Gateway Distriparks Limited

Gateway Distriparks is actively expanding its operational capacity. The company plans to increase its rake count from 34 to 37 by May/June 2026, by purchasing 3 new high-capacity wagons and swapping 3 old ones. The upcoming Indore project is targeted to be operational within 2 years, adding a significant 120,000 TEUs per year capacity to the terminal. Furthermore, Snowman Logistics aims to increase its total capacity from 155,000 to 200,000 in the next 2-3 years, indicating a clear growth trajectory for the logistics arm.

Snowman Logistics' warehousing segment experienced a notable decline in EBIT margins, falling from historical levels of 15-20% to less than 3% in the current quarter. Management attributed this to a changing business mix, shifting from predominantly frozen storage to more chilled and dry warehousing, which typically yields lower margins. The introduction of the 'Park & Pay' model, a back-to-back arrangement with low margins, also contributed to this compression. Despite the margin pressure, the warehousing numbers showed healthy growth of 19% year-on-year and 5% quarter-on-quarter, and management is actively pursuing price hikes in contract renewals.

Investors raised concerns regarding ongoing land disputes, specifically the Jaipur Benami issue and the Krishnapatnam Bank transaction. For Jaipur, approximately INR 8-9 crores are stuck with an aggregator, and INR 21 crores of owned land have been seized, making the ICD project unviable without the disputed land. Management expressed strong confidence in their legal position, citing lawyers' opinions, and assured that proper due diligence was conducted for the Indore project to prevent similar issues. They also highlighted their transparency in disclosing these matters and their strategy of contesting cases with merit.

Gateway Distriparks intends to maintain an annual capital expenditure of INR 100-150 crores. The majority of this capex, approximately 75-80%, is planned to be financed through debt. The company reported a gross debt of about INR 200 crores (excluding Snowman) as of December, with cash in hand at INR 140 crores after the acquisition of the Indore land. Management noted that net debt had reached zero in January before the Indore land purchase, reflecting healthy cash flow generation which is being reinvested into the business.

The company anticipates positive impacts from potential trade deals with the U.S. and EU. Currently, 25% of U.S. sales and 10% of EU exports originate from their ICDs, with expectations of increased volumes, particularly in handicrafts, textiles, leather, and chemicals, once deals are finalized. Regarding the Dedicated Freight Corridor (DFC), the last connection to JNPT DFC corridor is expected by end of March. Management anticipates some volume shift from Mundra to JNPT and an increase in double stacking percentage by 2-3%, which would improve business efficiency, though specific quantification is pending.