AVG Logistics Limited

Q&A

Q1: The company has reported a revenue growth of around 6% year-on-year in Q1. However, profitability has grown much faster, with PAT up nearly 30%. What is driving this faster growth in profitability?

A: The stronger growth in profitability reflects the benefits of better operational efficiency, asset utilization, and cost discipline. We are continuously working on fleet productivity, reducing empty runs, improving freight planning, optimizing turnaround times, and improving warehouse productivity. Together, these small operational improvements have a meaningful impact on our profitability.

Q2: What is the company's outlook for revenue growth in FY27?

A: We expect revenue growth of around 15% to 20% for FY27. This outlook is supported by our current business, new contracts signed, and full-year revenue contributions from assets added late in FY26, which will be fully utilized during the current year.

Q3: How much of this projected 15% to 20% growth is organic versus growth coming from new customers and contracts?

A: We target around 7% to 8% growth to come from new business contracts and around 8% to 10% to be driven by expanding our business with existing customers.

Q4: Is there any seasonality in the business that investors should consider when analyzing Q1 performance?

A: Yes, there is seasonality. Generally, Q1 and Q3 are normal operating quarters, while quarter 4 usually has better volume due to higher demand from some of the industries we serve. Quarter 4 and 3 are much better than quarters 1 and 2, so quarterly numbers should be looked at in the context of a full financial year.

Q5: What incremental revenue and PAT can the company generate from the capital raised through the recent rights issue?

A: We raised ₹52.93 crores through the rights issue, which will strengthen our working capital position and support our growing business requirements. While it is difficult to give a specific revenue or PAT number against the rights issue proceeds alone, at an overall level, we expect incremental revenue and better PAT from new contracts, higher fleet utilization, and the capex done in FY26 and FY27.

Q6: What amount of capital expenditure (capex) are you planning to do this financial year, and how does it compare to last year?

A: In FY26, we did a capex of around ₹62 crores. For FY27, we are planning further capex of around ₹60 crores.

Q7: Why is the company focusing on a leasing model for adding fleet assets instead of direct ownership?

A: We are evaluating the leasing of assets to balance our financial requirements. Our approach is to maintain a balance between asset ownership and leasing so that we can support business growth while keeping our financial and capital requirements under control. For instance, additional fleet requirements—particularly in the heavy-capex EV segment will be fulfilled through operational leases of vehicles.

Q8: Can you brief us on the Haldiram Nagpur contract and how the placement of 100 dedicated vehicles will benefit your business?

A: We received a contract for 100 dedicated vehicles from Haldiram Nagpur. On August 21st, 40 vehicles were deployed, with the remaining 60 under fabrication and expected to deploy within the next one to two months. Since these are dedicated vehicles, they provide better revenue visibility and fleet utilization planning.

Q9: Are there opportunities to scale this partnership with Haldiram Nagpur, and how does return journey logistics work?

A: Yes. We will secure backloads during return journeys from locations like Bopal, Indore, Nagpur, Jagalpur, and Bijeria, improving profitability. Furthermore, after deploying these initial 100 vehicles, Haldiram's management has asked us to add another 100 vehicles by December 2026, which provides strong future opportunities in our dedicated model.

Q10: Which of your business segments are currently generating the best profit margins?

A: We generally see better margins in specialized segments like dedicated vehicles, cold chain business, reefer trucks, warehousing, and factory/warehouse operations management. These are specialized areas with less organized competition where we can achieve better utilization and margins compared to traditional transportation.

Q11: For your new liquid logistics segment, are you purchasing the tanks or taking them on lease?

A: We have already purchased two sets of tankers (two trains) on our books. For future additions over the next year or so, we want to lease the tanks to keep them off our balance sheet, though we may consider buying two more trains afterward.

Q12: Will the new liquid logistics, EV, and LNG businesses have higher margins than your traditional transportation business?

A: Yes, both specialized segments offer higher margins. Customers pay better rates due to specialized route management and government policy requirements. Furthermore, operational costs for EV and LNG are lower compared to diesel, leading to better profit margins.

Q13: Can you explain how your in-house real-time vehicle tracking software benefits the company?

A: Our in-house software utilizes GPS dash cams to enable real-time tracking and safety monitoring. Giving customers access to this dashboard has improved customer planning for loading/unloading and enhanced asset utilization. This technology-driven efficiency has helped us increase our overall running mileage, targeting a 15% to 20% growth in vehicle utilization.

Q14: Could you provide an update on the progress of your joint venture (JV) with the BNAT group?

A: We have completed the formalities and incorporated Carbon Light Logistics Private Limited. This company will focus exclusively on green transportation (LNG, EV, CNG) for sectors like steel, metal, and cement, and we expect operations to officially start on October 1st.

Strategic Outlook

1. Management has set a clear objective of achieving 15% to 20% revenue growth for FY27. Confidence is backed by an active pipeline of new customers and full-year revenue contributions from assets added late in FY26.
2. The company expects approximately 7% to 8% of its FY27 growth to come from new business contracts, and 8% to 10% to be driven by expanding existing client accounts. The actual contribution from each avenue may fluctuate depending on the timing of contract deployments.
3. AVG aims to add a total of around 200 vehicles to its sustainable fleet by March 2027. This includes expanding CNG, LNG, and electric vehicle configurations to match customer commitments.
4. Following the initial deployment of dedicated vehicles, AVG expects to secure a contract for an additional 100 vehicles by December 2026. This relationship provides strong long-term revenue visibility.
5. The company is aligning its network to capture opportunities created by government infrastructure initiatives like PM Gati Shakti and the Dedicated Freight Corridor (DFC). AVG has already begun operations through the DFC.
6. AVG’s priority remains delivering growth efficiently and maintaining financial discipline. New investments are tightly coupled with real customer opportunities, ensuring every asset addition is backed by secure business.

Business Strategy

1. AVG's core strategic focus for FY27 is growing the business by maximizing the productivity of its existing fleet. The company is actively securing backloads for return journeys to keep vehicles running productively both ways.
2. Rather than relying only on new customer acquisitions, the company is actively increasing its share of wallet with existing clients. Many customers now seek a single partner to manage multiple legs of the supply chain, which plays directly to AVG’s integrated strengths.
3. To prevent heavy capital expenditure from straining the balance sheet, AVG is shifting toward operational leasing. This model will be used to fulfill additional vehicle requirements, particularly in the heavy-capex electric vehicle and liquid logistics segments.
4. The company is using its proprietary real-time vehicle tracking software and GPS dash cams to offer better shipment visibility and control. Giving customers direct access to this dashboard has helped AVG increase its overall monthly fleet mileage.
5. In response to customer demands for cleaner supply chains, AVG is building out alternative fuel capability with EV, CNG, and LNG. Fuel transition is treated as a long-term commercial opportunity rather than just a sustainability initiative.
6. The company is maintaining a strict balance between investing in high-return customer projects and rewarding shareholders. This is highlighted by declaring a dividend of ₹1.20 per equity share for FY26 alongside planned growth capex.

Key Highlights

1. Operating revenue grew by approximately 6% year-on-year to ₹132.48 crores, while profitability outpaced revenue growth with a 30.62% surge in Profit After Tax (PAT) to ₹6.48 crores. This highlights the early positive impact of operational efficiencies and asset utilization.
2. Profit Before Tax (PBT) and PAT margins improved by 98 and 92 basis points respectively due to continuous efforts in fleet productivity. The company successfully reduced empty runs and improved freight planning to boost overall profitability.
3. AVG Logistics successfully raised ₹52.93 crores through a rights issue in Q1 FY27 to fortify its financial position. This capital provides greater working capital flexibility to support expansion plans and meet customer demands.
4. The company secured a long-term contract with Haldiram Nagpur to deploy 100 dedicated vehicles. This contract expands their footprint across the western, southern, and key eastern markets including Odisha, Bihar, and Jharkhand.
5. AVG entered into a joint venture with the BNAT group, incorporating Carbon Light Logistics Private Limited to manage green transport across metal, steel, and cement sectors. Operations are slated to commence on October 1st, leveraging CNG, LNG, and electric vehicles.
6. Higher profit margins are being achieved in specialized segments like cold chains, liquid logistics, reefer trucks, and warehouse management. These specialized services experience less organized competition and offer better utilization compared to traditional transport.

Performance

Q1 FY27:

1. Revenue from operations: ₹132.48 crs (↑5.96% YoY)
2. EBITDA: ₹19.48 crs | EBITDA Margin: 14.70% (↓420 Bps)
3. PAT: ₹6.48 crs | PAT Margin: 4.89% (↑92 Bps)

FY26:

1. Revenue from operations: ₹578.60 crs
2. EBITDA: ₹108.57 crs | EBITDA Margin: 18.76%
3. PAT: ₹26.27 crs | PAT Margin: 4.54%