Allcargo Logistics Q1 FY26 earnings call

Where management's figures differ from the filing

• EBITDA (management definition, ex other income and other items): said ₹103 cr (ex other income and other items); filed ₹26.11 cr (margin 0.7%). Management's definition excludes 'other income and other items from a business standpoint'; filed figure is PBT + finance costs + depreciation - other income (₹26.11 cr).

What moved the numbers, as management explained it

• Notional FX loss of ₹83 cr on USD-denominated intercompany loans from Belgian holding, owing to ~9% EUR-USD swing in the quarter (long-term 5-year change only ~1.8%). (accounting)
• EUR appreciation lifted European local revenue and gross profit but also raised European staff and G&A costs; net effect broadly neutral at EBITDA level.
• One-off items totaling ~$2.2M third-party doubtful debt provisions on discontinued non-core businesses plus $1.6-1.7M additional variable payouts recognized this quarter. (one-off)
• Domestic contract logistics revenue +49% YoY on new business wins; express revenue -7% QoQ due to deliberate customer rationalization, lifting EBITDA despite top-line dip.
• Cost initiatives: financial outsourcing phase 1 on track; operational outsourcing delayed by two quarters to year-end (Dec) quarter.

The numbers management led with

• Contract logistics YoY growth: Revenue +49-50% YoY, EBITDA +29-30% YoY
• Express (Gati) EBITDA growth: EBITDA +18% YoY despite revenue -7% QoQ at Rs. 357 cr
• Notional FX loss in P&L: Rs. 83 crores in Q1 FY26 (non-cash, intercompany USD loans at Belgian sub)

Guidance on this call

By business

Balance sheet, capex and funding

• Gross debt ₹1,060 cr, down ₹107 cr QoQ; rupee-term reduction smaller than underlying euro-term debt paydown due to currency translation.
• Net debt ₹467 cr, below the previous quarter.
• Borrowings of Belgian subsidiary denominated in EUR; euro-USD volatility creates rupee-term translation noise on reported debt.
• Working capital rationalized through efficiency measures, contributing to debt reduction.
• Operating cash flow remained strong despite weak earnings, supporting deleveraging.

The industry, as management sees it

Global trade is subdued and unpredictable due to US tariff escalation (India, EU 15%, China delays) and geopolitical tensions, but tariff deadlines intermittently create volume spikes into the US that help yields. Industry air/express volumes have shown double-digit growth in recent months, and near-term Jul–Sep quarter is expected to be stronger on festive-season demand. Beyond that, broader recovery is dependent on macroeconomic and geopolitical normalization.

Risks management named

• US tariff escalation (India double-tariff hit, EU 15%, China delays) could prolong trade-volume softness
• Euro appreciating against USD lifts both local revenue and SG&A — net neutral but creates reported P&L noise
• Doubtful-debt provisions of ~$2.2 mn in Q1; management says negligible from Q1 CY26 after non-core exits
• Operational outsourcing action delayed by ~2 quarters vs. plan

Asked for a number, answered without one

• Tariff cost-sharing between brands and supply chain partners: Stated no significant negotiation pressure as yield is dollar-based and freight rate as buying cost adjusts with lower demand; no quantification of share provided.

Every question, with its answer

1. 1. International supply chain GP-to-EBITDA conversion + Express recovery

   Koundinya Nimmagadda, Jefferies

   Question. On the international supply chain front, with currency movements helping gross profit but not EBITDA, can you provide granularity on gross profit to EBITDA conversion and update on cost-reduction initiatives? Separately, on express distribution, are you seeing any green shoots that give optimism for H2 given the segment has been weak for some time?

   Answer, Ravi Jakhar, Director, Strategy and Group CFO. Business is largely USD-priced; yields consistent over last three quarters. Ocean freight ~50% of cost (LCL) and 65-70% (FCL) is USD. Local cost/revenue typically net out in local currencies. EUR appreciation of 9% lifted European GP and SG&A by ~1.8% each, broadly netting out. Other cost pressures: ~$1.5 mn third-party provisions, ~$0.7 mn intercompany receivables squared off, ~$1.6-1.7 mn variable payouts. On outsourcing, operational plan to conclude 30-40 roles was delayed by ~2 quarters; financial outsourcing Phase-1 on track for next quarter with ~$1.5 mn annualized savings. Other initiatives: rate-management tools, AI/automation projects on track. Volumes 8-10% up June vs July sequentially, but seasonal. On express, July volumes looking good; expects momentum through festive season; industry has seen double-digit growth; new team settled; marginal price increases taken; cost optimization done; revenue and rates both improving.

   Follow-up. Can you quantify the one-off payments/other expenses with respect to receivables or provisions?

   Answer. Approximately $1.5 mn of third-party provisions, ~$0.7 mn of intercompany receivable positions squared off net impact, and $1.5-1.7 mn of variable payouts not previously provided for. Total ~$2.2 mn on provision side plus $1.6-1.7 mn additional variable payouts. Outlook: negligible doubtful-debt provision from Q1 CY26 after non-core exits.

2. 2. Express gross margin recovery potential

   Koundinya Nimmagadda, Jefferies

   Question. Do you have any specific comments on the gross profit or gross margin side in the express business that seems to have taken a hit?

   Answer, Ravi Jakhar, Director, Strategy and Group CFO. Express GP should be sitting at a higher number going forward. Deductions were above estimate levels (claims settle in later quarters); steps being taken could yield 0.3-0.5% GP impact. Volume scale-up will lower mid-mile operating cost (km/truck, etc.). Operating gross margin is under 25% this quarter vs ideal closer to 30% — clear room to improve. In international, percentages are misleading because freight is pass-through; recommends yield (GP/volume) as the right metric.

3. 3. Tariff impact on trade + ECU360 door-to-door strategy

   Vikram Suryavanshi, PhillipCapital

   Question. With US tariffs, how do you see reorientation of trade or early signs of regional volume impact? Separately, on ECU360 app, what is the share of door-to-door volume out of total, and is there scope to capture more of the end-to-end wallet?

   Answer, Jan Kleine Lasthues, Chief Operating Officer – ECU Worldwide. Market is volatile and hard to predict on tariffs. India hit with double tariffs; EU at 15%; China decision delayed. Tariff deadlines cause short-term volume spikes into the US that help yields. Long-term global volumes are a bit down; uncertainty is not helping global trade. Allcargo is navigating well; yields up; volumes targeted to grow. Not the largest market share, so growth is possible. On ECU360, the platform now provides instant door-to-door pricing globally; recently extended from LCL to FCL — expecting a big push in FCL volume via ECU360 and to earn additional GP on first/last leg and value-added services, not just port-to-port. Other companies have tried similar tools; ECU360 is unique as a neutral digital partner. Disconnected line issue during this exchange.

   Follow-up. With tariff hikes happening, are brands asking supply chain partners to bear part of the tariff burden?

   Answer. Yes — answered in follow-up: Allcargo is a platform/consolidator that creates efficiency via LCL loading rather than half-utilized boxes. Profit is from efficiency, not vanilla cost markup, so no significant negotiation pressure. Where tariffs shrink volumes on a lane, freight rates come down, and Allcargo passes on lower cost to customers while keeping the same margin. Yield (USD/cbm, USD/TEU) has remained absolutely consistent over the last three quarters. Jan Lasthues added: tariffs hit individual lanes (e.g., China-to-US) but the rest of the world keeps trading normally, and being a global player lets ECU/Allcargo grow on other lanes.

4. 4. ECU360 expansion to FCL and wallet-share upside

   Vikram Suryavanshi, PhillipCapital

   Question. Any update on ECU360's ability to garner more door-to-door wallet share from customers?

   Answer, Jan Kleine Lasthues, Chief Operating Officer – ECU Worldwide. ECU360 gives push-of-a-button door-to-door pricing globally — already a lot of business gained through it. Plan is to gain more, now extended to FCL in addition to LCL. Goal: grow FCL volume and earn additional GP on first/last leg and value-added services, not just port-to-port. ECU360 6 (digital quotation + full customer interaction) is a clear advantage — Jan notes he has not seen another company deliver this end-to-end in 25 years in the industry.

5. 5. Demerger and listing timeline

   Vikram Suryavanshi, PhillipCapital

   Question. What is the expected timeline for the demerger listing post-restructuring, and is it revised?

   Answer, Ravi Jakhar, Director, Strategy and Group CFO. NCLT hearing was scheduled for the day of the call; however, NCLT has been significantly occupied and a fresh hearing date is expected next month. Matter should conclude in that hearing or in September or latest October, after which the demerger can become effective. Listing process would then take a couple of months to follow.

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In their words