Release Date: October 30, 2024
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 its operating margins sequentially in Q2, showcasing efficient operational strategies.
- The company's rail express service is gaining traction, contributing positively to margins and expected to make up 20% to 22% of revenue in the next 2-3 years.
- Automation efforts, such as the newly automated Pune sorting center, have improved operational efficiency and reduced turnaround time by 40%.
- The introduction of a money-back guarantee has been well-received, enhancing customer confidence in timely deliveries across all modes.
- TCI Express Ltd (NSE:TCIEXP) announced its first interim dividend of INR3 per share, reflecting a commitment to shareholder value.
Negative Points
- Year-on-year base revenue saw a slight dip due to prolonged monsoon rains and geopolitical tensions affecting logistics demand.
- The company faced challenges in the manufacturing and automotive sectors, leading to lower activity and demand.
- Capacity utilization of the fleet was at 83%, below the expected 85%, impacting operational efficiency.
- The company experienced increased costs due to higher toll taxes, labor costs, and lower fleet utilization.
- Despite automation efforts, margins have not improved as expected, with EBITDA margins dropping from 16% to 13% due to increased costs.
Q & A Highlights
Q: Can you provide the volume for this particular quarter?
A: The volume for this quarter was 250,000 tons, and for the first half of the fiscal year, it was 485,000 tons, compared to 492,000 tons in the same period last year.
Q: Are you intentionally slowing down branch additions due to volume not picking up?
A: Yes, we have muted the expansion of branches temporarily because the volume is not picking up. We will resume expansion once the volumes start to increase.
Q: Has the Air Express business impacted margins in Q2, and have you passed on the costs to customers?
A: The Air Express business costs continued to impact Q2 due to high costs from airline consolidation and airport privatization. We have not been able to pass these costs onto customers due to the high-cost scenario.
Q: What is your outlook for volume growth over the next 2 to 3 years, considering the current economic conditions?
A: We anticipate a growth rate of 13% to 15% in volume and 1% to 2% in value. We are focusing on expanding our customer base and multimodal services to achieve this growth.
Q: Can you provide more details on the industries impacting volume growth and your revised CapEx guidance?
A: The industries impacting volume growth include lifestyle, textile, engineering, and automotive sectors. For CapEx, we anticipate spending INR 40-50 crore in FY25 and INR 100-125 crore in FY26, focusing on sorting center construction and automation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
