Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TCI Express Ltd (NSE:TCIEXP, Financial) maintained stable business performance despite challenges in the logistics sector.
- The company is strengthening its metro city delivery network and has launched direct delivery services to improve service levels.
- TCI Express Ltd (NSE:TCIEXP) plans to achieve a 20-22% revenue share from multimodal logistics in the next 2-3 years.
- The company has a debt-free balance sheet and generated strong cash flow from operations, amounting to INR 40 crore during the period.
- TCI Express Ltd (NSE:TCIEXP) received several recognitions, including the CI Scale award for supply chain and logistics excellence and being featured in Forbes India's select 200 companies with global business potential.
Negative Points
- The logistics sector faced challenges due to moderation in manufacturing activity and evolving demand trends.
- Festive season demand in October was lower than expected, impacting overall freight movement.
- Inflationary factors, including increased labor and transport costs, added pressure on operating expenses.
- The company's volume declined by approximately 3% in the quarter, affecting margins.
- There is a slowdown in SME customer volumes, impacting the company's revenue mix and margins.
Q & A Highlights
Q: What was the volume trend for this quarter, and how do you see the market shaping up in the near future?
A: The volume decreased by approximately 3% this quarter. The market has been challenging with muted growth impacting margins. We are not seeing significant improvement in January, and it's hard to predict Q4 performance. Cost pressures remain due to increased tolls, driver shortages, and labor costs. We are negotiating price hikes with customers, which should gradually improve margins. (Unidentified_4)
Q: Have competitors taken price increases, and how does this affect TCI Express?
A: Competitors like Blue Dart and VRL have taken price hikes, but volume growth remains a challenge across the industry. TCI Express has consistently taken price hikes over the years, which helped maintain margins. However, this year is unique with SME customers facing challenges, making it difficult to pass on costs. We are focusing on negotiating price hikes with larger customers. (Unidentified_4)
Q: What is the rationale behind the $7.5 million investment in Singapore, and how does it align with domestic challenges?
A: The investment is planned over two years and aims to establish a freight forwarding business in Singapore, supporting both inbound and outbound operations. This will complement our Indian business by facilitating imports and distribution. The investment is separate from domestic CapEx, which remains on track with planned expansions in Ahmedabad and Kolkata. (Unidentified_4)
Q: How is the Rail Express business model structured, and what are its advantages?
A: Rail Express offers faster delivery compared to surface transport, with transit times of 2-3 days. It uses passenger trains for transportation, providing a cost-effective alternative to air services. This model allows for door-to-door service, integrating rail with road transport for efficient logistics. (Unidentified_4)
Q: What is the expected contribution from multimodal logistics in the next few years?
A: We aim to increase the revenue share from multimodal logistics to 22% over the next three years. This growth will be driven by our strong presence in air and rail segments, with each year seeing a 1.5% increase in contribution. Multimodal logistics offer slightly superior margins compared to current levels. (Unidentified_4)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
