Allcargo Gati Aug-24

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Questions and Answers

What is the purpose of the letter dated August 09, 2024?

To notify stakeholders about stock price changes

To request additional funding from investors

To provide the transcript of an earnings call (correct)

To announce the company's merger with another firm

Which financial results are discussed in the letter?

Unaudited Standalone and Consolidated Financial Results for Q1 of FY 2024-25 (correct)

Quarterly projections for FY 2025

Second Quarter Financial Results for FY 2024-25

Annual Financial Results for FY 2023

What is the ISIN number provided for Allcargo Gati Limited?

INE152B01027 (correct)

INE152B01028

INE152B01029

INE452B01027

Who is the Company Secretary and Compliance Officer mentioned in the letter?

T.S. Maharani Signup and view all the answers

Which regulation does the company reference in the letter?

Securities and Exchange Board of India Regulations, 2015 Signup and view all the answers

What is the projected growth rate for India in financial year 2025 according to the IMF?

7.0% Signup and view all the answers

What initiative has been launched to improve visibility and customer service in the Express business?

Gati Associate Tracking Engine Signup and view all the answers

Which role was Mr. Ketan Kulkarni appointed to before becoming the Deputy Managing Director?

Chief Growth Officer Signup and view all the answers

What was the average monthly GST collection for financial year '23, '24?

INR 1.68 lakh crores Signup and view all the answers

What aspect of business has seen enhanced profitability according to the content?

Cost Optimization Initiatives Signup and view all the answers

Which company did Ketan Kulkarni work for before joining Allcargo Group?

Blue Dart Express Signup and view all the answers

What is the financial year's GST collection for April '24?

INR 2.1 lakh crores Signup and view all the answers

What milestone has been achieved in the infrastructure update?

Successful implementation of Phase 1 Signup and view all the answers

What was the EBITDA for the Express business in Q1 FY'25?

INR20 crores Signup and view all the answers

What percentage growth in EBITDA was reported from Q4 FY'24 to Q1 FY'25?

33% Signup and view all the answers

What was the reported EBITDA margin for Q1 FY'25?

5% Signup and view all the answers

Which of the following was a key strategy for improving gross margins?

Cost reduction initiatives Signup and view all the answers

What was the company's revenue for Q1 FY'25?

INR408 crores Signup and view all the answers

What is the aspirational customer mix between KEA accounts and SME, retail aimed at achieving?

55-45 Signup and view all the answers

What was the quarterly plan mix for KEA, SME, and retail in June 2024?

63%, 19%, 18% Signup and view all the answers

What was the change in operating costs reported?

Significant reduction Signup and view all the answers

What is expected to improve as a result of a mix between zonal and national play?

Gross margin Signup and view all the answers

How much did the recent fundraiser amount to?

INR 160-170 crores Signup and view all the answers

What is the key purpose of the newly raised funds?

Investment in infrastructure, technology, and processes Signup and view all the answers

What is the targeted direct cost reduction for FY'25?

5% Signup and view all the answers

What factors may influence future fundraising according to Pirojshaw Sarkari?

Opportunities, circumstances, and fund requirements Signup and view all the answers

What has the company achieved with the recent QIP?

Secured growth capital for investments Signup and view all the answers

What is Rushabh's concern regarding fund raising in the future?

If fundraising will be required soon again Signup and view all the answers

According to Pirojshaw Sarkari, is the company at a dead end for cost reduction initiatives?

No, there are more opportunities for cost reduction Signup and view all the answers

What percentage of wallet share is currently held with large customers?

30% Signup and view all the answers

What is the minimum annual revenue amount for customers classified as key accounts?

INR 20 lakhs Signup and view all the answers

Which company was mentioned as adding B2B express as a vertical?

Delhivery Signup and view all the answers

What is one major barrier to entry in establishing a B2B network according to the discussion?

Existing networks are hard to replicate. Signup and view all the answers

How many players did Pirojshaw Sarkari mention in the organized B2B express space?

Two Signup and view all the answers

Compared to 4-5 years ago, how does Pirojshaw Sarkari describe the competitiveness of the B2B express space?

Significantly more competitive Signup and view all the answers

What is one reason companies want to include B2B in their networks?

Cost advantages in operations Signup and view all the answers

What was suggested about the reach of B2B networks compared to B2C networks?

B2B networks cover fewer PIN codes. Signup and view all the answers

What is the primary target for Pirojshaw Sarkari in growing the business?

Increasing profitability Signup and view all the answers

What gross margin percentage target is set for the future?

30% Signup and view all the answers

What EBITDA percentage does Pirojshaw Sarkari aim to achieve?

10% Signup and view all the answers

What is the status of the Contract Logistics business in relation to the overall business?

It currently constitutes a small portion Signup and view all the answers

What is the expected timeline for completing the merger process?

By the first quarter of next year Signup and view all the answers

What percentage margin has Pirojshaw Sarkari indicated for the Contract Logistics business?

30%-35% Signup and view all the answers

Which regulatory body was involved in the approval process for the merger?

SEBI Signup and view all the answers

How do Pirojshaw Sarkari's margin targets compare with industry peers?

Lower than peers targeting 14%-15% Signup and view all the answers

Study Notes

Allcargo Gati Limited Q1 FY25 Earnings Conference Call

Date: August 05, 2024
Management: Pirojshaw Sarkari (Managing Director & CEO), Anish Mathew (CFO)
Moderator: Jainam Shah (Equirus Securities Private Limited)
Call Focus: Q1 FY25 financial results and future outlook
Company Context: Allcargo Gati Limited (formerly Gati Limited) is a logistics company
Key Financial Metrics:
- First Quarter Revenue: INR 408 crores (Q1 FY25)
- First Quarter EBITDA Margin: 5% (Q1 FY25)
- Gross Margin (Express Business): 27% (Q1 FY25)
- Q1 FY25 Express Business revenue stood at INR 358 Crores

Economic Outlook

Global: IMF projects 3.2% global growth in 2024, with a slight improvement to 3.3% in 2025.
India: IMF predicts 7% growth for FY25 and 6.5% for FY26, driven by increased private consumption, especially in rural areas.
GST Collections: GST collections in India for Q1 of FY24/25: INR 2.1, 1.73, and 1.74 lakh crores for the months of April, May, and June 2024, respectively.

Company Performance Highlights

Debt-Free: The company is debt-free, with INR 196 crores in net cash after a successful QIP of INR 169 crores.
Strong Express Business: Focus on cost optimization initiatives resulted in a 33% increase in EBITDA for Express business (INR20 crores), compared to INR15 crores in Q4 FY'4.

Discussion Points

Gross Margin Improvement (Q1 FY25): 1% improvement compared to last quarter, driven by cost reduction measures. The intent is to further improve the gross margin by 1% each subsequent quarter.
Employee-Cost Rationalization: Ongoing optimization and reduction of operating expenses.
Customer Mix: Shifting focus to SME and retail customers, aiming for a 60/40 customer mix between key accounts and SME/retail.
Earnings Outlook: Growth of at least 15% in tonnage for FY24/25.
Future Plans: Q1 FY'25 focused on cost optimization and developing the contracted logistics business. Aiming for 30% CAGR on contractual logistics segment over the next 3 years with a 10-12% EBITDA margin post Ind AS implementation

Future Outlook

Management Confidence: Positive outlook for future growth, driven by new technology, improved infrastructure, and focus on operational efficiency.
Industry Trends: Increased competition from B2C to B2B logistics.
Growth Strategy: Focus on expansion (especially towards Tier 1 and 2 cities) which will likely result in increased volumes.

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Description

Join the earnings conference call of Allcargo Gati Limited for Q1 FY25, where management will discuss the financial results, key metrics, and future outlook. Gain insights into the logistics company's performance and the broader economic environment projected by the IMF.