Allcargo Gati — Q4 FY25 earnings call

Call held 16 May 2025

Management summary

Allcargo Gati reported a mixed Q4 FY25, with revenue growing 9% YoY but tonnage and Q4 EBITDA declining. However, the full financial year FY25 demonstrated robust performance with revenue growing 2.1% to INR 1,510 crores and EBITDA increasing by 34%, driven by cost initiatives and improved gross margins. The company is strategically focusing on service quality, tech-led solutions, and pricing to achieve profitable growth, targeting a 6.5-7% EBITDA margin for FY26. Corporate restructuring is progressing, with an NCLT hearing scheduled for July 2nd, 2025.

Highlights

  • FY25 Revenue increased by 2.1% YoY to INR 1,510 crores.

  • FY25 EBITDA grew significantly by 34% YoY.

  • FY25 EBITDA margin improved by 110 bps compared to the previous year.

  • Q4 FY25 Revenue showed a 9% YoY growth.

  • Net cash position as of March '25 was healthy at INR 109 crores.

Concerns

  • Q4 FY25 Tonnage declined to 3 lakh metric tons from 3.12 lakh in Q4 FY24.

  • Air Express revenue degrowth occurred due to the loss of a large customer.

  • Q4 FY25 Gross Profit decreased to INR 89 crores from INR 93 crores in Q4 FY24.

  • Q4 FY25 EBITDA declined to INR 12 crores from INR 15 crores in Q4 FY24.

Key financials

3 periods

Headline

  • Net Cash (March '25)
    ₹109 Cr

Q4 FY25

  • Revenue Growth
    —
    YoY +9%
  • Gross Profit
    ₹89 Cr
    YoY -4.3%
  • EBITDA
    ₹12 Cr
    YoY -20%

FY25

  • Revenue
    ₹1,510 Cr
    YoY +2.1%
  • EBITDA Growth
    —
    YoY +34%
  • EBITDA Margin Improvement
    —
    YoY +1.1%

What they filed

Q1 FY26: revenue down 0.2%, net profit up 156.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q3 FY24Q4 FY24Q1 FY25Q2 FY25Q3 FY25Q4 FY25Q1 FY26
Revenue442 424 355 358 426 −3%392 −8%385 +9%357 −0%
EBITDA15 7 13 19 18 +20%21 +211%10 −28%13 −30%
Net profit-4 19 -6 -2 -1 +66%1 −97%15 +340%1 +156%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Debt Debt disclosed
    • Repayment Estimated post-merger debt in the range of INR 80-90 crores after existing debt repayments. ₹80 Cr
    So from our estimate, it would be in the range of INR80 crores to INR90 crores post the repayments of the existing debt, which has happened so far.
  • M&A Non-core asset (fuel station) Divestment · Closed

    Part of identifying and selling non-core assets.

    Another thing that I would like to highlight here is that in this quarter, the noncore assets, which we were identifying to say so far, we could sell one of them. ... So one of the fuel station was already closed. The agreement was concluded in this quarter, Jan to March quarter.
  • M&A Two other non-core assets Divestment · Signed

    Part of identifying and selling non-core assets.

    Process of closure would be completed in this quarter or next quarter.

    And for other two of them, we could agree sign a definitive term sheet, and the process of closure would be completed in this quarter.
  • Liquidity Cash ₹109 Cr
    Net cash as of March '25 stood at INR109 crores.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · FY26 · High confidence 6.5% to 7%
    Our focus to go to a level of 6.5% to 7% for the next financial is maintained.

    — Deepak Pareek

  • Gross Margin Profitability · FY26 · Medium confidence 27%
    On a gross margin, our realistic estimates is to move from 25.5 onwards to move to a level of 27 in this year.

    — Deepak Pareek

Market Share

  • Air Express Business Growth Market Share · next 2-3 years · Medium confidence Multiples of market growth (market 3-4%)
    We will grow faster than the market is the indication. The air market grows at about 3% to 4%. We will grow in multiples of that.

    — Ketan Kulkarni

Volume Growth

  • Total Express Market Growth Volume Growth · implied ongoing · Medium confidence 10% above total express market
    The entire business have only given an indication in terms of earlier calls that we will grow at about 10% above the total express market. 10% means that the market is growing at 10%, we will grow at 11%. If the market is growing at 15%, we'll grow at 16.5%.

    — Ketan Kulkarni

What to watch in Q1 FY26

Corporate Restructuring (NCLT Hearing Outcome)

Post July 2nd, 2025 (next quarter)
Current NCLT hearing scheduled for July 2nd, 2025.
Target Outcome of NCLT hearing and communication to stock exchanges.

Why it matters

Finalization of the restructuring scheme is crucial for the company's future structure and operations.

We are waiting for NCLT hearing, which is scheduled on 2nd July. Post the hearing, the outcome of the scheme and order will be communicated to the stock exchanges and our shareholders.

Risks & concerns

  • Competition in the Express business

    medium

    The business is competitive, requiring engagement with business partners and focus on service quality.

    Management acknowledged

  • Loss of large customers due to pricing pressure

    medium

    Air Express degrowth was caused by a large customer moving away due to pricing pressure, indicating a trade-off for yield.

    Management acknowledged

  • Volatile global economic environment

    low

    While acknowledging global volatility, management highlighted India's resilience and strong economic growth.

    Management downplayed

Q&A highlights

6 direct
Tepid top-line growth despite positive industry indicators Direct
The industry Express grows at about between 1.2% to 1.5% of the GDP. So in that sense, the growth is about between 8% to 9% that the Express industry grows at. Wherein Surface grows a tad faster than Air. So the industry is maintaining those parameters of 1.2% to 1.5% of GDP. So that's in a comfortable space for the industry.

Management clarified industry growth rates and the company's alignment, addressing concerns about lagging growth.

Asked by Anshul Agrawal

Price hikes in Q4 and industry follow-up Partial
Yes. In fact, Deepak just made the comment that the tonnage handled was much less, but there is a growth in revenue that clearly indicates that the yield has improved. ... I would not like to comment on competitors in the industry, Anshul.

Confirmed successful price hikes improved yields despite lower tonnage, but management avoided commenting on competitor actions.

Asked by Anshul Agrawal

Air Express revenue degrowth vs Surface growth Direct
Air Express we kind of degrew because one of our very large customers moved away because of the pricing pressure that we have put on him. And that is the only loss that you are seeing there.

Provided a specific reason for Air Express degrowth, attributing it to a strategic decision to let go of a large customer due to pricing pressure.

Asked by Disha

Gross margin dip despite price hikes Direct
Yes. Definitely, our gross margins have taken a dip. ... so if you see on a year-on-year basis the gross margin have gone up by 80 basis points from last year, 24.6% to 25.4%. So that has been our focus to increase the gross margin on a constant basis. I think we have been reactivating this point. Only aberration what we did in this quarter was taking true from the market and our business partners.

Clarified that while Q4 saw a dip, FY25 gross margin improved YoY, and the Q4 dip was due to specific market and business partner adjustments.

Asked by Chirag

Updates on corporate restructuring Direct
We are waiting for NCLT hearing, which is scheduled on 2nd July. Post the hearing, the outcome of the scheme and order will be communicated to the stock exchanges and our shareholders.

Provided a clear timeline for the next step in the restructuring process, which is crucial for the company's future structure.

Asked by Chirag

Focus on retail and MSME not translating to numbers Direct
But MSME, I think that was a structural flaw in our internal go-to-market strategy on MSME, which we have kind of reversed and corrected. So you will definitely see much better and improving numbers quarter-on-quarter now from the MSME segment.

Acknowledged MSME underperformance but stated a corrected strategy and expected quarter-on-quarter improvement in this high-yield segment.

Asked by Shikha Mehta

Debt post-merger Direct
So from our estimate, it would be in the range of INR80 crores to INR90 crores post the repayments of the existing debt, which has happened so far.

Provided an estimated net debt figure post-merger, which is a key financial consideration for investors.

Asked by Jay Singh

2 min read 6 chapters

Detailed narrative

Q4 FY25 Performance Overview

Allcargo Gati reported a mixed Q4 FY25. Revenue grew 9% year-on-year, but tonnage handled declined to 3 lakh metric tons from 3.12 lakh in Q4 FY24. Gross profit for the quarter was INR 89 crores, down from INR 93 crores in Q4 FY24, and EBITDA stood at INR 12 crores, a decrease from INR 15 crores in the prior year quarter. Net cash as of March 2025 was INR 109 crores.

FY25 Annual Performance and Margin Improvement

For the full financial year FY25, total revenue reached INR 1,510 crores, marking a 2.1% growth over FY24's INR 1,479 crores. The company achieved a significant 34% growth in EBITDA and an improvement of 110 basis points in its EBITDA margin compared to the previous year. Gross margin for FY25 also improved by 80 basis points, reflecting successful cost initiatives.

Strategic Focus on Service Quality and Technology

Management emphasized a strong focus on improving service quality and leveraging technology to drive profitable growth. Initiatives include modernizing financial and operations ERP, enhancing IT infrastructure, and implementing new applications like HubEye and GateEye for 24/7 real-time visibility on trucks. The company aims to differentiate through superior service quality, which is seen as a critical factor in the logistics industry.

Air Express and MSME Segment Strategy

The Air Express business experienced degrowth in Q4 FY25 due to the loss of a large customer, a strategic decision based on pricing pressure. However, Air Express remains a focus area for improving blended yields, with plans to grow at multiples of the market's 3-4% growth rate. The MSME segment, a high-yield business, saw a setback in FY25 but management has corrected internal go-to-market strategies and expects improved performance quarter-on-quarter.

Corporate Restructuring and Non-Core Asset Divestment

The corporate restructuring process is advancing, with all necessary approvals from exchanges and shareholders obtained. An NCLT hearing is scheduled for July 2nd, 2025, after which the scheme's outcome will be communicated. Additionally, the company has sold one non-core asset and signed definitive term sheets for the divestment of two others, with closure expected by the current or next quarter.

Financial Outlook and Margin Targets

Allcargo Gati is targeting an EBITDA margin of 6.5% to 7% for the next financial year (FY26), building on the 110 basis points improvement seen in FY25. The gross margin is also expected to improve from 25.5% to 27% in FY26. Post-merger, the estimated net debt is projected to be in the range of INR 80-90 crores, after accounting for existing debt repayments.

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