Afcom

Afcom Holdings Limited delivered robust financial results for Q4 FY26 and the full fiscal year. Q4 revenue reached INR191.88 crores, marking an 87.80% year-on-year growth, with PAT at INR44.66 crores, up 72.85% YoY. For the full FY26, total revenue stood at INR587.72 crores, a significant 143.86% increase YoY. The company's PAT for FY26 was INR121.90 crores, growing an impressive 230.05% YoY, with an EBITDA margin of 40.52%.

The company achieved several significant milestones in 2026, including being awarded 'Fastest Growing Airline in the Freighter Market' by Aviation Cargo Express and 'Top Airline by Air to Air Import' by Velana Awards in Maldives. AFCOM Cargo was also recognized as 'Freighter of the Year'. Furthermore, the company forayed into the Australian Pacific region through a strategic relationship with Nauru Air Corporation, expanding its international footprint.

Afcom is actively expanding its fleet, with the third aircraft already operational and the fourth and fifth expected before the next quarter. Plans are also in place to induct wide-body Boeing 777 aircraft, with one projected to be operational by the end of FY27 last quarter. The entire fleet of nine aircraft (5 existing + 4 new) is expected to be operational by mid-next year. Management noted that the VT-AFN aircraft, previously undergoing maintenance, is now being reserved for a large contractual flying opportunity in the Middle East, capable of 10-11 landings per day.

The company has fully adopted Ind AS, leading to fundamental changes in financial reporting. Leased assets are now classified as assets and liabilities, with leased rentals charged as financial cost. Maintenance reserves, previously treated in the balance sheet, are now provisioned to the P&L annually. These changes, along with forex gains or losses, are now directly charged to the P&L, impacting reported EBITDA figures.

Despite a more than 100% increase in Aviation Turbine Fuel (ATF) prices, Afcom maintains that fuel cost is a direct pass-on to customers through a fuel surcharge, protecting margins. The geopolitical conflict in West Asia created a surge in demand for charter services due to disruptions in scheduled airline operations, leading to hardened freight rates which the company successfully capitalized on. The designated Indian carrier status is expected to provide a 5-7% reduction in overall fuel costs in the current financial year.

Chennai airport, a key base for Afcom, recorded a 12.5% year-on-year growth in international cargo volume, transacting 3.26 lakh metric tons, which is 2.3 times the national average. Afcom contributed significantly to this growth. The company also announced plans to commence international operations from Noida airport, which is set to inaugurate its cargo terminal on June 17, 2026, with Afcom being the first cargo aircraft to land there. This expansion aims to leverage highly mechanized logistics systems for future cargo movement.

The company reported INR62 crores of cash in its books. An analyst raised concerns about INR33 crores in outstanding tax payments contributing to high interest costs, despite the available cash. Management acknowledged this as an area for improvement and committed to addressing it positively in the current financial year, aiming to optimize tax payments and reduce interest burden.

The strategic cooperation with Nauru Air Corporation is progressing well, though specific details remain confidential due to their sensitive nature. Additionally, Afcom is actively developing its Maintenance, Repair, and Overhaul (MRO) capabilities, which is a natural requirement for an airline. Management expects activity in this area to pick up momentum starting from the next quarter, with further communications to the investor community.