JSW Infrast — Q3 FY25 earnings call

Call held 28 Jan 2025

Management summary

JSW Infrastructure reported a strong Q3 FY25, with consolidated revenue up 24% and PAT up 32% YoY, driven by robust cargo handling and increased third-party volumes. The company outlined ambitious growth plans, targeting 400 MMT capacity by FY30 and INR8,000 crores logistics revenue with 25% EBITDA margin. While facing some cyclical headwinds in iron ore, management expressed confidence in future growth from greenfield projects, capacity expansions, and strategic acquisitions like Navkar.

Highlights

  • Consolidated revenue grew 24% YoY to INR1,265 crores in Q3 FY25, driven by increased capacity utilization and new contributions.

  • Consolidated EBITDA increased 20% YoY to INR670 crores in Q3 FY25, with port segment operational EBITDA up 19% to INR570 crores.

  • PAT for Q3 FY25 grew significantly by 32% YoY to INR336 crores.

  • Total cargo handled for the 9-month period (April-Dec '24) registered an 11% YoY growth, reaching 85.7 million tonnes.

  • Third-party cargo mix showed robust growth of 45% YoY to 41.7 million tonnes, increasing its share to 49% of the total mix.

Concerns

  • A mark-to-market unrealized loss of INR156 crores was recognized, though non-cash, due to hedge accounting.

  • Profit before tax for Q3 FY25 stood at INR276 crores, a decline compared to INR307 crores in Q3 FY24.

  • Lower cargo volumes were observed in the iron ore terminal at Paradip due to cyclical prices and temporary customer stops, though now restarted.

Key financials

  1. Consolidated Revenue ₹1,265 Cr +24%YoY
  2. Consolidated EBITDA ₹670 Cr +20%YoY
  3. PAT ₹336 Cr +32%YoY
  4. Profit Before Tax ₹276 Cr
  5. Depreciation ₹138 Cr
  6. Finance Cost ₹97 Cr

What they filed

Q1 FY27: revenue up 18.1%, net profit down 8.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,001 1,182 1,283 1,224 1,266 +26%1,350 +14%1,522 +19%1,445 +18%
EBITDA521 586 641 581 610 +17%644 +10%769 +20%674 +16%
Net profit374 336 516 390 369 −1%365 +9%424 −18%358 −8%
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.

Segment breakdown

  • Port Business (Q3 FY25)
    29.4 million tonnes Cargo Volumes₹1,063 Cr Operational Revenue₹570 Cr Operational EBITDA14.3 million tonnes Third-Party Cargo49% Third-Party Cargo Share
  • Logistics Business (Navkar, consolidated from Oct 11, '24)
    11% Current EBITDA Margin15% JSW Steel Revenue Contribution

Capital allocation

  • Capex ₹9,000 Cr
    • Logistics segment expansion (total till FY30) ₹9,000 Cr
    • Port business investment (next three years) ₹15,000 Cr
    • Logistics business investment (next three years, additional to Navkar) ₹3,000 Cr
    • Total capex for next five years (including Navkar) ₹8,000 Cr
    As mentioned by Rinkesh, we are scaling up our logistics segment based on the foundation of Navkar business. Hence, we have allocated close to INR9,000 crores of capex till FY '30 and aspire to achieve 25% EBITDA on a top line of INR8,000 crores. (Page 4); So port business for the next three years, we are looking around INR15,000 crores of investment. And for logistics business, INR1,000 crores is already spent and we might invest, say, another INR3,000 crores or so during the next three years. (Page 17); If you see the figures, we have to spend around -- we're looking at spending around INR8,000 crores in the next five years including the INR1,100 crores we have spent to pick up Navkar.
  • Debt Net ₹827 Cr · 0.4× EBITDA
    As of December '24, we have net debt of INR827 crores and net debt to EBITDA is 0.4x and one of the strongest balance sheet in the sector. (Page 4); Forex exposure, you mean to say Ankita? So this we have 1 bond of $400 million, another $120 million is another loan, which we have taken for funding our UAE terminal. (Page 14)
  • M&A Navkar Corporation Limited Acquisition · Integrated

    Foundation for scaling up logistics segment and developing a robust pan-India logistic network.

    Consolidated with JSW Infrastructure from October 11, 2024, contributing to revenue and EBITDA.

    Operational EBITDA for the port segment stood at INR570 crores up from INR480 crores, an increase of 19% strong EBITDA growth was largely driven by the increased revenue. We have consolidated Navkar Corporation Financial with effect from October 11, '24, as a result of total revenue of the company stood at INR1,265 crores and the total EBITDA stood at INR670 crores reflecting a year-on-year growth of 24% and 20%, respectively. (Page 3)

Guidance & targets

Capacity

  • Total Cargo Handling Capacity Capacity · by FY 2030 or before · High confidence 400 million tonnes per annum
    I'd like to outline my top three priorities: number one, to ensure the advancement and successful completion of our expansion plan to 400 million tonnes per annum by FY 2030 or before encompassing greenfield, brownfield and other growth projects within the stipulated time and budget.

    — Rinkesh Roy

Logistics

  • Logistics Business Top Line Logistics · by FY '30 · High confidence INR8,000 crores
    Number two, to significantly scale up the logistics business segment, targeting a top line of INR8,000 crores by FY '30 and an EBITDA margin approaching 25%.

    — Rinkesh Roy

  • Logistics Business EBITDA Margin Logistics · by FY '30 · High confidence approaching 25%

    — Rinkesh Roy

Volume

  • Company Level Volume Growth Volume · for FY '25 · High confidence 10%
    So this year also, you can see that we have reached composition up to 49%, which was earlier 39%. So this growth of say we have given a guidance of 10%. This will continue to be there till we have our expansions coming into the picture.

    — Lalit Singhvi

Profitability

  • Port Segment EBITDA Margin Profitability · Medium confidence 58-59%

    Previously 52-53% → 58-59%

    So I'm looking at EBITDA margins going from, say, current level of 52%, 53% operational EBITDA margin, they are going to 58%, 59%.

    — Lalit Singhvi

Project Returns

  • Minimum Project Appraisal Return Project Returns · High confidence at least 16%
    So most of our project appraisals that we do are based at a minimum of at least 16%. So that you can take as a sure short guidance that it will never be below those numbers.

    — Rinkesh Roy

Port Business

  • Port Business EBITDA Margin (400 MMT capacity) Port Business · at 400 million tonnes capacity · Medium confidence around 55%
    55% -- it will not be less than that as per the current arrangement of 400 million tonnes.

    — Lalit Singhvi

  • Port Sector Volume Growth Port Business · in '25, '26 · High confidence double-digit growth
    At least, we're looking at double-digit growth, which earlier my predecessors had also told you. So this would be the growth that we expect to see in '25, '26.

    — Rinkesh Roy

  • Revenue CAGR Port Business · High confidence north of 20% to 22%
    So the profile will also switch and hence, the revenue CAGR would be north of 20% to 22%.

    — Vishesh Pachnanda

Container Business

  • Container Business Margin Container Business · High confidence 60-65%
    The container business will give the similar type of growth, which we are getting at these ports, private ports. It is 60%, 65% type.

    — Lalit Singhvi

What to watch in Q4 FY25

Iron ore volume recovery

next quarter
Current Lower volumes due to cyclical prices and customer issues
Target Come back to normal levels

Why it matters

Recovery in iron ore volumes is crucial for the performance of Paradip and Odisha terminals.

So we feel that in the next quarter, it should come back.

Risks & concerns

  • Cyclicality and volatility in iron ore prices and volumes

    medium

    Iron ore prices are cyclical, leading to lower export volumes and temporary stops by major customers at Paradip/Odisha, though a comeback is expected.

    Management acknowledged

  • Muted growth at Jaigarh and Dharamtar ports due to Dolvi steel plant expansion

    medium

    Growth at these ports is currently muted as they primarily serve the Dolvi steel plant, which is undergoing expansion and lumpy growth is expected only post-commissioning in mid-FY27.

    Analyst acknowledged

  • Mark-to-market unrealized loss on hedging

    low

    A non-cash mark-to-market unrealized loss of INR156 crores was recognized due to Ind-AS 109 on hedge accounting.

    Management acknowledged

Q&A highlights

8 direct
Volume growth at Jaigarh and Dharamtar ports Direct
As you are aware, the Jaigarh and Dharamtar ports, they're primarily serving Dolvi steel and Dolvi steel plant is currently expanding from 10 million tonnes per annum capacity to 15 million tonnes. So this lumpy growth will come once when this plant gets commissioned, which will be in around '26 and/or '27, mid '27.

Clarifies that muted growth at these key ports is temporary and linked to the ongoing expansion of the Dolvi steel plant, with lumpy growth expected post-commissioning.

Asked by Achal Lohade

Margins for Fujairah liquid storage terminal Direct
Yes. This should continue because the market is good for the tank farm business. So we expect this to continue and EBITDA margins for this type of business is typically high at 85% plus.

Provides specific high-margin guidance for the newly operational Fujairah terminal, indicating a significant positive impact on overall profitability.

Asked by Achal Lohade

Logistics capex guidance and asset-light model Direct
So in this strategy, we will be creating the same assets at a much lower cost. So this is on the terminal part. Secondly, a large part of our capex will also go into either leasing of rakes or purchasing of rakes, a mix of which an ideal mix we'll be calculating and moving ahead.

Explains how the company plans to achieve its INR9,000 crores logistics capex target while maintaining an asset-light approach, focusing on Gati Shakti terminals and leasing.

Asked by Achal Lohade

Reasons for improved EBITDA per tonne in port business Direct
So as I said that if you look at my 174 million to 400 million tonnes journey, so most of the investment is going into the greenfield ports, okay? So whether it's Keni or Murbe or Jatadhar they all are greenfield or wherever we are expanding, say, Jaigarh or Dharamtar and all that, where the EBITDA margins are 65% to 70% because there is no revenue sharing with the government.

Details the structural reasons for expected margin expansion in the port business, primarily driven by a higher proportion of greenfield projects with no revenue sharing.

Asked by Priyankar Biswas

Decline and recovery of iron ore volumes Direct
The iron ore prices are cyclical and right now, the prices are a little lower. So it has affected a bit on the export side. So this as and when we have seen in the last few years that this in a year also, there is a cycle. Sometimes it is good and then exports are higher. So some people have in between stopped and some large players have, again, restarting those things. So we feel that in the next quarter, it should come back.

Addresses the reason for lower iron ore volumes (cyclical prices, customer issues) and provides a positive outlook for recovery in the next quarter.

Asked by Priyankar Biswas

Logistics business model and synergy with JSW Group Direct
So even if we capture and synergize with them for a smaller percentage, at least 15% to 20%, that itself will be around 40%, 50% of the revenues and EBITDA that we are projecting. So this synergy of group cargo, of the port terminal as well as having the pan-India presence and logistics, this will be a natural progression from ports and terminals into logistics.

Explains the strategic rationale behind the logistics expansion, emphasizing customer stickiness, pan-India network, and significant synergy with JSW Group's substantial logistics spend.

Asked by Alok Deora

Organic growth trends and drivers for existing assets Direct
So if you look at the board profile, two terminals, that is JNPA and Tuticorin. While they'll be commissioned, JNPA we are looking at the first quarter of '25 and Tuticorin later on. The biggest advantage that we are having is these terminals are allowed for interim operations. So a lot of growth we expect to come even during the interim operations at these two terminals.

Clarifies that despite muted organic trends in some areas, new interim operations at JNPA and Tuticorin, resolution of issues at Paradip coal terminal, and the Goa covered shed will drive future organic growth.

Asked by Aditya Mongia

Navkar Corporation's role and investment strategy Direct
So here, let me put things in perspective. Here, the growth strategy that Navkar we are looking at is getting -- generating better efficiencies at the existing terminals. That is number one. Number two is kind of utilizing the space available and the land available to create more capacity and spread. And thirdly is leveraging the group cargo to generate new circuits. So where you can, again, on the return flow, capture new customers. So this is a part of a bigger strategy that we are looking at. And the investments are primarily in more of movable assets, which can be leased also.

Outlines Navkar's growth strategy focusing on efficiency, capacity utilization, leveraging group cargo, and an asset-light approach through leasing movable assets.

Asked by Kunal Shah

2 min read 6 chapters

Detailed narrative

Q3 FY25 Financial and Operational Performance

JSW Infrastructure reported a strong Q3 FY25, with consolidated revenue growing 24% year-on-year to INR1,265 crores and consolidated EBITDA increasing 20% to INR670 crores. PAT for the quarter saw a significant 32% year-on-year growth, reaching INR336 crores. For the nine-month period (April-December '24), total cargo handled stood at 85.7 million tonnes, an 11% year-on-year growth, with third-party cargo growing 45% to 41.7 million tonnes and its share increasing to 49% of the total mix.

Strategic Priorities and Long-Term Vision

The company outlined three key priorities: expanding cargo handling capacity to 400 million tonnes per annum by FY 2030, scaling up the logistics business to achieve a top line of INR8,000 crores by FY '30 with an EBITDA margin approaching 25%, and continuously seeking value-accretive inorganic opportunities. Management emphasized an asset-light model for logistics to achieve industry-leading ROCE.

Logistics Business Expansion and Navkar Integration

The logistics segment is being significantly scaled up, with INR9,000 crores allocated for capex till FY '30. This includes INR1,100 crores already spent on the Navkar acquisition, which was consolidated from October 11, 2024. The strategy involves creating a pan-India logistics network with 15-20 terminals, leveraging Gati Shakti terminals, and utilizing group cargo to establish a base, aiming for an 11-12% current EBITDA margin with expectations of improvement.

Port Capacity and Operational Developments

Total cargo handling capacity increased to 174 million tonnes per annum. Key developments include commencing interim operations at JNPA and handling nearly 90,000 tons of liquid edible oil, increasing Mangalore coal terminal capacity to 8.1 million tonnes, and PNP port capacity to 8 million tonnes. The company expects double-digit volume growth in the port sector for FY25 and FY26, driven by new terminals and resolution of issues at Paradip coal terminal.

Margin Expansion Drivers

EBITDA margins for the port segment are projected to increase from the current 52-53% to 58-59%. This improvement is primarily attributed to the increasing share of greenfield projects, which typically have higher EBITDA margins of 65-70% due to no revenue sharing. The newly operational Fujairah liquid storage terminal also contributes significantly with high EBITDA margins exceeding 85%.

Capital Expenditure Plans

For the port business, approximately INR15,000 crores of investment is planned over the next three years. The logistics business, in addition to the Navkar acquisition, is expected to see another INR3,000 crores of investment over the next three years. The total capex for the next five years, including the Navkar acquisition, is estimated at INR8,000 crores, with a focus on asset-light strategies like leasing for rakes and utilizing government-provided land for terminals.

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