of Aditi Jain from Wealth Management. Please go ahead.

Hello, sir. Am I audible?

Yes, ma'am. Yes, ma'am.

So my question is, what incremental revenue and fact can company generate from the raised capital recently?

Can you repeat your question, please?

Yeah, sure, sir. What incremental revenue and fact can company generate from the capital raise?

The right issue will help us to strengthen our working capital position and support our growing business requirement. However, it is difficult to give us specific revenue on your pet number only against the right issue proceed. But at overall business level, we expect incremental revenue and better pet. For new contract and higher fleet utilization and the capex which we have done in 2025-2026 and the current financial year. The new asset which we have added will contribute for a longer period. We should support revenue growth and improve back margins. At the same time, depreciation will increase due to the addition of the new asset. So, depreciation may increase during that time, but overall, a profit and incremental growth will come in the company.

Okay, sir. Got it. What amount of capital expenditure we are planning to do this financial year?

Last year, ma'am, we did capex of around 62 crore. And benefit of these assets will come and will be seen in the current financial year as well as in the coming years. And for 26-27, we are planning to do a further capex of around 60 crore. At the same time, we are also evaluating the leasing of asset to our financial balance sheet. So that will, our financials will be balanced. Instead of buying, we are talking to the companies and the financial institute for the leasing of the asset. Our approach to maintain a balance between asset ownership and leasing so that we can support business growth while keeping our financial and capital requirements under control. So, this year, CapEx will be 50-50 crore, and other assets, we are trying to take on lease. So, this will be, leasing model will be much better in view of our balance sheet.

Okay, and can you please brief us about the Haldiram contract? How will the placement of 100 vehicles benefit the company business?

We have received the contract initially of 100 vehicles, that is from Hyderabad, Nagpur, for their realistic requirement, and last week, on 21st August, 40 vehicles have been already deployed, and the remaining 60 vehicles currently enter the deployment process, and they expect to deploy in next one month or maximum two months. And this contract will add to our revenue and provide better revenue visibility as the vehicles become fully operational. Since these are dedicated vehicles, it will also help us to maintain better fleet utilization and planning. These vehicles are going loading from Nagpur and going to south, east, and some part of the west also. So as of now, We have signed the contract of 100 vehicles, but last week we met the management of Hanjirama Nakhur. They are asking us to add another 100 vehicle by December 26. These are repeated customers, good pay masters, and these are helping us to build opportunity for our additional vehicle requirement in dedicated model in the future.

Thank you. Thank you.

Next question is from the line of Cable Meta from Meta Securities. Please, go ahead.

Yeah. Hi, sir. Good afternoon. Sir, we have started a liquid logistics train. So, are we planning to deploy some new liquid logistics train or are we purchasing the tanks or taking it on lease?

Two set of tankers we have already purchased and now for the purchase we don't want to take our books, we want to take the future few tankers or two trains from leasing offices only. Already, two trains we have purchased and other trains we will take on lease as of now for the future one year or so. After that, we can think again to buy two more trains in our books.

Okay, and should investors expect some margins to improve further as we can see some increase in capex in fleet?

Yes, we expect our margins to improve as the benefit of the capex done during 25-26 start coming from this current year of 27. A major part of CapEx was done in the second half of 26. Twenty-five, twenty-six. Therefore, these new asset vehicles, assets will have a higher contribution and higher utilization in twenty-seven, as they will be operational for the entire financial year. With sweating of the, we, in our company, we are using the word, sweat of asset. So, sweating of asset, Good morning, everyone. And better operational efficiency. We expect more improvement in our profit margin. Because if we run our vehicle more and both were loaded, then profitability will be much better. So we are working toward that and we are having the customer from both ends, like Delhi to Bombay and Bombay to Delhi. Both sides we are loading the vehicle. So, definitely the profitability will increase this year.

Got it, got it. And, sir, which business segments are currently generating the good profit percentage?

Basically, currently we are generally see better margin in dedicated vehicles, cold chain business, refer trucks. And warehousing and factory management. Nowadays, we are doing business of customer warehouse operations. So these are specialized segments where competition is less. And since the vehicles are dedicated to specific customer requirements, we are able to achieve better utilization and other margin compared to some of the traditional transportation activities. We will continue to focus on specialized business, where we can earn more profit instead of our normal transport business. So we are focusing on sustainability, where LNG operational cost is less compared to the digital vehicle, electric. Obviously, the investment is high, but operational cost is very less compared to that. So business margin will increase only if we control our operational cost. So we are focusing on that and hopefully this year our margin will be much better.

Okay. And will the new liquor logistics, TV and LNG businesses have higher margins than the traditional transportation business?

Yes, both are higher margin because these are the specialized business and a lot of government policies and route management is required. So, customers are giving better rate in terms of kilometer or in terms of destination wise. So, compared to normal goods, the rate of the liquor goods are little high. So, margins are better there. Got it. And EV business is also because the cost of operations is less in EV and LNG compared to the diesel.

So the profit is a little better in this segment. Okay, sir. Yeah, that's all from my side, sir. Thank you.

Thank you. Next question is from the line of Dinesh Khandar. Individual investor, please go ahead.

Yeah, hello. Good afternoon, sir.

Yeah, good afternoon, sir. Yeah, so I just have a couple of questions. So, can you make a brief about the Hadiram contract that you recently got? And how this 100 vehicle placement will benefit your business?

Yeah, I have already explained that somebody was previously asked the same question. We got the order in last, I think, July month, and we have deployed the vehicle on 21st of August. So, 140 vehicles are already deployed, and 60 is under fabrication, which will be placed in another one month or so. So... This contract will add revenue and provide better revenue visibility as the vehicles become fully operational. Since these are dedicated vehicles to Haldiram, it will help us to maintain better fleet and utilization and planning. And we will get the backlog also from the return journey from like... Gopal, Indore, Nagpur, Jagalpur, this area, we will bring the back load also. Overall, these 100 vehicles are applied. We expect a contract with good contribution to revenue of 26, 27, and also strengthen our relationship with the repetitive customer, and which will help us build opportunities for additional vehicle development in dedicated model in future. So, these are FMCG and like in the festival season, they are having a huge demand of the vehicles. They are giving us another offer. After deployment of these 100 vehicles, they will give another 100 vehicle contract to us, which we are trying to deploy by December 26. Okay, okay, sir.

And in total, how many new clicks are you adding in the current year, 6x27?

Twenty-seven, we are choosing two types of models. One is the lease model, another is the purchase model. So, around CNG, around 50, 60 vehicles, LNG, we got the contract of 100 vehicles, and electric. As of now, we got the order of 30 vehicles, but our 70 vehicle order discussion is going on. So, total target is to add around 200 vehicles in this March 27.

Thank you, everyone.

Thank you.

Thank you. Next question is from the line of my ear, Parekh from VY Capital. Please go ahead.

Yeah. Good afternoon. Can you hear me?

Good afternoon.

So, I just wanted to know, like, the company has highlighted its

in-house software for real-time vehicle tracking. So, like, what exactly this software does and how it will benefit the company overall? Yeah, nowadays, we can do a lot of things by using the technology and technology cooper AIBRI. So, the company has developed in-house software for tracking the real-time. We are running and confounding them through GPS, dash cam also. So we have put camera also in our vehicles for the safety purpose. And this software enables us to provide our customer through access of track locate. And the vehicle provided them for logistic operation on dedicated basis. For example, if we send one vehicle from Delhi to Bangalore, so they want to understand where is our vehicle, when it will reach. So, this GPS and technology will inform them by when this vehicle is reaching to destination. So, we put some... Kilometre running around 350 km per day vehicle should run. If Bangalore is 2100, so it should reach in six days or five days. So our technology platform or our dashboard will inform to the customer that vehicle will reach a destination on so and so date. So, this is a matter of better utilization, setting of a set, and customer can plan better way of loading and loading that they know when the vehicle is coming. So, it helps us to plan the task in a better way, and we have now started giving access of this software to the customer also, so that they can plan better way, And our total overall running has increased now. So, for example, if our vehicles are running one lakh kilometer in a month, so now we are targeting to make it minimum 15 to 20 percent growth, one lakh, 20,000, by utilizing the latest software, etc. Okay. In August, we did this incremental growth in our running.

Okay, got it. Can you also write on the progress of the JV business with Bidanath Group? The Vaitanathurut JV, all the formalities has completed, and I hope you must be aware that we have incorporated a company called Carbon Light Logistics Private Limited. The initial capital has been deployed, and I'm talking to the customers, long-term contract providing LNG and electric vehicles. That company is especially looking after only, dealing sustainable, not only green business only, green transportation. That is CNG, LNG, and electric. Thank you. We are arranging finance and leasing of new vehicles for the deployment with the customer, and... Hopefully, the operation will start from 1st of October in this group, and it will be a very good opportunity, and we expect a good business in this carbon light, because a lot of companies, which are steel, cement, FMCG companies, wish to transfer their business to the electric vehicle.

Okay. Okay. Got it. Thank you for answering.

Thank you very much.

Ladies and gentlemen, we'll take that as a last question. Now I'll hand the conference over to Mr. Harsh Gosavi for closing comments.

Thank you, everyone, for joining the conference call of EVG Logistics, Limited. If you have any queries, you can write to us at researchadventedkirinadvisors.com. Once again, thank you, everyone, for joining the conference.

Thank you very much. On behalf of Kirin Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.