Patel Integrated Logistics Ltd Q4 FY23 Earnings Conference Call Insights

Key highlights from Patel Integrated Logistics Ltd (PATINTLOG) Q4 FY23 Earnings Concall

Q&A Highlights:

• [00:11:04] Sanjeev Damani from SKD Consulting enquired how many trucks of different sizes does the company own or associate with and does it do road transportation in addition to air cargo. Mahesh Fogla ED said PATINTLOG is predominantly an air cargo company but uses trucks for overnight journeys. It aims to become an asset-light company and does not carry substantial trucks in its books.

• [00:12:08] Sanjeev Damani from SKD Consulting asked if the company only carry air cargo or does it also book and supply trucks for earnings. Mahesh Fogla ED replied that the company moves goods by road for overnight journeys but focuses more on air cargo and is looking for further opportunities in roadways. It will consider other options if opportunities arise.

• [00:12:59] Sanjeev Damani from SKD Consulting queried what kind of bookings does the company have in air cargo and the scope of this activity. Mahesh Fogla ED answered that the company carries all goods that can move through the air, including e-commerce goods like electronics, pharma goods, and documents. It selectively moves costly goods and is present in more than 100 locations in India.

• [00:17:14] Sanjeev Damani from SKD Consulting asked to quantify the number of clients and percentage of business from the largest clients and specify if there are long-term tie-ups with big names. Mahesh Fogla ED said the company’s USP is it does not depend on a single client and has more than a four-digit number of clients. It has a clear mandate to expand its customer list and not depend on any single customer, with no double-digit percentage contribution from any single client.

• [00:22:57] Ankur Shawariya asked about the company’s major competitors. Mahesh Fogla ED replied that PATINTLOG is a public listed company with a Pan-India network and operates in the niche area of consolidating cargo through passenger aircraft. There is local level competition but not in the company’s area of operation.

• [00:24:04] Anil Bhagwani enquired about the future prospects of the company. Mahesh Fogla ED answered that the company has continuously reduced its debt and has substantially reduced it in the last quarter, resulting in prime real estate becoming mortgage-free. It is exploring how to exploit this real estate to create value for stakeholders and the prospects look very good as the aviation sector grows.

• [00:26:39] Anil Bhagwani if the company advertise digitally or otherwise or is B2B enough for it. Mahesh Fogla ED said the company has recently appointed a Public Relations agency to explore ways to create awareness about the company and its strong brand recall. It hopes to address concerns about advertising in the future.

• [00:27:49] Rishikesh from RoboCapital asked about the growth outlook and explain the roadmap for returning to pre-COVID levels of revenue and EBITDA margins. Mahesh Fogla ED replied that the company does not see any challenge in returning to pre-COVID levels as it is on a strong footing with positive cash flow and financial stability. The aviation sector is growing and the company is open to creating value wherever possible and aims to reach even higher than pre-COVID levels.

• [00:31:33] Rishikesh of RoboCapital enquired what kind of steady state EBITDA margin does the warehousing and air freight businesses make. Mahesh Fogla ED answered that the air freight business is a high volume, low EBITDA business with an expected EBITDA range of 4-5%. Increasing turnover and corresponding growth margin will result in higher EBITDA margins. The current EBITDA may not correctly represent the company’s ecosystem and employee strength.

• [00:36:28] Rishikesh of RoboCapital  asked about the kind of ROCEs the company is looking to achieve. Mahesh Fogla ED answered that the company wants to achieve double digit ROCE.

• [00:40:04] Ankur Shawariya asked if the company is considering entering the B2C market to reduce trade receivables and cash cycle. Mahesh Fogla ED said that while B2C has the positive of reducing trade receivables and cash cycle, it can also be capital intensive and result in cash burning for last mile delivery. The company will selectively enter B2C while conserving its cash as a priority.