AVG Logistics (NSE:AVG) Q1 2026 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to AVG Logistics Limited Q1 FY 'twenty seven Earnings Conference Call hosted by current advisers. As a reminder, all participants will be in a listen only mode, Please note that this conference is being recorded. And now in the conference over to Mr. Harish Gosavi from Kirin Advisors. Thank you, and over to Mr. Gosavi. Good day. On the behalf of Kirin Advisors, I welcome you all to the Q1 FY 'twenty seven Conference Call of AVG Logistics Limited.

0:45 From the management team, we have mister Sanjay Gupta, managing director and chief executive officer, mister Rajesh Rohitia, chief financial officer. Now I hand over the call to mister Sanjay Gupta for opening the mark over to you, sir. Yeah. Thank you. Good morning. Good day, everyone. Welcome to AVG Limited q one twenty seven earning call. Thank you for joining us today and for your kind, continued trust, and confidence in AVG Logistics. Let me start by saying that we are happy with the day. Year '27 has begun. Twenty one 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 stronger, more diversified and technology driven logistic business.

1:43 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. This 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 'twenty seven 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 Algeraun Nagpur for the development of 100 dedicated vehicles.

2:30 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 demonstrated that confidence that large customers are placing in AVG to manage their logistic requirement 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 part of the... Their supply chain rather than simply provide transportation. Display directly to our strength.

3:16 We are using real time vehicle tracking and our in house technology solution to give customer 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 that same time, we are deliberately building the new business around our core logistic platform. Liquid logistic is one such opportunity. We entered this trend because we see strong demand and delivery limited or nice competition. We have already started building capabilities to intend to scale this business meaningfully over the coming years.

4:09 Customers are increasing for cleaner transportation solution. We are responding through CNG, LNG and electric vehicle. During Q1, we also entered into a joint venture with Bharatanat Group to accelerate LNG powered transportation across such as steel, metal and cement. We see this as a long term opportunity, not just a sustainability initiative. As a customer move towards cleaner supply chain, we believe AVG can play an important role in helping them make that transition. India's logistics sector is undergoing a structural transformation. Manufacturing is growing, Consumption is increasing.

4:56 E commerce continue to expand. Supply chain are becoming more organized, and the government is investing heavily in infrastructure and multimodal connectivity. Initiatives such as PM Shakti, Kiti 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 Canadian network, a diversified customer base, more than 3,000 owned and hired vehicle, over 70 branches, and more than 7.4 lakh square feet of warehousing capacity.

5:49 We are now adding technology, specified the logistics and alternative fuel capability to this platform. This give us multiple leadership for growth. As we said in our previous earning call, our objective for '27 is to deliver approximately 15% to 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.

6:37 We want very new investment to strengthen our ability to serve customer and create long term value. We have also continued to balance growth investment with shareholder return with the Board declaring a dividend of INR 1.20 per equity share for INR 26. As we look ahead, our message is simple. The opportunity in Indian logistic is large, and AVG 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 our all stakeholders.

7:35 With that, I would now request our CFO, Mr. Rajesh Ruhilaji, to take you through the financial performance of year Q1 'twenty seven 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 'twenty seven, 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 FY 'twenty seven compared with 125.02 crores in Q1 FY 'twenty six, representing a year on year growth of INR 5.97 crores.

8:35 What is particularly encouraging is the improvement in profitability. PBT increased 24.42% year on year to INR 8.71 crores, while PAT increased 29.98% to INR 6.46 crores. PBT margin improved by 98 basis points to 6.58, and FAT margin improved by 89 basis points to 4.87%. So while revenue growth was moderate, the stronger growth in profitability reflects the benefit of better operational efficiency, asset utilization and cost discipline. This is an area where we remain very focused.

9:21 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 customer. We are also working closely with our existing customers to identify additional requirements across geographies and business segments. This allow us to increase wallet share while leveraging the network and infrastructure we already have.

10:14 During q one, we raised 52.93 crores through the right issue. This provides additional resource for working capital and general corporate purpose and give us greater flexibility to support our expansion plan and customers' requirement. We are also maintaining a disciplined approach to our balance sheet. As of March 26, net debt was approximately INR 173 crores. Debt 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.

11:02 Our approach to CapEx is also disciplined. We invested INR52 crores in FY 'twenty six and targeting INR50 crores plus in CapEx in current financial year FY 'twenty seven, with additional fleet requirements fulfilling through the operational lease of the vehicle, particularly in EV segment due to heavy CapEx requirement. 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 Audi Ram contract 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 contract, giving us better visibility on utilization and return.

11:57 Cost management will remain a key priority through the year. We will continue to focus on fuel efficiency, maintenance, fleet utilization, empty run reduction, freight 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 contract has few escalation clauses, which help us manage the impact of change in fuel prices. We also continue to focus on maintaining a balanced 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 INR 1.20 per equity shares for FY 'twenty six, subject to shareholders' approval at the seventeenth Annual General Meeting.

12:53 The record date for determining eligibility for the dividend is 09/18/2026, the register of members and their transfer books will remain closed from September 19 to 09/25/2026. Both days 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 chain. The development of dedicated trade corridors, industrial corridors and multimodal logistic infrastructure should create further opportunity for organized logistic companies.

13:46 In FY 'twenty seven, 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.

14:37 We believe the combination of our core logistics business, new customer wins, specialized logistics, green transportation and technology give 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 and a. Thank you. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question, may press star and 1 on the touch tone 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.

15:37 Participants, you may press star and 1 to ask the question. First question is from the line of Sachi Shinde from Shah Consultancy. Hello? Am I audible? Yes, ma'am. Can you speak a little louder, please? Okay. So I have two 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 FY 'twenty seven? Yes.

16:24 We are very positive about the revenue growth of year 'twenty seven. 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 'twenty seven. 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 given us the revenue less revenue in last year. This full year, they are giving the revenue. So we'll support higher revenue as they will fully utilize during the '27.

17:24 Okay. So how much of the growth is organic? Was the growth coming from the new customer and the contracts? We are working towards the new business and increasing the business of our existing customer. So our target is to make 15% to 20 growth. So around 7% to 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.

18:10 We are sincerely working towards sustainable logistics, which is LNG, EV and CMG. So 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% by both the ways like existing customer and new customers. Okay, sir. And is there any seasonality in the business that investors should consider while analyzing Q1 performance? Yes. In logistic, there is some seasonality in our business. Generally, Q1 and Q3 normal operating quarters, while quarter four usually have better volume.

19:02 If you see the previous history, quarter four is always better due to higher demand for some of the industries we serve. Therefore, quarterly numbers should be booked at a manner of full financial year. We expect the higher volume in quarter three and '4 and overall performance of the year. If you see our older '26, '25 or '24, this year's quarter four and '3 are much better than quarter one or '2. Okay, sir. Thank you for answering the question. Thank you.

19:48 Participants, you may press star and one to ask the question. Next question is from the line of from Wealth Management. Please go ahead. Hello, sir. Am I audible? Yes, ma'am. Yes, ma'am. Okay. So my question is, what incremental revenue and tax can company generate from the raised capital recently? Can you repeat your question, please? Yeah. Sure, sir. What incremental revenue and PAT can company generate from the capital raise? The this is right issue. You are talking about right issue, right? Yes. Yes. Yes. The right issue will help us to strengthen our working capital position and support our growing business requirement.

20:39 However, it is difficult to do this specific revenue on or back number only against the right issue proceed. But at overall business level, we expect incremental revenue and better PAT for new contracts and higher fleet utilization and CapEx, which we have done in 'twenty five, 'twenty six and the current financial year. The new asset will new asset which we have added will contribute for a longer period in Chinese supplies 2627, which should support revenue growth and improve net margins. At the same time, depreciation will increase due to the adding addition of the new asset.

21:26 So depreciation may increase during that time, but overall, our profit and the 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 'twenty six, 'twenty seven, we are planning to do a further CapEx of around 60 crore.

22:13 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 financial institute for the leasing of the asset. Our approach for that to maintain a balance between asset ownership and leasing so that we can support business growth by keeping our financial and capital requirement under control. So this year, CapEx will be $50.60 crores, and other assets we are trying to take on lease. So this will be... Leasing model will be much better in view of our view of our balance sheet.

23:04 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 for their logistic requirement. And last week, on twenty first, AVG's 40 vehicles have been already deployed, and the remaining 60 vehicles currently under the deployment process and expected to deploy next one one month or maximum two months. And this contract will add to our revenue and provide better revenue visibility as the vehicle become fully operational.

23:57 Since these are dedicated vehicle, 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 a contract of 100 vehicles. But last week, we met the management of they are asking us to add another 100 vehicles by December 2026. So these are a reputed customer, a good paymaster, and these are helping us to build opportunity for our additional vehicle requirement in dedicated model in the future.

24:52 Next question is from the line of Cable Mehta from Mehta Securities. Yeah. Hi, sir. Good afternoon. Sir, we have started a 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 two set of tankers two set of tankers, sir, we have already purchased. And now for the purchase, we don't want to take our own books. We want to take the future few tankers or two train from leasing only.

25:39 Already two trains we have purchased and another trains we will take on lease as of now for the last future one year or so. After that, we can think again to provide two more things from 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 2526 start coming from this current year of '27. And this major part of CapEx was done in second half of twenty six, twenty five, twenty six.

26:30 Therefore, these new asset vehicles, asset will have higher contribution and higher utilization in 'twenty seven as they will be operational for the entire financial year. This setting of the in our company, we are using the word set of asset. So setting of asset and better operational efficiency, we expect more improvement in our profit margin. Because if we run vehicle more and both will then profitable to be much better. So we are working towards that, and we are having the customers on both end, like Delhi to Bombay and Bombay to Delhi, both sides we are loading the working.

27:24 So definitely the profitability will increase this year. Got it. Got it. And, sir, which business segments are currently generating a good good profit percentage? Basically, currently, we are generally see better margin in dedicated vehicles, whole chain business, deferred trucks, and warehousing and factory management. Nowadays, we are doing business of customer warehouse operations. So these are specialized segment where competition is less. And since the vehicles are dedicated to specific customer requirement, we are able to achieve better utilization and other margin compared to some of the traditional transportation activities.

28:21 We will continue to focus on the specialized business where we can earn more profit instead of our normal transport business. So we are focusing on sustainability. Their 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 the our operational cost. So we are focusing on that and hopefully this year our margin will be much better. Okay.

29:10 And will the new Liquor Logistics EV and LNG businesses have higher margins? So then the traditional transportation business? Yes. Both are higher margin because these are the specialized business and lot of government policies and group 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 freight of the liquor goods are little high. So margins are better there. And EV business is also because cost of operations is less in EV and LNG compared to the diesel. So the profit is a little better in this segment.

30:12 Okay, sir. Yes, that's all from my side, sir. Thank you. Thank you. Next question is from the line of Dinesh Kainar, Individual Investor. Please go ahead. Yes. Hello. Good afternoon, sir. Yes. Good afternoon, sir. Yeah. So I just have a couple of questions. So can you brief us about the HDRM contract that you recently got? And like how this 100 vehicle placement will benefit your business? Yeah. I already explained that somebody will... Previously asked the same question.

30:58 This... We got the order in last, I think, July month, and we have deployed the vehicle on August 21. So 100 vehicles is out... 140 vehicles are already deployed, and 60 is under fabrication. This will be placed in another one month or so. So deployment, this contract will add revenue and provide better revenue visibility as the vehicle become fully operational. Since these are dedicated vehicles to Handiram, it will help us to maintain better fleet and utilization and planning. And we will get backload also from the return journey from like Gopal, Indore, Nagpur, Jabalpur, Bijayria, we will bring the backlog also.

31:52 Overall, these 100 meters of reply, we expect a contractual good contribution to our revenue of $26.27 and also strengthen our relationship with the reputable 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 we are right now, the or So festival season demand. So they are having a huge demand of the vehicles. They are giving us another offer after deployment of this 100 vehicle, they will give another 100 vehicle contract to us, which will be are trying to deploy by December 26.

32:43 Okay. Okay, sir. And in total, how many new fleets are you adding given current year, '27? '27, we are choosing two type of model. One is the lease model, another is the purchase model. So around the CNG, around the charter vehicle, 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 is the discussion is going on. So total target is to add around 200 vehicle in this March 27. Okay. Good night. I'll be right back. Thank you.

33:32 Thank you. Next question is from the line of Manjur Parekh from VY Capital. Please go ahead. Yes. Good afternoon. Can you hear Good afternoon. Yeah. So I just wanted to know, like, the company has highlighted its in house software for a real time vehicle tracking. So, like, what exactly the software does and how it will benefit the company overall? Yeah. Now there's the... We can do lot of things by using the technology and technology tool for AVGRI. So company has developed in house software for tracking the real time running and controlling them through GPS dash cam also. So we have a good camera also in our vehicles for the safety purpose, and this software enabled us to provide our customers through access of the track locate and the vehicle provided them for logistic operation on dedicated basis.

34:45 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 kilometer running around 350 kilometer per day vehicle should run. If Bangalore is 2,100, 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 model of better utilization, setting of asset and customer can plan better way of loading, unloading that they know when the vehicle is coming.

35:39 So it helps us to plan their task in a better way. And we have now start giving access of this software to the customer also so that they can plan better way and our total... What are 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% growth, one lakh 20,000 by utilizing the latest software, etcetera. Okay. In the last three days, incremental growth in our running.

36:29 Okay. Got it. Like, can you also write down the progress of JV business with Vaidyanath Group? The Vaidyanath Group JV, all the formalities has completed, and I hope you must be aware that we have incorporated a company called Carbonite Logistics Private Limited with initial capital has been deployed and talking to the customers, long term contract providing LNG and electric vehicle. That company is especially looking after only dealing sustainable of green business only, green transportation.

37:16 That is CNG, LNG and electric. And we are arranging finance and leasing of new vehicles for the deployment with the customer. And hopefully, the operation will start from October 1 in this group, and it will be a very good opportunity. And we expect a good business in this Carbonite because lot of companies which are steel, cement, FMCG companies used to transfer their business to the electric vehicle. Okay. Got it. Thank you, Praveen. Thank you very much.

38:04 Ladies and gentlemen, we'll take that as the last question. I'll now hand the conference over to Mr. Harsh Kausavi for closing comments. Thank you everyone for joining the conference call of AVG Logistics Limited. If you have any queries, you can write to us at researchgirainadvisors dot com. Once again, thank you everyone for joining the conference. Thank you very much. On behalf of Kiran Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you. Thank you.