Attaching the links to the recent AGM recordings as mgmt have given hints to future roadmap to some degree.
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AllCargo Logistics mads two announcements
a. Issuance of Bonus Shares: The company’s board has approved the issuance of three bonus shares for each share held by shareholders. This decision aims to increase liquidity and allow more shareholders to participate in the company. It will also support their strategic restructuring plans. Importantly, this will utilize less than 15% of the company’s available reserves. This move follows a recent demerger of two businesses.
b. Financial Results: Apart from reporting financial results, company have been performing well in recent years, despite the recent acquisition of minority shares in Gati Express Supply Chain and Allcargo Supply Chain. The company has taken steps to reduce its debt and has exited non-core businesses. They are now focusing on an asset-light approach and digital strategy for future growth. Although there have been challenges in recent quarters due to the macroeconomic environment, the company believes that its strong balance sheet will support future growth.
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Management is also exploring option to further simplify the structure with GATI, they might announce some change after bonus issue.
Allcargo logistics is planning to restructure further by separating the ECU business and merging the supplychain and contract logistics business including Gati. This is expected to be completed by Jan 25.
Allcargo restructuring.pdf (1.2 MB)
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Can someone explain the merger ratio with current market price of Allcargo & Allcargo gati which is mentioned in following slides, thank you
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I also observed this,where there is clear cut arbitrage opportunity is there in purchasing share of gati,if the swap ratio remains unchanged. But why then market is not reacting to this . I will be happy if some knowledgeable enlighten .
As I understand it, the value of AllCargo Logistics shares is likely to drop after the AllCargo ECU demerger. The Gati ↔ AllCargo Logistics swap will occur after this demerger, so everything hinges on the valuation of AllCargo ECU.
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Interview with AllCargo Chairman, Mr. Shashi Kiran Shetty
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- Consolidated revenue for Q1 FY25 was Rs. 3,813 crores, up from Rs. 3,271 crores in Q1 FY24
- EBITDA for Q1 FY25 was Rs. 133 crores, down 5% YoY but up 34% QoQ
- Reported PAT of Rs. 4 crores compared to a loss of Rs. 12 crores in Q4 FY24
- Consolidated net debt stood at Rs. 434 crores as of June 30, 2024
- International supply chain business saw 6% QoQ growth in LCL volumes and 9% YoY growth in FCL volumes
- Express business EBITDA up 33% QoQ on improved operational efficiencies
- Contract logistics revenue up 13% QoQ and 22% YoY
- Focus on standardizing operations and outsourcing to reduce costs
- Driving automation to maintain costs against inflationary pressures
- Expanding in underrepresented markets like Argentina, Uruguay and Paraguay
- Launching new products and trade lanes to drive revenue growth
- Seeing sequential improvements across all businesses
- Trade environment has been buoyant with demand exceeding expectations
- Expecting sustained recovery in trade volumes until end of year
- Freight rates expected to remain stable or range-bound in near term
- Supply chain issues like Red Sea crisis and US port congestion creating container shortages
- European economies remain subdued, but growth seen in Asia, US and South America
- Expect European demand to potentially pick up in 2025
- Expect continued positive trend in volumes and profitability for coming quarters
- Focus on expanding market share and outgrowing the market in LCL and FCL businesses
- Anticipate improvements in utilization and operating leverage to drive profitability
- Business seeing recovery after challenging 12 months
- Well-positioned to benefit from revival in global trade volumes
- Unique LCL consolidation model provides competitive advantage
- Focus on digital initiatives and automation to drive efficiencies
Management did not provide specific guidance on profit margins. However, they indicated some factors that could positively impact margins going forward:
- Improved utilization: LCL volumes increased 6% QoQ and FCL volumes grew 9% YoY. Better utilization typically leads to improved margins.
- Operating leverage: There is significant operating leverage in the business, meaning incremental revenue growth should disproportionately benefit profits.
- Cost containment: The company has implemented cost reduction initiatives, outsourcing, and automation to keep SG&A costs in check despite inflationary pressures.
- Mix improvement: Increased usage of 40-foot containers (up 9%) which are more operationally efficient.
- Volume growth expectations:Continued volume growth for the remainder of the year, which should help spread fixed costs.
- Yield improvements: LCL yield (gross profit per cubic meter) to improve beyond previous levels as volumes grow.