Allcargo Logistics (NSE:ALLCARGO) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Allcargo Logistics Limited Q2 and H1 FY 'twenty seven 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. I now hand the conference over to Mr. Shahrukh Garg from Stella IR Advisors. Thank you, and over to you, sir. Thank you. Good afternoon, everyone, and thank you for joining us today. We have with us the senior management team of Allcargo Logistics Limited, Mr. Ketan Kulkarni, Managing Director and Chief Executive Officer Mr. Deepak Parekh, Chief Financial Officer and Mr.

0:55 Sanjay Punjabi from Investor Relations. The management will be sharing operating and financial highlights for the quarter ended 09/30/2026, 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.

1:44 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 Allcargo Logistics. That sustainable growth rests on disciplined execution, customer centricity, and a clear principle of deliver value and command value. That framework has guided the organization to a second consecutive quarter of profitability.

2:31 Looking at the quarter gone by, Q2 FY twenty twenty seven was essentially a tail 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.

3:23 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. Acted by this improved service equation, we have witnessed healthier realization 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.

4:10 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 light 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.

5:04 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, H1 FY twenty seven 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.

6:01 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 FY 2027. This signifies stable underlying industrial and retail demand underpinning domestic surface movements. For Q2 FY 'twenty seven, the macro backdrop was represented by the sluggish industrial activity during the monsoon months of July and August, followed as a recently mentioned an uptick in September. This is represented by high frequency indicators like e vapor generation, which cost 141,000,000 run rate and GST collections, which maintained a 14.7 Y o Y in the month of September.

6:48 Coming to Allcargo Logistics, we have started FY twenty seven on a strong footing and have continued the performance momentum in Q2 FY twenty twenty seven too 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 results. 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, mister Vijayanahara.

7:35 Starting 01/01/2027, will take over as the company's managing director and chief executive officer. I will be moving to a new role at the ALLCARGO Group. Vijay brings experience across financial services, pharmaceuticals, FMCG, ecommerce, 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 Allcargo where he was CEO of Ozone Pharmaceuticals.

8:24 Let us all welcome, Vijay. Thank you. With that, I hand the call over to our CFO, Mr. Deepak Bhai. Over to you, Deepak. Thank you, Ketan. I am pleased to present the financial results for the second quarter and half year ended 09/30/2026. 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.

9:16 For Q2 FY 'twenty seven, our revenue from operations stood at INR555 crores, registering a growth of 3.4% Y o Y compared to INR $5.37 crore in Q2 FY 'twenty six and an increase of 1.6 quarter on quarter from INR $5.46 crore to in Q1 FY 'twenty seven. For the first half of the year, H1 FY 'twenty seven, revenue reached INR $110.01 crore, up 7.1% year on year from INR $10.28 crore recorded in H1 FY 'twenty six. A defining highlight of our operating performance this quarter has been the rigorous control across all our cost lines, which remained either flat or trended downwards despite the scale of business expand.

10:16 On the back of this direct cost discipline, gross profit for Q2 FY 'twenty seven expanded by 13% Y on Y and 6.7% quarter on quarter to INR174 crores. Our gross margin improved significantly to 31.4%, representing a substantial two seventy basis points expansion year on year vis a vis 28.7% in Q2 FY twenty six and one hundred and fifty basis point expansion quarter on quarter vis a vis 29.9% in Q1 FY 'twenty seven. EBITDA for Q2 FY 'twenty seven grew by 24.2% Y o Y and 8.5% quarter on quarter to INR 77 crore compared to INR 62 crore in Q2 FY 'twenty six and INR 71 crore in Q1 FY 'twenty seven.

11:21 EBITDA margin expanded by two forty basis points year on year to 13.9% vis a vis 11.5 in Q2 FY 'twenty six and up 90 basis points sequentially from 13% in Q1 FY 'twenty seven. PBT for Q2 FY 'twenty seven stood at INR 24 crore, more than doubling with the 166.7% Y o Y growth compared to INR 9 crore in Q2 FY 'twenty six and a surging 26.3% sequentially from rupees 19 crore in Q1 FY 'twenty seven.

12:12 And thank you. With that, I complete the overview on the financial summary. And now I would like to open the floor to the operator for your questions. Thank you. Thank you very much. We will now begin the question and answer session. 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. The first question is from the line of Prateli Khara from Param Capital.

13:16 I just wanted to understand on the volume, the growth that we see in Express as well as in consolidated the warehouse space under management has seen a reduction of 5.5% year on year. Because the other players in the industry have grown in terms of volume Yeah. Thank you for your question. Though the line was a little weak, I under... This is here.

14:01 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% Y o Y, 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.

14:57 Instead, we focused extensively on improving our net service levels, which is operating quality, which scaled to about 110.2 indexed on Q2 FY twenty seven. So 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.

15:44 Does that answer you, ma'am? Thank you. Yeah. That is helpful. Hi. Am I audible? I'm okay. You are audible, but the voice is a little garbled. But please go ahead. Yeah. I just wanted to understand on 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 Consolators. 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.

16:34 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 sales side of the business, we are embedded with very, very large customers. So there are two pronged approach 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 relationships with them over the years. So both those line items into the new business funnel on the CL side are also strongly fractioning.

17:30 You know, we are very strong in chemical logistics, wherein we are the market leaders. Two other verticals, ecommerce and automotive are also a strength area for us. We differentiate very, very strongly when we enter with solutions. And all these interventions are allowing us to grow on both sides of the NBD and the NBTE on CL. Thank you. The next question is from Saurabh Rathod from Knightstone Capital.

18:23 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, the index margin you are guiding? Yeah. So on a... In this margin, the gross profit for q two was 30.6%, which is up nearly one and a half percent from twenty nine point one percent 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 y to d y to d basis, consultative logistics, are at 36.5%.

19:10 And on express side, we are 27 gross margin. No. I'm talking about EBITDA. EBITDA margin. So EBITDA margin, 13.5 on h... On a half yearly basis. If we were split it down, then we are on consultative logistics, 29.7, and on express, we added 6.5%. So, like, 29.7% is post Indus for consultative. So what is, like, pre Indus? You can assume? So pre... Yeah. Pre in days, yeah, if we look at consultative logistics, it will be 8.8%.

19:59 Okay. So earlier, it was, like, near breakeven. Right? But it is now 8.8. Yes. Yes. Okay. We discussed that then. Yeah. Right. Right. Thank you. Ladies and gentlemen, to ask questions, you may press star and 1. The next question is from who's an individual investor. Please go ahead.

20:49 Hi. Thank you for the opportunity. So 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 twelve to eighteen months? Thank you, Rutri, if I got your name correct Yes. For the question. We are seeing very, very strong traction in ecommerce 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.

21:41 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 twelve to eighteen months. We're 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 revenue stream currently. Thank you. Got it. So one... I have one more question.

22:26 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. Thanks. And I would understand that this is also towards CN? Yes. It is to contact logistics. 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.

23:15 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 dovetails 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.

24:01 Okay. Thank you for the opportunity, all the best for the coming quarters. Thank you very much. Thank you. The next question is from Mr. Achal Lohade from the Wama Institutional Equities. Am I audible? You are audible, though the voice is a little soft, but we will manage to catch your question. Please go ahead. Yes. Thank you for the opportunity, sir. The questions I had was, a, with respect to both the segments, what kind of growth plans or growth strategy we have for, let's say, over the next three to five years?

24:55 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. Sure. Yeah. Thanks. Deepak here. So as you know, I'll give you a background that we had outlaid a five year growth plan in the analyst meet last 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.

25:41 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 the PBT, we have given a CAGR increase of 20% for a five year term. So we continue to work on that direction. As you know, 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 or progress against that, and we are on the path towards those guidelines, which we have given to you.

26:30 And what about the capital outlay for CapEx? Sorry, you will have to repeat yourself. Can you please repeat? And what about the CapEx CapEx, annual CapEx we would look look at, Karim? So annual CapEx, we have been on the Express side at INR 15 crore annually. This year too, we would be around in the range of INR 15 crores to INR 20 crores that will improve all hub related and expansion CapEx. And on the Consultative Logistics, we 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 model, and that would be based on the outlay if we see from here, one year down the line would be in the range of INR 20 crores.

27:38 Got it. Great, sir. Thank you so much for answering those questions. Thank you. Thank you. Thank you. The next question is from Jay, who's an individual investor. Please go ahead. Yes. Am I audible? Yes. You are, Jay. 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?

28:34 Yeah. Thanks. So the EBITDA margin growth, as you rightly pointed out, from 13%, q one has moved to 13.9, percent, 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 q one and q two. So the delta of that is largely factored if you see on this 24% from, let's say, q one to q two, the delta of 8.5% is very encouraging.

29:19 As you know, that's a straight follow through of the price price increase measures, which has been seen on the gross profit level at six and a half. To add to that is a cost efficiency measures that are added further to the EBITDA additions. So, yes, our focus would be to continue on this trend. As per the guidelines, we have to go to a level of 15% on a on a on a c... On a basis till FY twenty eight. So directionally, we'll have to move in this trend to achieve that benchmark of 15%. Thank you so much for answering the question, sir. One last question from my end. So when we see the h one 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 have my answer?

30:24 There are quite a few, actually, we have dealt earlier also. If you see the EBITDA growth of 30% is a result of significantly of the operating leverage. If I see the revenue growth and the gross gross margin growth post the direct cost is 12%. From... If you see that the delta between 303012%, 18% is as a result of operating leverage, which has which has witnessed in this half yearly. Lot of hard... 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 has been...

31:11 Which has the customer is offering us. So that operating leverage from here on to move further, I would... We we go by our plan of three years on this. There also, if you see on the EBITDA growth trajectory of 15%, there will be bit of element of operating leverage. But largely, we are... We have covered in this in this first half. Second half also would be in the same pattern. Right, sir. Thank you so much for answering the questions so patiently, and all the best for your next quarter results, sir. Thank you. Thank you. The next question is from Gaurav Agarwal from nine point one Capital. Please go ahead.

32:12 Congratulations on good set of numbers. Sir, I think a couple of quarters back, we gave a guidance in one of our PPTs, wherein we said that from FY 'twenty five, we intend to grow our revenue at the rate of 10% on a three year CAGR basis. And we also mentioned in that, I guess, our EBITDA expectation in that particular area, which is FY '8, should be 13% plus. So this is post enterprise, right? So do we still hold on to that guidance? Or do you want to change that now? Yeah. So if I... If you reiterate the numbers, we have already achieved those guideline numbers, which we have set out in in the plan for '28.

33:03 If you see our EBITDA margin is 13 and a half, 13.4%. Right. And what we had... We are now aspiring is at a 15% EBITDA margin. And Right. Directionally, we are working towards achieving that in that c... That will complete the CAGR trend what we have predicted in for us for FY '28. Right. Right. Sir, what would be the number? You know, because we have quite a limited depreciation number. Yeah. So what should be the number which we should assume that's it for FY twenty eight? FY twenty eight for operating EBITDA?

33:52 Yes. Yes. On a three in dash basis, like, after rent expenses. Okay. Pre index, we can assume 5%. Got it. Got it. And the... It's... Let's see. Okay. Sir, additionally, in terms of revenue growth, there any upside to what we guided, let's say, company's potash guidance was 1012%. Is there a reason to believe that you can grow at a much faster rate given you have had at least last two, three quarters after you gave that initial guidance? So if anything has materially changed in your expectations or based on the last two, three quarters performance and environment, Do you think we can surpass our guidance on the revenue growth front?

34:47 Yes. We can see the current revenue growth for the half year is about seven point plus a few percentage points. Our guidance remains because we are expecting a strong festive Q3 and also a strong end to the year. So the guidance from the investor presentation made remains as of today on the revenue that we had given. We're confident of achieving that. At the same time, as Deepak mentioned, the margin improvement program will also continue. Got it. Got it. And I assume that AGN will do its separate call, right, Global Limited?

35:34 Yes. Allcargo Global. Global. Separate call. Got it. We'll have a separate call. Will be a separate call. Sure, sir. Great, sir. Great. Thank you so much, and thank you for answering my questions. You for your Thank you. Good question. Thank you. Well, as there are no further questions, I would now like to hand the conference over to Mr. Ketan Kulkarni for closing comments.

36:29 Thank you. Thank you, everybody, for joining the conference call. It was a great pleasure for us to answer the very strong and important questions that you all put forth through, and I do hope we have answered to your satisfaction. All the best and wishing you and your families a very, very happy Diwali and a festive season. Thank you, and wish you a very happy Diwali. Thank you very much. On behalf of Allcargo Logistics, that concludes this conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.