Afcom Holdings - Sky High Ambitions, Grounded in Reality?

Stock Opportunities SME Stocks
46

I had done some digging into the management as well.

Mr Iyer, board member in Deccan and accused in the Deccan case is Deepak’s brother. But this has already been disclosed in the RHP and all the cases against Mr Iyer have also been disclosed.

This was my conclusion as well, that Flyington was collateral damage in the Deccan debacle.
Afcom’s successful start only re-affirms the fact that the promoter has learnt his lesson.

NB: Invested and Biased.

Edit: Sorry, missed this part, the SFIO, in it’s petition for re-starting the Deccan case, cites Mr. Deepak as a respondent , and calls him “Ex Director” at Deccan - this is most likely false or a clerical error, as the RHP specifically says that Deepak was never a Director at Deccan - which I believe, since directorship is not something you can deny/hide, with each person having DIN numbers and all.
Him being a respondent is more likely through his association with Flyington. This is also corroborated by the news reports at the time.

2 Likes
47

My understanding is Amortization of Dry Lease Expenses is a one-time action when the company had obtained aircrafts, but the Air Operator Permit was not received. The lease expense upto this date was treated as pre-operative expense and is being amortized now. This will gradually get written off and will not come up again.

image
image1127×419 89.9 KB

The actual current rentals are being included in Operating Costs line item in the quarterly results.

But I now have a new question. Though the quarterly results club everything under a single line item called “Operating Cost”, the Annual Report for FY25 gives the breakup. Here, the Aircraft Charter Fee for FY25 is shown as Rs.118 crore out of total Operating Cost of 149.57 Crore. So 80 % of the Operating Cost is Aircraft Charter Fee.

image
image1106×620 73.8 KB

Operating Cost for Q3 FY26 was Rs.83 crore and assuming this same ratio, Aircraft Charter Fee should come to 80 % of this i.e. about Rs.66 crore. This is much higher than the USD 200,000 per aircraft per month mentioned by the management in the video above. This still needs clarification. I think we have to wait till the FY26 Annual Report to get better clarity on this.

No positions, just tracking.

1 Like
48

Can’t assume same. Company went through a change in lease model from wet to dry lease.

2 Likes
49

What I am not able to understand if why the stock is trading at 19.4 TTM PE if their operating margins are so good and has a clear revenue growth path.

  1. Is there a terminal value risk with oversupply or increase in airplane lease cost due to supply constraints once the contract period is up?
  2. Is the company reaping rewards of operating in niche routes which is not repeatable as the company scales?
  3. Is it because of the lack of moat around the company or is operational efficiency the moat like Indigo
  4. Is it due to dependence on GCCs for all of their revenue

Is there any other airport cargo company in the world with margins like this?

This seems too good to be true

3 Likes
50

Very valid question. There are 2 possibilities

  • Either there’s something deeply negative which is known to some big investors and they are selling heavily
  • Currently, a lot of smallcap and specially SME stocks are being beaten badly despite so good performance. This is not a company or fundamental issue but a money supply problem. A lot of ruthless selling is happening in some stocks like Oriana power, ABS-Marine, etc. This is a time and money problem and as soon as the supply of money improves, these stocks will look extremely attractive and will again trade at higher multiples. When and how much, nobody knows but this is the time to hold with conviction.

Disc: I’m holding and this is not a buy/sell reco

1 Like
51

“Designated Indian carrier” brings benefits of lower VAT and to boost operating margins.

image
image1027×943 90.1 KB

2 Likes
53

It’s both 1 & 2 imho. Markets in general are down, the promoter has a slightly chequered history, and aviation companies have a reputation of going bust. To add to all this the balance sheet and cash flows are not exactly pristine. Afcom is a high risk high reward play.

3 Likes
54

Each plane revenue is 20 crore per month so 240 cr per annum while cost of airplane is usd 200k ie 22 cr per annum. So around 10% cost belong to lease rental of each plane.

Please correct me if I am wrong

1 Like
55

240 cr revenue and 22 cr expense yes, comes out to ~9%

1 Like
56

Company is going conduct concall on 6th March

3 Likes
58

Anyone attended today’s concall? Any key notes?

59

Yes, was early morning in a different timezone so did not take notes , so these are from memory:

  • Regarding the war, acknowledged possible fuel price hike but at the same time they expect freight rates and demand to go up as well because of it.
  • Middle eastern operations just started, but paused because of the war. Don’t see long term impact.
  • The 3rd aircraft is in the process of being operationalized, paper work includes re-registration and it’s being handled now. It’ll be at least Q1FY27 before it starts contributing meaningfully to revenue. 4th and 5th still in pipeline.
  • The delay in the procurement was because the lessor planned initially was a Georgian company, which had some internal issues so that didn’t happen. Afcom then switched to Nauru and they have the plane with them now. Nauru has offered some relief/compensation on the costs incurred because of the delays on their side.
  • A part of the agreement with Nauru is that Afcom will feed cargo into Nauru’s network at Bali, which will forward cargo to the Australia region.
  • Alliance with Nauru is going beyond what was initially planned, with the possiblity of a JV (50:50 partnership) which will operate out of Bangkok as a hub.
  • 2 B737-300 planes (smaller ones than the current B737-800s) with 15-16 ton capacity will be added to the JV company. This is on top of Afcom’s 5 B737-800 fleet.
  • MRO facility will be joint ownership with Nauru (30:70), and will have long term contract for maintaining Nauru’s fleet
  • Plans for wide body planes are on track. Company says there’s no dearth of demand.
  • Company is in the process of switching to IND-AS, most probably by Q4FY26.

All these are the points that stood out, the rest have been said in the past already or have been included in the PPT.

e7a2d3f0-3e9a-406e-a256-f5645fad6fea.pdf (5.2 MB)

8 Likes
60

Third aircraft registered:

7b261e1a-ae92-496b-9dcc-eaecb8f11ace.pdf (298.4 KB)

2 Likes
61

I have 1 simple question.

What if Indigo enters the market?

It will crash margins of afcom.

1 Like
62

Not just Indigo, any competitor can crash their margins.

Afcom’s management’s had given one possible reason that would deter passenger airlines from entering this market - they’re already selling belly cargo space, which is practically free money for them. If they start freighter operations it might kill this line of their business.

1 Like
63

20260317_231309
20260317_231309737×482 20.5 KB

1 Like
64

Did the management ever talk about cost pass-throughs in any press release or con-calls , Is pricing passed on to the client in real time or is there a delay involved in passing on the hikes ?

65

Since 1st April frequency of 2 planes has reduced drastically. This reflects they are affected by fuel price. Until increase in rate(before 1st april) both planes were being use extensively. After price increase this has dropped to once in 2 days for each plane.

Further the third plane is yet to begin operation. Probably indicates lack of demand in current scenario.

Disclosure: tracking

2 Likes
66

I’d disagree with your data. This is what AI says about the flights in the last 3 months (I have cross checked from the sources mentioned too):

Based on current flight tracking logs and operational reports as of April 23, 2026, AFCOM Holdings has seen a steady month-on-month increase in flight activity. This growth is driven by the induction of its third aircraft in mid-March and the subsequent surge in demand for regional transshipments following Middle Eastern airspace disruptions.

## Month-Wise Flight Comparison (Feb – April 2026)

The total number of flights across the three aircraft (VT-AFO, VT-AFC, and VT-AFN) shows that April is currently the company’s most active month to date.

| Aircraft Registration | Feb 2026 | March 2026 | April (Till 23rd) | Trend Analysis |

|—|—|—|—|—|

| VT-AFO | ~42 | ~68 | ~74 | High utilization on MAA-MLE-CMB loops. |

| VT-AFC | ~38 | ~45 | ~52 | Primary domestic and feeder flight support. |

| VT-AFN | — | ~32* | ~68 | Rapid scale-up after March 11 induction. |

| Total Fleet Flights | ~80 | ~145 | ~194 | 142% Increase since February. |

*VT-AFN began commercial operations mid-month following DGCA registration on March 11, 2026. [1, 2]

## Activity Highlights by Aircraft

* VT-AFO (B737-800BCF): Continues to be the most active in the international sector. In the last week alone (April 16–23), it completed multiple rotations including [Hanoi (O9708)](VT-AFO - Boeing 737-86N(BCF) [28617] - Flightradar24) and Male (O9303). [3]

* VT-AFN (B737-800F): Has seen the most dramatic increase in utilization since April 1. It is currently being used to bridge the capacity gap for cargo [diverted from Middle Eastern hubs](AFCOM Holdings Adds Third Aircraft Amid Soaring Cargo Demand | Whalesbook), often performing 3–4 legs per day. [2]

* VT-AFC (B737-800F): Maintains steady operations between Chennai, Mumbai, and Delhi, acting as the domestic backbone for the international legs flown by the other two aircraft.)

7 Likes
67

yeah the flights seemed to increase initially and then dropped, with a few gap days in between.

fuel prices are pass through IIRC so this is more likely due to shortage of fuel

1 Like