TCI Express Limited (TCIEXP) Q4 FY23 Earnings Concall Transcript

TCI Express Limited (NSE:TCIEXP) Q4 FY23 Earnings Concall dated May. 29, 2023

Corporate participants:

Chander Agarwal — Managing Director

Mukti Lal — Chief Financial Officer

Pabitra Mohan Panda — Chief Operating Officer

Analysts:

Alok Deora — Motilal Oswal — Analyst

Krupashankar NJ — Avendus Spark — Analyst

Amit Dixit — ICICI Securities — Analyst

Ravi Naredi — Naredi Investments — Analyst

Preet Nagarsheth — Wealth Finvisor — Analyst

Ronald Siyoni — Sharekhan Limited — Analyst

Jignesh Makwana — Asian Market Securities — Analyst

Deepak Lalwani — Unifi Capital — Analyst

Radha Agarwalla — B&K Securities — Analyst

Ritik Tulsyan — Concept Investwell — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the TCI Express Q4 FY ’23 Earnings Conference Call hosted by Motilal Oswal. [Operator Instructions]

I now hand the conference over to Mr. Alok Deora. Thank you, and over to you, sir.

Alok Deora — Motilal Oswal — Analyst

Thank you. Good afternoon, everyone. On behalf of Motilal Oswal Institutional Equities, I welcome you all for the TCI Express Q4 FY ’23 post earnings call. I would like to thank the management for giving us the opportunity to host the call.

From the management side, we have Mr. Chander Agarwal, Managing Director; Mr. Mukti Lal, CFO; and Mr. Pabitra Mohan Panda, COO for the call. We will start with the opening remarks from the management and then open the floor for Q&A session.

I would now like to hand over the call to Mr. Chander Agarwal. Thank you, and over to you, sir.

Chander Agarwal — Managing Director

Thank you. Good evening, everyone, and welcome to the Q4 and full year financial ’23 earning calls of TCI Express Limited. I would like to thank all of you for joining us here today. Our earnings presentation has been uploaded on the website as well as in the stock exchange and I hope you had a chance to review it.

I will first briefly talk about the performance for the quarter and then discuss the prevailing and projected industry and business environment and then we’ll hand over the call to CFO, Mr. Mukti, to present the financial performance of the company. Financial 2023 has been a year of growth acceleration for TCI Express. Despite heavy macroeconomic challenges and inflationary trends across India, we take pride in consistently outperforming in the industry with double-digit revenue growth and double-digit profitability margins. The accomplishment can be attributed to a strong asset light business model, efficient operations and cost-effective measures including the automation of sorting center.

Quarterly highlights. During the quarter, TCI Express delivered a notable performance with highest ever revenue, reflecting our relentless pursuit of excellence and commitment to driving sustainable growth with profitability. The growth was primarily driven by the strong demand from the MSME and corporate sector, high utilization and through the newly developed sorting center. In the light of robust performance during the quarter, the Board of Directors has recommended a dividend of INR2 per share, taking the full-year dividend to INR8 per share representing a payout of 400% on the face value of financial ’23. In addition, we also successfully completed a share buyback program of INR42.5 crores announced in Q4 financial ’22. This is a testament to our strong financial position and our commitment to rewarding our shareholders for their trust and support.

In terms of operation achievements, we expanded our presence by adding 35 new branches in financial ’23. This expansion will help us cater to our customers with more extensive reach leading to faster turnaround time. Our strategic investments in automation and digitalizations are paying off and reflecting in the structural improvement in cash flow and profitability. Among the new long services, the Rail Express is offering a good traction from customers and we have successfully expanded customer base from 250 to 2,200 and presence from 20 [Phonetic] routes to 125 routes since its inception. These services are expected to contribute positively to our top line in the forthcoming quarters, enabling us to achieve higher margin levels.

For that business sector, it also means that we take apart positive contribution to the world with sustainable actions and dedication to society and environment. We are happy to share that TCI Express, GIGA Sorting Centre in Tajnagar and Pune Sorting Centre in Chakan has been awarded the prestigious GEM 5 Certification, demonstrating our commitment to promoting environmentally sustainable green building design and construction practices. With our ESG roadmap, we are taking bold action to tackle climate change by replacing the old vehicles with new standards, investing in automation and installation of solar panels on our sorting centers and very well viable. It will enable us to be self-sufficient in our energy requirements going forward.

The Indian economy has shown [indecipherable] resilience and still shows very high growth potential and is rebounding strongly even in the face of global uncertainties with the government’s focus on infrastructure development, various reform initiatives and robust domestic demand for logistics sector to Express logistics sector is poised for significant expansion. With a major policy pushed by the government and they did by strong economic recovery, we are strategically well-positioned to capitalize on this marked growth — growth potential of the Indian economy. Our strategic initiatives and robust fundamentals will continue to propel us forward with sustained profitable growth and delivering superior value to our customers.

With this, I would now like to hand over the call to Mr. Mukti to discuss the financial performance of the quarter.

Mukti Lal — Chief Financial Officer

Yeah. Thanks, Chander, sir. And now I would like to discuss the financial performance of the company. Our total income stood at INR328 crore for Q4 ’23 as compared to INR316 crore in previous quarter and INR300 crores in same period last year, so this way it is the highest revenue we achieved in any quarter. The company posted a sequential growth of 4% and year-on-year growth of 9%. The growth was primarily driven by strong demand from SME and corporate segment as well as high utilization in newly developed sorting center facilities.

Our EBITDA for the quarter stood at INR56 crores with the margin 17% back, registering a growth of 6.7% and 18% on year-on-year and a sequential basis, respectively. The net profit of the company is INR2.38 [Phonetic] crore with margin of 11.7%, registering a growth of 20% and 7% in sequentially [Phonetic] and year-on-year basis, respectively. On a full year basis, the total income for FY ’23 stood at INR1,248 crore as compared to INR1,090 crore last year, registering a year-on-year growth of 14.5%. EBITDA for FY ’22, FY ’23 was INR202 crores with a margin of 16.2%, registering a growth of 10%. Net profit for FY ’23 was INR139 crores with the margin of 7.2% [Phonetic], registering a year-on-year growth of 8%.

We continue to generate strong operating cash flow of INR147 crores and maintain cash balance of INR49 crore. With a flexible capital structure, we are well positioned to fund our strategic growth plan. And now during FY 2023, we incurred a highest capex of INR125 crores, primarily for the purchase of land in Kolkata and Ahmedabad for setting up the new automated sorting center and for new corporate office in Gurgaon and for network expansion by adding 35 new branches to penetrate deeper in key growing markets in West and South region to cater the growing market demands. We will continue to implement the automation strategy in other sorting center to enhance overall operational efficiency and ultimately to drive profitability further.

So thank you very much and now I would like to open the floor for [Technical Issues]. Over to you, moderator. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin with the question-and-answer session. [Operator Instructions] We take the first question from the line of Krupashankar NJ from Avendus Spark. Please go ahead, sir.

Krupashankar NJ — Avendus Spark — Analyst

Good afternoon and thank you for the opportunity. My first question is on your outlook on FY ’24. I do understand that there are some headwinds with respect overall market, but how is it shaping up your targets going ahead with respect to revenue growth as well as margin expansion?

And second thing on the — recently in this quarter, you have stated that the hubs utilization, the relaunch hubs utilization have also improved. Can — but margins have jumped back to the 2Q levels, if I’m not mistaken. So is there further lever of margin expansion coming in from these automation center? Or do we have to wait for newer automation centers currently for margin expansion? Thanks.

Mukti Lal — Chief Financial Officer

Yeah. Krupashankar, you — actually can you ask one by one, because we missed few things on your [Speech Overlap].

Krupashankar NJ — Avendus Spark — Analyst

Sure, sir. And just one again, if you could —

Mukti Lal — Chief Financial Officer

Because your voice is [Speech Overlap] not clear, yeah.

Krupashankar NJ — Avendus Spark — Analyst

Okay, sir. Okay. So my first question was on your outlook for FY ’24, just wanted to understand that given that macro headwinds remain, how would you think TCI Express would grow in FY ’24, and what kind of margin expansion you can likely to see with new branch, new hubs coming up?

Mukti Lal — Chief Financial Officer

Yeah. For growth aspect, Mr. Chander would be — give you an answer on that. First, I will be take like on margin expansion, yes, in this year FY 2024, we will be — again have a planning to be increase a margin of 100 basis point. Like in this year, we couldn’t succeed on that, because in day — since day one, we said, we have not taken to price hikes in FY ’23, whole FY ’23. In this current year, we had targeted and started a process till we take a price hike from the customer. So we are looking for an — at least to increase the prices at least 2% on overall year basis. So I think we will be back to like 17.5% kind of EBITDA margin in this FY ’24.

Chander sir, kindly give a guidance on revenue please.

Chander Agarwal — Managing Director

Our revenue will be about close to 15% to 16% is what I am envisioning.

Krupashankar NJ — Avendus Spark — Analyst

But Chander, we do see that there are underlying challenges with respect to the overall industry as a whole, right, so because we are seeing that corporate structure saying that [indecipherable]

Chander Agarwal — Managing Director

I am not able to understand what you are saying. Can you [Speech Overlap]

Operator

Sorry, Mr. Krupashankar, you’re sounding very muffled, sir. Are you on a speaker phone or on a headset?

Krupashankar NJ — Avendus Spark — Analyst

Is this better? Sorry, is this better?

Operator

Yes, sir. Please go ahead.

Krupashankar NJ — Avendus Spark — Analyst

Okay, okay. So what I was asking is that while we are seeing lot of headwinds relating to the tonnage growth as a whole this year, are we aiming for higher growth with a different strategy, which is more on pricing basis or is it more on referring to specific new customers, new branches? What would be our strategy going ahead in this year at least?

Chander Agarwal — Managing Director

We are yet to see a lot of — we will not be making any significant changes from our business model, or we will not be doing anything different to just to garner additional business. We are always, as I’ve always said that, our backbone or rather our rider is the economic growth of the country. We will follow that. And if the country is projecting to grow at about 7%, we will do at about 15% to 16%. There is nothing more that we’ve done well in terms of getting additional business at the cost of 1%, 2% more, additional business at the cost of lowering profit. I don’t think that is justified. The top line business is getting the top line only. It is nowhere I think sustainable role model. So we are well equipped and well planned and well-funded internally to increase our business growth organically and we will do so.

Krupashankar NJ — Avendus Spark — Analyst

Right. Thank you. My second question was more to do with your new hubs. I mean, while the utilization seems to have improved at new outsets — new hubs which have come to, the margin expansion which we are expecting, I think — I think that is still to come through because we have just reached what the margins we had posted in second quarter. So just wanted to get your sense on — while Mukti ji had just mentioned that, can be 100% [Phonetic] expansion due to price hikes, is there some factor also coming in from that utilization going up? Is that a fair understanding to make?

Chander Agarwal — Managing Director

Mukti?

Mukti Lal — Chief Financial Officer

Yeah. So basically, we are planning to be put in a second automation in Jharkhand, Pune in this year. And as we said, like we already started for Tajnagar, so we will be — margin improvement through this system is yet to become like we just increase our margin level of 15 basis points only in this year. Next year onwards, we are trying to be like get 25 basis point on this automation only. So that will be part of strategy entities like giving us so many benefit like also mentioned in our last call, this isn’t a benefit in flexibility of operation. And whole year, we have not faced any challenge on the center and rather we improve in a timeline [Phonetic] also improved like we cut the — this reduced the time from 24-hour to eight-hour on the truck waiting time. So this way and we also able to reduce by labor numbers and flexibility in operation is there. So time — overall time has been reduced in this center from like 20-hour to only eight-hour and this will be further reduced wherever we — where we will be creating a more efficiency in a destination hub, because like in the last meeting we said. So once we will be doing both center, original and destination, there we will have the more probability and more operational efficiency on that, yeah.

Krupashankar NJ — Avendus Spark — Analyst

Thank you. I have no [Phonetic] questions, I’ll get back in the queue.

Operator

Thank you. We take the next question from the line of Mr. Amit Dixit from ICICI Securities. Please go ahead, sir.

Amit Dixit — ICICI Securities — Analyst

Yeah. Hi, good afternoon, everyone, and thanks for the opportunity. Congratulations for good performance in this quarter. I have two questions. The first one is essentially an offshoot of the previous answer that you gave regarding price hikes. So we are looking for a price increase of 2% for FY ’24. Now first of all, have you intimated the customers regarding to say how do you see the acceptance of this price hike in the current macroenvironment? And also the growth that you are seeing in the different sectors, if you could just throw some light on that? That is the first question I have.

Mukti Lal — Chief Financial Officer

Yeah. So on price hike side, yes. This is in a process where business — this all agreement is rollover on a different, different date, though majorly 50% in the first quarter of the year — any year. So we intimate to all the customer and we are able to get some hikes from these customers. And over the period we will also able to get that, because whenever it comes for renewal, we will be asked for the annual hikes from the customers and where fortunate customer is allowing to that.

And if you talk about like market condition is good, there is no challenge and everybody is anticipating to be grow the economy in the range of 7%, and as guidance given by our MD, so we will be achieved like 15% to 17% and — like 15% in volume and then 17%, 18%, and we will be having a revenue growth. So that is our target for FY ’24. And again, yes, you rightly said, so we continuously adding the branch, these new branches and new offerings whatever we started in one, one-and-a-half year back, that is also contributing continuously on this year’s to come also.

Amit Dixit — ICICI Securities — Analyst

Okay. So the second question is essentially on the capex that we are doing now. While it is appreciable that you are investing where it matters the most that is an automation. However, coming to the return side, the returns in near term might suffer a bit, because of — because these investments typically would give you return only when the entire network is automated, not when one is automated the other is not. So your thoughts on that, are you have — do you have a threshold ROE in mind, ROCE in mind that okay, my return should not go below this in the intermittent. I understand right by FY ’25, FY ’26, all the automation centers would be there so possibly margins would be in a different trajectory. But in the interim period, do you have a threshold in mind?

Chander Agarwal — Managing Director

You have to understand — let me answer this, you have to understand that the addition of what I had also said in the previous con call that the whole — the real benefit will come at all the sorting centers automated. However, since we are already very efficient in our operations, adding automation in each center will enhance that efficiency in the entire supply chain. It does not — in our case, in my company, in this study, in this company, it does not make a difference whether you’re adding one by one or you’re not — you are adding altogether. Because we already are very efficient, because we are asset light. And we have a very robust network, hub-and-spoke network. We will not see that the variance what you’re talking about in terms of a dip because of automation. It will only enhance it.

Amit Dixit — ICICI Securities — Analyst

Okay. So the — what you’re trying to implying is that the ROE that we are generating 25 [Speech Overlap]

Chander Agarwal — Managing Director

We can talk on this — we can talk — I can explain you more later, but if you have any specific other short questions I can answer that now.

Amit Dixit — ICICI Securities — Analyst

No, no, sir. I’ll take it offline. No problem. Okay. Thanks, and all the best.

Operator

Thank you, sir. [Operator Instructions] We take the next question from the line of Mr. Ravi Naredi from Naredi Investments. Please go ahead, sir.

Ravi Naredi — Naredi Investments — Analyst

Really Chander, our complete history would growing on growth path in your direction and leadership. Sir, how much railway business in overall top line and what is plan this business in next five years?

Chander Agarwal — Managing Director

Mukti?

Mukti Lal — Chief Financial Officer

Yeah, you’re talking about revenue, please?

Ravi Naredi — Naredi Investments — Analyst

Yeah, yeah, yeah.

Mukti Lal — Chief Financial Officer

So revenue like, firstly, we have to have very — like mid-term plan for the FY 2025, we want to reach on a INR1,750 crore to INR1,800 crore revenue. And then obviously, we — again there is a very simple math on that. We want to be 2X of GDP growth rates, so all depending on the GDP. Supposing tomorrow GDP just start to grow 8% to 9%, then we will be growing in the range of 20% to 22%. So this is our trajectory. We have to be growing that two adds of GDP plus something on that. So that’s why, if you see in simple terms, we are always targeting do we have 18% to 20% growth on revenue side.

Ravi Naredi — Naredi Investments — Analyst

Okay. And how much our railway business in this overall network?

Mukti Lal — Chief Financial Officer

Sorry, which one?

Ravi Naredi — Naredi Investments — Analyst

Railway.

Mukti Lal — Chief Financial Officer

Railway is again — because railway just started one-and-a-half year back. It is almost — it is still not sizable one, obviously, but is growing very faster and customer are giving good traction on that. And good thing is that it’s the highest profitable business and investing in all service level of what we are providing or competition providing in air service. So that’s why is growing fantastically. And we hope by 2025, we will be grow like more than 5% of overall revenue. That is our target.

Ravi Naredi — Naredi Investments — Analyst

Okay. And sir how many more sorting center we are planning in next five year?

Mukti Lal — Chief Financial Officer

So right now, we have only, automated is one, another one is we constructed in Chakan, which will be automated in this year. And we already bought the land for four center already, like we bought for the Ahmedabad, Kolkata, Chennai and Nagpur and Indore, five center we already bought the land. And construction is going on for the Nagpur project and remaining three, four will be started this year or next year. And then we are also looking for to buy the land for Mumbai Center and Bangalore Center. So by FY ’26 if you say, then we will be have like seven, eight more center will be ready for that.

Ravi Naredi — Naredi Investments — Analyst

Okay, okay.

Mukti Lal — Chief Financial Officer

’26 I am saying.

Ravi Naredi — Naredi Investments — Analyst

And I think this one center need INR50 crore of capex?

Mukti Lal — Chief Financial Officer

Yes, more or less INR50 crore to INR60 crore on bigger location, like if you talk about Nagpur, it will not be may cost more than like INR30 crore or Indore the same way. But if you talk about, Mumbai, yes, it will be like INR60 [Phonetic] crore, INR65 crore kind of. So, if you take an average of that, like it is in the range of INR45 crore to INR50 crore.

Ravi Naredi — Naredi Investments — Analyst

Okay. And one last sir, this 2% price hike, how much amount will be transferred to bottom line out of 2%?

Mukti Lal — Chief Financial Officer

So again, like it will be — we targeting to be directly transferred to my bottom line because our balance sheet, there our profitability is very simple. In spite of all the challenges, we are able to maintain our gross margin for this year and we will be certainly enhanced on next year by this price hike. And again, on our operational efficiency, we want to improve truck utilization from current level of — like last year, we — whole year we maintained almost 84.25%, which we will be back to 85% in this year. So our further margin will be improve on that.

Ravi Naredi — Naredi Investments — Analyst

Okay. All the best, sir, all the best.

Mukti Lal — Chief Financial Officer

Thank you, please.

Operator

Thank you, sir. [Operator Instructions] We take the next question from the line of Preet Nagarsheth from Wealth Finvisor [Phonetic]. Please go ahead, sir.

Preet Nagarsheth — Wealth Finvisor — Analyst

Yes. Good afternoon, everyone. So the question, Chander, I would like to understand better is that given the learnings from the automation conducted, the next few centers that we opened up, would we be the issue of operationalize them faster? Or would it also take similar time as it has taken for the Gurgaon?

Chander Agarwal — Managing Director

I think it will be faster because we already learned do you know [Foreign Speech]

Preet Nagarsheth — Wealth Finvisor — Analyst

I think there is some disturbance on the line. Sorry, Chander, I couldn’t catch that. But could you say by how much faster, meaning if you can quantify what would it take now to operationalize a new setting?

Chander Agarwal — Managing Director

Yeah. So basically, Gurgaon center we’ve taken almost one year to be start from the installation to commissioning and utilizing the process. And now we have very good learning from that center, so we want to be cut overall process from installation to modulation [Phonetic] is maximum to maximum eight months to nine months max. So now we almost on the words to finalize the vendor. And I think hopefully by March ’24, this center will be ready on Pune.

And this will be again — we will be having further cost cutting in this new center because we have lot of learning from this Gurgaon one and although with the good efficiency. So this is a process because in India nowhere have these kind of automation earlier and this is the first one we launched. And we have very good learning and we will be obviously replicated the same in Pune center and subsequent other centers also.

Preet Nagarsheth — Wealth Finvisor — Analyst

Okay. The other thing I wanted to understand is that, how is the competitive intensity shaping up? Because I believe that, I think even Mahindra Logistics has gotten into the B2B sides on the Express side, right? So any insights in terms of how the competitive intensity is there?

Mukti Lal — Chief Financial Officer

Chander, sir, you would like to answer?

Chander Agarwal — Managing Director

Can you repeat?

Preet Nagarsheth — Wealth Finvisor — Analyst

Yeah. Sir, I was referring to the competitive intensity in the sense that looking at the ROCE profile, right, of the industry and companies like TCI Express and others, I think there are other income — other people who are looking to get — make inroads into this sector. So for example, the recent one was Mahindra Logistics acquiring Rivigo’s B2B side. Now is this competitive intensity stopping the margin expansion? Or is it slowing it down? Or how is it shaping up on the ground? If you can shed some light?

Chander Agarwal — Managing Director

No. Yeah, let me be clear to all that it’s not the competition, which slows down our margin expansion. It is the state of the economy of the country that dictates our margin. And secondly Rivigo is not the B2B company, it is just a cutting company that owned fleet. So one has to really study the market to understand what the business everyone is talking about and what they’re actually doing. In pure B2B play, TCI Express is the only company that stands. Everybody — every other company has a mixture of fuel pump or B2C or something like that.

Preet Nagarsheth — Wealth Finvisor — Analyst

Okay. Got you. All right. Thank you so much and wish you guys all the best.

Chander Agarwal — Managing Director

Thank you.

Operator

Thank you, sir. We’ll take the next question from the line of Ronald Siyoni from Sharekhan Limited. Please go ahead, sir.

Ronald Siyoni — Sharekhan Limited — Analyst

Yeah, good morning, sir. Congratulations on good numbers, sir. Sir, I wanted to understand about sectorial growth outlook, which you are seeing for FY ’24. Say, if you are seeing a good outlook on auto, then whether we are expecting two wheelers also to come back in growth trajectory or say consumer durables returning to the growth trajectory, the inflation and the interest rates which have now been little bit taking a pause. So are you banking on the same to revive the growth in these sectors and within these segments?

Mukti Lal — Chief Financial Officer

Yeah, Chander sir, would you like to answer?

Operator

Ladies and gentlemen, the line from Mr. Chander is got disconnected. Please stay connected while we reconnect him.

Mukti Lal — Chief Financial Officer

Yeah.

Operator

Ladies and gentlemen, we have the line from Mr. Chander reconnected. Sir, please.

Ronald Siyoni — Sharekhan Limited — Analyst

Sir, should I repeat the question?

Chander Agarwal — Managing Director

Yeah. I had said that you have to really study the market to understand what competition is doing. Most of them have B2C, they have petrol pump or that mix has a larger chunk. And then if we look at the other competition you are talking about, there were fleet on us. They were doing B2B from the running trucks. So our profile is very different. Pure play express company, we are the only one in the country.

Ronald Siyoni — Sharekhan Limited — Analyst

Yeah, sir. So this was the answer related to previous question. So I was asking about, sir end-user industries like for FY ’24, which pockets say within auto? Are we looking two wheelers getting into growth trajectory, consumer durables getting revived? So this kind of growth, post March are we seeing in April and May the green shoots, the segments which were a little bit slow during quarter four? These segments are picking up or are expected to pick up in FY ’24?

Chander Agarwal — Managing Director

It’s too early to say anything. The year [Phonetic] has started. So maybe later next quarter, I can give you a better idea.

Ronald Siyoni — Sharekhan Limited — Analyst

Okay, sir. And your decision to going for a 2% price hike during this year vis-a-vis not undertaking it in the prior, say, H2. So this do instill some kind of confidence in the growth assumptions for — sectorial growth assumptions especially for FY ’24? So that’s what I was looking for in terms of auto and consumer durables especially. If you can just give a few views on this two sector?

Chander Agarwal — Managing Director

Mukti, please answer.

Mukti Lal — Chief Financial Officer

Yeah. So we are very confident to be like we started to asking to customers and customers are also responding on our request to be increase the prices. And we already taken some price hikes. And we will be in the — whole year, yes, we will be do like 1.5% to 2% we will be taking. And industry-wide, just you talk about all the industry is doing well, but specifically like we are in a pharma, it is all time industry. New industries came up with like kitchenware and bathroom ware, this is the new industry or new segment where we also targeting good revenue with our new service offerings. So combination of all the things and our customer base like 50-50, interestingly like always our SME customer is supporting a lot to us and that’s why margin level is so high in and we are just outside on that and we are generating 17% kind of EBITDA. So these number of customer base is huge. And with the expansion of branch network, we further expanding to other customer for especially these SME customer. So just put together, we are confident to be achieve the revenue growth of kind of 17% to 18% in this year. And obviously EBITDA margin, we want to be in the 17.5% kind of EBITDA margin for this year.

Ronald Siyoni — Sharekhan Limited — Analyst

Thank you, sir. One last question, what are your targets for branch expansion this year FY ’24, any specific target?

Chander Agarwal — Managing Director

So there is, we have a strategy to be like first, we opened like four, five — 450 branches over the period of last five years. So we are stabilizing that also. And in this year, we are taking a target to open a branch in the range of 50 to 75 in this year FY ’24.

Ronald Siyoni — Sharekhan Limited — Analyst

Thank you very much, sir. Best of luck.

Mukti Lal — Chief Financial Officer

Yeah.

Operator

Thank you, sir. [Operator Instructions] The next question is from the line of Mr. Jignesh Makwana from Asian Market Securities. Please go ahead, sir.

Jignesh Makwana — Asian Market Securities — Analyst

Yeah. Thank you for the opportunity. So first, if I don’t — I don’t know whether I missed on that. But if you can provide the absolute tonnage volume for this quarter and utilization mixture for the full year?

Mukti Lal — Chief Financial Officer

So, yeah — yeah, Jignesh. So basically in this quarter, we achieved a highest volume growth — volume of 2,53,000 ton for that this quarter. And we are happy to announce first time we crossed the 1 million volumes overall year, 1 million ton.

Jignesh Makwana — Asian Market Securities — Analyst

Okay. And what was the utilization mixture for the full year?

Mukti Lal — Chief Financial Officer

So full year utilization in trucks is 84.25%, in this quarter we achieved an 85% utilization.

Jignesh Makwana — Asian Market Securities — Analyst

Okay. And lastly, if you can provide absolute revenue contribution from the new service which we started?

Mukti Lal — Chief Financial Officer

So new services, we will be given a one-to-one basis. We are not disclosing the number yet because this is again not the big number right now because we started in last year or in one-and-a-half year back only these services. So once this number will be sizable, we will give that level.

Jignesh Makwana — Asian Market Securities — Analyst

Okay. So when we say we had a volume growth of about 8% in this quarter, the balance 1.5% incremental growth will have come from the new services? Is it fair to say?

Mukti Lal — Chief Financial Officer

Sorry, come back.

Jignesh Makwana — Asian Market Securities — Analyst

In this present quarter you had volumes of 8% Y-o-Y, okay —

Mukti Lal — Chief Financial Officer

Yeah.

Jignesh Makwana — Asian Market Securities — Analyst

Versus your revenue growth was 9.5% [indecipherable]. So is it fair to say the incremental 1% and 1.5% revenue growth came from the new services?

Mukti Lal — Chief Financial Officer

So rightly said, so Rail is growing faster than again other services, you can say that overall basis.

Jignesh Makwana — Asian Market Securities — Analyst

Okay, thank you. That’s all from my side.

Mukti Lal — Chief Financial Officer

Thank you. Faster in air cargo, less than surface.

Deepak Lalwani — Unifi Capital — Analyst

Hello?

Operator

Thank you, sir. Ladies and gentlemen, you are requested to use your handsets while asking a question. We take the next question from the line of Mr. Deepak Lalwani from Unifi Capital. Please go ahead, sir.

Deepak Lalwani — Unifi Capital — Analyst

Hi, sir. Thank you for the opportunity. Sir, my clarification was that — was on the FY ’24 growth. Sir, so the assumption of 16% to 17%, is it largely industry growth that you’ve embedded in your assumption? Or does it also assume gaining share from the other players?

Mukti Lal — Chief Financial Officer

No. So, basically this is — our — again we are not gaining market share. So our dependence on that, not that. So we depending on like our existing customers. So always what we are doing, we trying to get the like 50% to 60% growth from the existing customer and 40% to 50% from new customer addition. And this is going on each year and that’s why we are able to maintain our margin level also and also growth level. So that is the same planning we also have in this year as well. So we will be targeting like getting the 50% to 60% growth from the existing customer and 40% to 50% from the new editions.

Deepak Lalwani — Unifi Capital — Analyst

Right, okay. Sir, and the 2% price hike, which you’ve mentioned starting say April, starting Q1 onwards, has the competition also taken a similar sort of a price hike? And if you can indicate the level of customer stickiness in our business, does this 2% price hike — will it ensure that the customer would stick with you or he has a propensity to switch between the suppliers?

Mukti Lal — Chief Financial Officer

Yeah. So very good question. So basically, there is two aspects of that. Few companies are already asking to increase the prices from customer and few companies I think may not be asked for that. And subsequently they will be clear their position and I think Q1 at all. But we started to asking for that. And other aspect and good thing is that because we have the 50% SME customer and they usually allowing us to increase the prices in a holistic way. So you are not facing any challenge on that. And we are also not saying one, supposing we will increase our 2% customer, will be go away from us, this is not the case. And rather they are more focused on our service level and they have the long relationship with us. So like two decades — since two decades they are with us. So that is not in a challenge at all, which we have done in like FY ’21 and FY ’22, we will be same way we will be doing a ’24 also, vis-a-vis [Phonetic].

Deepak Lalwani — Unifi Capital — Analyst

Okay. Thank you, sir. And sir, you mentioned INR1,800 crore is your endeavor top line for FY ’25.

Mukti Lal — Chief Financial Officer

Yeah.

Deepak Lalwani — Unifi Capital — Analyst

And you’ve given a few drivers on your presentation. So if you can just elaborate on the increase of customer base and the branch network, some anecdotal explanation to this would be useful sir.

Mukti Lal — Chief Financial Officer

So, yeah. So, Mr. Pabitra Mohan Panda will now — want to answer on that, please.

Pabitra Mohan Panda — Chief Operating Officer

Yeah. Whereas you are planning around 50 new branches, those branches will also give us a booster for adding new geographies, having good presence and that will also help boost our revenue. And these new products, these are also giving us momentum. This will also give us additional revenue. And from our existing customers, we are also getting very good support for our new products as well as these customers where we are working. Their business is also — this is also increasing. So all three will give us a better revenue prospect.

Deepak Lalwani — Unifi Capital — Analyst

Right. Sir, has there been any big customer wins in the last five months, six months that you’ve — that you are sure of this revenue growth and the prospects for the future? If you can indicate any customer wins and which category does it belong to if —

Pabitra Mohan Panda — Chief Operating Officer

Yes. Yes. See, we doesn’t diverse customer name. Whether we are mainly depending on major players, auto and pharma, these two are our major growth drivers. And we are adding more customers in these segments.

Deepak Lalwani — Unifi Capital — Analyst

Okay. Sure, sir. Thanks. That’s it from my side. Thank you.

Mukti Lal — Chief Financial Officer

Thank you, Deepak ji.

Operator

Thank you, sir. [Operator Instructions] We take the next question from the line of Ms. Radha from B&K Securities. Please go ahead.

Radha Agarwalla — B&K Securities — Analyst

Hi, sir, thank you for the opportunity. Firstly, I can congratulate you on consistently good performance. Sir, my question was to Mr. Agarwal. So since the listing in 2016, we have seen that this year our revenues have doubled as well as margins, EBITDA margins have also doubled.

Mukti Lal — Chief Financial Officer

Excuse me, Radha, we are not able to listen you properly.

Operator

Ma’am, I request you to please use your handset while asking the question, if you are on your headphones.

Radha Agarwalla — B&K Securities — Analyst

Okay. Just a second. Hello?

Mukti Lal — Chief Financial Officer

Yeah. This is better now. Please, Radha, carry on.

Radha Agarwalla — B&K Securities — Analyst

Hello?

Mukti Lal — Chief Financial Officer

It is better now, please.

Radha Agarwalla — B&K Securities — Analyst

Yes. Okay. Thank you, sir.

Chander Agarwal — Managing Director

Just go ahead.

Radha Agarwalla — B&K Securities — Analyst

Yeah. Sir, my question was to Mr. Agarwal. So just wanted to ask that since listing in 2016, we have seen that this year in FY ’23, our revenues have doubled as well as EBITDA margins have doubled. So this was despite COVID. And sir, going forward from here on, either I see that we have two main challenges. One is DFC and second is rising competition. But on the other hand, we also have introduced many value-added products. So from here on, how do we see the business shape up? And what’s your long-term vision as in with respect to grow revenues doubling from here on? And as those double revenues, what would be our targeted EBITDA margins?

Mukti Lal — Chief Financial Officer

Chander, sir.

Chander Agarwal — Managing Director

I think we have given the guidance for doubling our revenue by 2027 and that still holds true. And I think even looking at the fact that the profitability will also grow [Phonetic] like three times. The whole — the entire company has now geared that sort of growth and we have enough — as you can see that we have enough levers to — levers to kind of like protect ourselves from competition. So I don’t think any sort of challenge will be faced. However, I always say that our rider is the economy, the Indian economy. And the success of that will also determine our success.

Radha Agarwalla — B&K Securities — Analyst

Okay, sir. And sir secondly, you are witnessing good growth in the Rail Express segment. So could you highlight us any benefits we are receiving from our — from our group companies already being present in a similar business — similar segment of the business?

Chander Agarwal — Managing Director

The group company does — yeah, the group company does totally different business. They’re doing bulk cargo and all that, which is not profitable. What we’re doing is, we’re maintaining our 18% margins and all of that. And we are using our branch network of 40,000 pick-up and drop locations and all of that. So we have completely different business altogether.

Radha Agarwalla — B&K Securities — Analyst

Yes, a different business, but given that there —

Mukti Lal — Chief Financial Officer

Yeah, Radha, to add that, so we are doing it on through passenger trains and we’re doing this good trends. So they are taking like overall full racks and we are doing through the passenger train. We’re using that belly space of these trains and passenger trains. That’s why our service delivery is just equal to air services, like supposedly you want to add from Delhi — deliver to Delhi to Chennai in one day, we can deliver like — we can — if we take the matter today, we will be delivered tomorrow evening in Chennai through passenger train. So that’s way our services are express services and is a one-third cost of in comparison to air. And what our other group companies doing, they’re doing the full racks and there’s a different business altogether. That’s bulk business basically. That is a basic business.

Radha Agarwalla — B&K Securities — Analyst

Sir, how would the user industry differ from surface express versus real express?

Mukti Lal — Chief Financial Officer

This topic [Speech Overlap] separately offline. The detailing we can talk offline. Can we have the next question?

Radha Agarwalla — B&K Securities — Analyst

Okay. Thank you, sir.

Operator

Thank you. We take the next question from the line of Mr. Alok Deora from Motilal Oswal. Please go ahead, sir.

Alok Deora — Motilal Oswal — Analyst

Hi. Sir, just one question I had. So this scrappage policy was to be implemented from April, but we understand that not really implemented in the way it was expected. But if it was to come through, then there is a fear of that trade [Phonetic] rate going up. So we are completely on our outsourced model, so how are we looking at that, sir?

Pabitra Mohan Panda — Chief Operating Officer

Sir, I will answer. The scrappage policy is not going to impact us more because our fleet, which we’ve already planned in such a way that all express — we have two types of route, one is express route, one is freedom route. We don’t keep any fleet above five years old in our fleet in express routes and not above eight years in our freedom routes. So this scrappage policy will not impact us.

Alok Deora — Motilal Oswal — Analyst

But the suppliers who are giving us their [Technical Issues] from their side freight rate could improve or it will be largely [Technical Issues] kind of a quarter-on-quarter?

Pabitra Mohan Panda — Chief Operating Officer

See this practice we are doing it since inception. So our suppliers, they are used to this. And the price point at which they are supplying is double. So they are used to this scrappage policy and they are utilizing somewhere else.

Alok Deora — Motilal Oswal — Analyst

Sure. Got it, got it, got it. Rest of the questions were already answered. That’s all from my side. Thank you.

Operator

Thank you, sir. We take the next question from the line of Mr. Krupashankar. Please go ahead, sir.

Krupashankar NJ — Avendus Spark — Analyst

[Technical Issues] if you can give us a broad sense with [Technical Issues]

Operator

Krupashankar, sir, we couldn’t hear you, sir. Could you repeat your question?

Krupashankar NJ — Avendus Spark — Analyst

Yeah. Is it better? Hello?

Operator

Yes, sir. Please go ahead.

Krupashankar NJ — Avendus Spark — Analyst

Am I audible?

Operator

Yes, sir.

Krupashankar NJ — Avendus Spark — Analyst

Mukti, just wanted to get the extent of contribution from each end user industry, for example, auto, pharma et cetera.

Mukti Lal — Chief Financial Officer

Sorry, can you come again? I could not hear properly to you please, Krupashankar.

Krupashankar NJ — Avendus Spark — Analyst

Yes, sir. Revenue contribution from each industry like auto, pharma, et cetera?

Mukti Lal — Chief Financial Officer

Yeah. So basically, again these are the five major vertical, which is giving around 55% revenue to us. And these are like auto, pharma and electronics, lifestyle, and engineering. So these five vertical is giving 55% revenue to us. And lead contributor like pharma and auto and then led by like engineering and electronics and this lifestyle products.

Krupashankar NJ — Avendus Spark — Analyst

Got it. You wouldn’t be keen on breaking that further, is it sir?

Mukti Lal — Chief Financial Officer

Sorry, come again.

Krupashankar NJ — Avendus Spark — Analyst

Contribution from each of them, you wouldn’t be willing to share?

Mukti Lal — Chief Financial Officer

It’s not be more than from one sector, it’s not more than like 13%. It is hovering around in the range of 9% to 13% major.

Krupashankar NJ — Avendus Spark — Analyst

Okay, sir. My second question is, to the extent of contribution from new businesses, just wanted to get a grasp what would be that percentage — that percentage in FY ’23?

Mukti Lal — Chief Financial Officer

Sorry come again Krupashankar, please.

Krupashankar NJ — Avendus Spark — Analyst

Sir the new businesses, the contribution — revenue contribution in FY ’23, just wanted to know what would that be?

Mukti Lal — Chief Financial Officer

From the new services?

Krupashankar NJ — Avendus Spark — Analyst

Yeah, new services altogether.

Mukti Lal — Chief Financial Officer

So altogether, if you talk about like except surface, we have almost around 18% kind of contribution we have.

Krupashankar NJ — Avendus Spark — Analyst

Got it. Got it. And last question from my side. So when I am looking at it, the branch addition, vis-a-vis the revenue per branch, I mean you want to touch a number which is revenue per branch going to be much higher than what we had seen in FY ’19. So incrementally we — can you expect that — do you expect that the mix will be more include of corporates as we’re taking more and more volumes from new customers from the corporate side rather than SME’s. Do you expect that corporate proportion would go up?

Mukti Lal — Chief Financial Officer

So that is very good question, Krupashankar. So basically, it is not like that. You rightly said, we open up these new branches, even these are the small branches, but giving the good profitable business, that’s why we continue to add it that. But it does not mean this business from the big customer has reduced as a proportionately, no, this is also again we have the same kind of proportion of like 50% to — 50%-50%. It may be slightly improved like 51%, 49% on a particular quarter or particular year. But continually we have the 50%-50% because whatever, here we add like 100 SME customer, then one big customer can be given the equivalent business for that. So that sense it is not the case. But though, we are always keeping in mind we are not depending on a particular one single customer, that’s why no single customer is giving more than 1%, 1.5% revenue to us.

And in other terms like more — top 25 customer is not giving more than 15% revenue to us. So that sense, we have very good system where we — our dependence on a particular customer is not there and that’s why like you rightly said in ’19, what were my margin levels and what the margin level we have in ’22? This is a sharp jump of that and the one-off region because we have also added the branches and we are getting the benefit of these small customers matching. So because — so to — it is very easy to add the business from the big customers, but to add from the equal business from the small customers is big challenge and that’s why we’re opening up the branches to match that.

Krupashankar NJ — Avendus Spark — Analyst

All right, sir. Thank you and all the best.

Operator

Thank you, sir. [Operator Instructions] The next question is from the line of Mr. Ritik Tulsyan from Concept Investwell. Please go ahead, sir.

Ritik Tulsyan — Concept Investwell — Analyst

Yeah. Thank you for taking my question. So my first question is in railways, we have grown quite aggressively, right, from 250 customers to 2,200 customers. So I just want to know what we are doing differently in terms of customer acquisition strategy? So that will be the first question.

Mukti Lal — Chief Financial Officer

Yes. So it’s a very good question. So basically our strategy since day one is very clear. We want to acquire the competitions air customer, which they are paying like INR100 per kg or INR150 per kg. We want to serve them with the kind of one-fourth or one-third cost with the similar kind of service level we want to deliver. So that’s why it’s very clear strategy. We had customers are so happy. Though in the first consignment, they slightly maybe have the doubt because from air to rail sometimes they may have the doubt, but once they come in with us, then they are giving the repetitive business to us. And these all customers are — good thing is that there is small — small customer we are doing the business with them. And now good thing is happening like consistent or repetitive business is coming from the existing customers. And — so both way we’re doing, like doing the business with the existing customer and also adding the new numbers. So that way strategy is very clear. India’s rail network is super and especially passenger train services are also good. Now all services are on time. So that’s why this business is getting the traction from the customer and getting good margin.

Ritik Tulsyan — Concept Investwell — Analyst

Okay, thank you. And one more question. So in terms of customer concentration in specific to railway business, so do we have the same concentration level as the company level? Or is it different in terms of customer concentration levels?

Mukti Lal — Chief Financial Officer

So our dependence on big — sorry, small customer is higher, not any big customer, which is anything like contributing 5% or 10% on that particular rail business, no. It is again like similar kind of 2%, 3% is — like top, again top 10 customers not contributing more than 10% to 15% business to us in rail as well.

Ritik Tulsyan — Concept Investwell — Analyst

Okay, thank you. And I just have one more last question. So in terms of other businesses, right, that is pharma and C2C business, how that is panning out in terms of your expectation? If you cannot quantify numbers, qualitative will also work.

Mukti Lal — Chief Financial Officer

So again our strategy is very clear. Cold chain pharma is very limited business. And so there will not be a much big aspiration on this business. But yes, C2C really is a much bigger business in market, though it is on this segment. So we are creating for that and aspiration is higher on these two businesses in comparison to like pharma cold chain and all.

Ritik Tulsyan — Concept Investwell — Analyst

Okay. Thank you so much for taking my question.

Mukti Lal — Chief Financial Officer

Thank you.

Operator

Thank you. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments.

Chander Agarwal — Managing Director

Thank you, everyone, for joining the investor call financial year ’23. I expect TCI Express to continue its growth and profit [Phonetic] in the year — financial year ’24. And I look forward to speaking to everyone again in the second quarter — the first quarter of financial ’24. Thank you very much.

Mukti Lal — Chief Financial Officer

Thank you, everyone.

Operator

[Operator Closing Remarks]