TVS Supply Q4 FY25 earnings call

TVS Supply Chain Solutions reported a strong turnaround in FY25, achieving a Profit Before Tax (PBT) of INR29 crores, a significant improvement from a loss of INR10 crores in FY24. Revenues from operations grew 9% year-on-year to INR9,996 crores. The fourth quarter of FY25 alone saw a PBT of INR18 crores, reversing a loss of INR14 crores in Q3 FY25, demonstrating a robust sequential recovery.

A key highlight was the successful turnaround of the Integrated Final Mile (IFM) business within the Network Solutions segment, which achieved operational profitability in Q4 FY25. This was driven by strategic initiatives including price increases from over 100 customers, consolidation of forward stocking locations, manpower rationalization, and exiting low-margin accounts. Management expects sequential improvement from FY26, aiming to reach its original guidance by FY27.

The Global Forwarding Services (GFS) business within Network Solutions faced significant macroeconomic headwinds^🌐, leading to a sequential decline of 5.7% in Q4 revenue. Management noted extreme volatility in freight rates, container shortages, and trade disruptions, preventing them from providing specific guidance for this segment. Despite these challenges, the NS segment's Adjusted EBITDA margin improved from 3.8% in Q3 to 5.1% in Q4, largely due to the IFM turnaround.

The company has initiated strategic actions to improve its cost structure, including leadership restructuring, headcount rationalization, and outsourcing to lower-cost locations. Redundancy costs of INR5 crores were incurred in Q4 FY25 (INR8 crores for the full year) and will continue into Q1 and Q2 FY26, with savings expected from H2 FY26. These measures are aligned with the long-term goal of achieving a 4% PBT margin by FY27.

TVS Supply Chain Solutions reported strong business development, with new wins totaling INR235 crores in Q4 and INR1,009 crores for the full year FY25. The order pipeline remains robust at INR5,250 crores. A significant win was the finalization of a 3-year, INR1,000 crore UK retail contract for storage and distribution services, effective H2 FY26. The company also regained a major auto component manufacturer in India and is in advanced discussions for several large 3PL opportunities in India.

The company maintains an asset-light model, relying on long-term lease agreements for warehouses and fleet. Net cash from operating activities for the year was INR194 crores, with capex fully funded through internal accruals. While net debt levels remained similar to FY24, management clarified that they do not expect to be net debt-free, as working capital borrowings will continue to support business expansion, managed within a narrow band.