Snowman Logistics Limited

Snowman Logistic reported a strong year-on-year performance in Q1 FY26, primarily benefiting from the absence of the Red Sea disruption that impacted the previous financial year. Volumes remained consistent, and the company achieved a slight increase in market share in its operational regions. Despite some geopolitical and geoeconomic conditions, management expects stabilization soon and is targeting double-digit growth for Gateway Distriparks for the entire fiscal year.

The Rail business recorded an EBITDA per TEU of INR9,100, which was slightly lower than expected due to higher empty and underframe running, reduced double stacking, and increased imbalance. The CFS business showed improvement with an EBITDA per TEU of INR1,500. Management anticipates an improvement in the Rail business's EBITDA per TEU, aiming for INR9,500 in the coming quarters^⏳, and potentially INR10,000 once the DFC connects to Bombay.

Snowman Logistics experienced positive growth in its warehousing and distribution segments, driven by new customer acquisitions and growth from existing clients. The company added approximately 15,000 pallets in capacity and implemented general rate hikes of 5-7%. In the transportation segment, Snowman strategically reduced engagement with low-margin businesses, expecting a positive trend from the next quarter. The company plans to continue investing around INR100 crores in its own facilities and develop asset-light models, aiming for over 200,000 pallets capacity in the next three years.

Gateway Distriparks continues its focus on expanding its Inland Container Terminal (ICD) network, but land acquisition remains a significant challenge, causing delays for new locations. The Jaipur ICD, initially expected earlier, is now projected for FY27. Management is exploring asset-light models and has identified 6-7 potential ICD locations for development over the next 5-7 years, with a focus on two in the near term. A land issue in Krishnapatnam related to old survey records is being appealed but does not affect current operations.

The company is continuously investing in digital platforms and IoT-based monitoring, including OCR technology at ICDs and RFID/GPS tracking, though quantifying the direct impact on cost savings is challenging. Snowman Logistics utilizes a mixed model for transportation, with approximately 300 owned vehicles and a similar number on lease or trip basis via its SnowLink platform, with future growth leaning towards third-party vehicles. The company also uses rooftop solar at 80-90% of its locations under an opex model and is evaluating direct investment for further cost savings.

The Dedicated Freight Corridor (DFC) connection at JNPT is now expected to be operational by March 31, 2026, a revision from the earlier December 31, 2025 target. Management believes this will offer advantages, though the impact on volumes will depend on shipping line strategies and port pricing. Gateway Distriparks is also exploring domestic opportunities, including procuring new domestic containers to replace its aged fleet of 800, to enhance volumes within the domestic segment.