Release Date: February 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TCI Express Ltd (BOM:540212, Financial) maintained stable profitability and margins despite challenging market conditions.
- The company recommended a second interim dividend of INR3 per share, bringing the total dividend for nine months FY24 to INR6 per share.
- Newly launched Rail Express service gained substantial traction, expanding the customer base to 4,000 and covering 125 routes.
- Ongoing construction of the Pune sorting center is on track to become operational in March 2024.
- Recognized as one of the top 500 value creator companies by Dun & Bradstreet and received the CII scale award '23 in the express courier category.
Negative Points
- Revenue from operations decreased to INR312 crore in Q3 '24 from INR320 crore in Q2 '24 and INR314 crore in Q3 '23.
- Volume growth was modest at 2.5% year-on-year for nine months FY24, indicating a challenging demand environment.
- EBITDA margin dropped sequentially, with Q3 '24 EBITDA at INR48 crore and a margin of 15.1%, down from previous quarters.
- Utilization levels of trucks dropped to 83.5% in Q3 '24, impacting operational efficiency.
- The company faced headwinds from muted festive demand and an extended holiday season, affecting overall performance.
Q & A Highlights
Q: Can you provide the volume number for the current quarter?
A: The volume numbers are 2.5 lakh tonnes for this quarter and 7.42 lakh tonnes for the nine-month figure. - Mukti Lal, CFO
Q: What is the CapEx target for the fourth quarter and next year? Are we on track for INR500 crore CapEx over FY23 to FY28?
A: We plan to spend around INR15 crore more in the fourth quarter, totaling INR40 crore for this year. We will spend the remaining INR335 crore over the next three years. - Mukti Lal, CFO
Q: What is the contribution from newer services this quarter?
A: The contribution from newer services remains around 17% to 17.5%, similar to the last quarter. - Mukti Lal, CFO
Q: Why did margins drop sequentially this quarter?
A: The revenue numbers were slightly lower, leading to a drop in truck utilization levels to 83.5%. Despite this, we enhanced EBITDA margin by 10 basis points compared to the same quarter last year. - Mukti Lal, CFO
Q: What are the medium- to long-term margin targets?
A: We are hopeful for a good Q4 and expect to maintain similar margins. This year has been challenging for the industry, but we have managed to maintain our margin levels. - Mukti Lal, CFO
Q: What is the volume growth expectation for this year and next year?
A: This year, we expect a 3% to 4% volume growth. Next year, we anticipate a volume growth of 11% to 13%, with revenue growth slightly higher due to potential price hikes. - Mukti Lal, CFO
Q: What kind of operating environment do you see in different segments?
A: The surface segment remains favorable, and the rail segment is catching up. We plan to expand into other locations within India to capture more business. - Chander Agarwal, Managing Director
Q: Why has the bottom line stagnated since December 2020?
A: The margin levels have remained consistent, but revenue growth has been impacted by the challenging environment. We are focusing on maintaining our margins and expanding our branch network. - Mukti Lal, CFO
Q: How do you plan to reach the FY25 target for new services contribution?
A: We expect the contribution from new services to increase to around 20% next year, with higher margins compared to traditional services. - Mukti Lal, CFO
Q: What are the plans for automating other hubs after Pune?
A: Next, we plan to automate hubs in Ahmedabad, Mumbai, and Chennai, starting with Ahmedabad in FY25. - Mukti Lal, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
