IGI Logo

Steady freight as supply chain moderates and seaways margins soften

* Revenue grew ~10% YoY to ~INR12.5b in 1QFY27 (in line).

* EBITDA margin came in at 10.8% in 1QFY27 (+20bp YoY and flat QoQ) against our estimate of 10.3%.

* EBITDA grew ~12% YoY at INR1.35b (5% above our estimate), while APAT was flat YoY at ~INR1.05b (in line).

* Supply chain revenue grew ~10% YoY, while the freight and seaways divisions reported ~9% and 6% YoY growth, respectively.

* EBIT margins for the Freight, Supply Chain, and Seaways divisions stood at 2.2%, 5.5%, and 34.7%, respectively, in 1QFY27. EBIT margins for the Seaways, Freight, and Supply Chain businesses contracted 220bp, 20bp, and 10bp YoY, respectively.

* Freight and Supply Chain EBIT contribution increased to ~13% and ~30%, respectively, driven by a decline in the Seaways EBIT margin to 35% (vs. 40% QoQ) due to volatile fuel prices. *TRPC delivered a steady performance amid headwinds from the West Asia crisis, inflationary pressures, and volatile fuel prices, which weighed on margins. The freight business reported steady growth, while the supply chain business reported muted growth on a high base. Seaways volumes remained largely flat, while margins were impacted by fuel price volatility. Going ahead, we expect growth to be driven by sustained strength in the Seaways segment, steady expansion in Supply Chain, and gradual improvement in Freight margins, supported by a higher LTL mix and increasing multimodal logistics adoption through new ships and rakes. We retain our estimates and reiterate our BUY rating with a TP of INR1,150, based on 17x FY28E EPS.

Seaways and SCS face near-term headwinds; freight growth remains steady

* Freight Division: Revenue in the Freight segment grew ~9% YoY during 1QFY27 due to healthy volume growth. The company also witnessed healthy traction in the LTL business. EBIT margin stood at 2.2%, declining 20bp YoY.

* Supply Chain Solutions (SCS): Supply Chain revenue grew ~10% YoY in 1QFY27, driven by steady demand across PV mobility, retail, consumer, and quick commerce. EBIT margin stood at 5.5%, contracting 10bp YoY. Management expects the fresh inventory replenishment of automobiles to support supply chain growth.

* Seaways Division: The Seaways segment’s revenue grew ~6% YoY in 1QFY27. EBIT margin stood at 34.7%, declining 220bp. The business reported flat volumes, with revenue growth driven by pricing; however, higher bunker prices weighed on margins

For More Research Reports : Click Here 

For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412