TCI Express Limited (TCIEXP) Q3 FY23 Earnings Concall Transcript

TCI Express Limited (NSE:TCIEXP) Q3 FY23 Earnings Concall dated Jan. 31, 2023.

Corporate Participants:

Mukti Lal — Chief Financial Officer

Chander Agarwal — Managing Director

Analysts:

Amit Dixit — ICICI Securities — Analyst

Ravi Naredi — Naredi Investment Private Limited — Analyst

Rakesh Wadhwani — Monarch AIF — Analyst

Bhavya Gandhi — Dalal & Broacha Stock Broking Limited — Analyst

Krupashankar NJ — Avendus Spark — Analyst

Nidhi Babaria — Envision Capital — Analyst

Deepak Lalwani — Unifi Capital — Analyst

Radha Agarwalla — B&K Securities — Analyst

Aejas Lakhani — Unifi Capital — Analyst

Harsh Shah — Jefferies — Analyst

Aman Vij — Astute Management — Analyst

Kunal Bhatia — Dalal & Broacha Stock Broking Limited — Analyst

Jainam Shah — Equirus Securities — Analyst

Ronald Siyoni — Sharekhan Limited — Analyst

Rikesh Parikh — Rockstud Capital — Analyst

Keshav Bagri — VT Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the TCI Express Limited Q3 FY ’23 Results Conference Call hosted by ICICI Securities. [Operator Instructions]

I now hand the conference over to Mr. Amit Dixit. Thank you, and over to you, sir.

Amit Dixit — ICICI Securities — Analyst

Yeah, thank you so much. Good evening, everyone. On behalf of ICICI Securities, I welcome you all for TCI Express Q3 FY ’23 post earnings call. At the outset, I would like to thank the management for giving us an opportunity to host the call. From management side, we have Mr. Chander Agarwal, Managing Director; Mr. Mukti Lal, CFO; and Mr. Pabitra Mohan Panda, COO on the call. We can start with opening remarks from the management and then open the floor for Q&A.

Without much ado, I would like to pass on the control to Mr. Mukti Lal. Over to you, sir.

Mukti Lal — Chief Financial Officer

So Mr. Chander would be giving this presentation, please.

Chander Agarwal — Managing Director

Good evening, everyone, and welcome to Q3 financial ’23 earnings call of TCI Express. I would like to thank everyone for joining us here today. To start with, I will give you an overview of the industry and business for the quarter, then will hand over the call to our CFO, Mr. Mukti to brief on the financial performance for the quarter. Our earning presentation has been uploaded on our website and stock exchange and I hope you had a chance to pursue it.

Q3 financial ’23 ended on a strong note with sustained growth in industrial activities and strong — not so strong demand from festive season. The growth trend was visible in the E-Way bill generation, which ended at a note of INR8.1 crores and the IIP, which rose to 7% in the month of November ’22. With the growth in industries, I’m pleased to announce that TCI Express recorded another quarter of stellar performance with highest quarterly revenue of INR315 crores, registering a growth of 9% year-on year and 1% on sequential basis. The growth was primarily driven by increased demand and strong contribution from SME and corporate customers.

EBITDA for the quarter was INR47 crores, registering a margin of 15% profit and our profit after tax stood at INR32 crores with a margin of 10%. The margins during the quarter was slightly impacted by a drop in utilization levels during the festive season and as well as an increase in — slightly increased expenses due to the administrative and advertisement expenses. On year-to-year basis, the company has delivered exceptional performance with revenue from operations of INR923 crores, a growth of 16.6%. EBITDA grew by 12% to INR146 crores and PAT grew by 8.5% to INR101 crores.

In light of strong performance during the nine months of financial year ’23, the Board of Directors has recommended a second quarterly dividend — interim dividend of INR3 per share, taking the total dividend to INR6 per share for the nine months financial year ’23, representing a payout of 300% on the face value and 23% on the EPS. Furthermore, as of 31st December ’22, we have successfully completed the buyback of 1,82,500 shares, amounting to INR41 crores, including taxes. This reflects our unwavering commitment to deliver long-term value to our shareholders.

More on the quarterly developments. During the nine months financial year ’23, we incurred an capex of INR99 crores primarily towards the land purchase for setting up automated sorting center in Calcutta and for the new corporate office in Gurgaon. Furthermore, we expanded our footprint by adding 28 new branches in Western South region to cater to the growing demand with unparalleled services. TCI Express has demonstrated agility and embracing cutting-edge technology by making significant investments in automation in the sorting centers.

We are making constant developments to enhance our operation efficiency by implementing our learnings from Gurgaon centre to streamline the process in other sorting centers. The automation in Pune sorting center will be finalized by year — financial year ’24. These investments in automation backed by our asset-light business structure will result in faster to non-time increased capacity and reduce labor and direct costs, ultimately driving the margin growth.

Our newly-launched services are delivering very well, especially the Rail Express service, where we have expanded our customer base and presence from 10 routes to 225 routes to cater to the growing demand. All the other products are doing fairly well in light of the nominal economic growth.

Looking ahead to logistics industries’ undergoing significant transformation, as the government recognizes the importance in driving the growth of the country’s GDP. As India continues to grow as a major player in the global economy, the demand for logistics services is expected to continue to grow.

Now, I would like to hand over the dais to Mr. Mukti to talk about the financial performance for the quarter. Thank you.

Mukti Lal — Chief Financial Officer

Thank you, Mr. Chander. And now I would like to discuss the financial performance of the company. During the quarter, our revenues from operations stood at INR314 crores for Q3 FY ’23 as compared to INR310 crores in Q2 and INR287 crores in Q3 FY ’22. The total income for the quarter was INR316 crores, as compared to INR312 crores in Q2 and INR289 crores in Q3, translating into a growth of around 2% and 9% in sequential and on year-on-year basis respectively. And this revenue growth is attributed to increased demand from festive, you know, festive season and strong contribution from SMEs and corporate customers.

And on the nine-month basis, we have delivered a stellar performance like — with revenue from operation of INR915 crores, a growth of INR16.8 crores, EBITDA grew by 12% to INR146 crores and profit after tax has grown by 8.5% to INR100 crores. So as a result of continued focus on revenue, quality and profit growth, we generate strong cash flow of INR95 crores and made proactive investment with capex of INR99 crores in nine months of this year. The government initiative for the seamless movement of goods, overcoming transport-related challenges and encouraging legislation [Phonetic] along with significant reduction in time and cost augurs well for the logistics sector, with major policy push aided by strong economic development. We remain confident in our ability to capitalize the opportunities and to solidify our leadership position with industry-leading services.

So thank you very much. And now I would like to open the floor for question and answer. Over to you, moderator, please.

Questions and Answers:

Operator

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

Ravi Naredi — Naredi Investment Private Limited — Analyst

Thank you, Chanderji. Sir, I could not understand this time the result, is the margin is down and we have acquired TCI Express PTE [Phonetic] Limited. So first, the reason for that.

Mukti Lal — Chief Financial Officer

So this is not acquiring anything, it is an opening of the subsidiary.

Ravi Naredi — Naredi Investment Private Limited — Analyst

Okay.

Mukti Lal — Chief Financial Officer

And the margins are down. This is cyclical, it’s not a constant basis. The economic situation in India as you know, it is not very strong at the moment.

Ravi Naredi — Naredi Investment Private Limited — Analyst

Okay, okay.

Mukti Lal — Chief Financial Officer

It’s a temporary head, it’s not —

Ravi Naredi — Naredi Investment Private Limited — Analyst

No, no. I understand. But you are management is so nice. I never see dip in the margin, just the first time I surprised by this happened, that’s why I’m asking you this. And sir —

Mukti Lal — Chief Financial Officer

See, it has no problem. It’s a good question. It’s a valid question. And in fact, we were surprised also. What has happened is that Diwali, first of all, was not very strong and it fell in the four days of holidays. So pretty much one week of business was missing in the month of October, more than that. So in general, yeah, so it was a big surprise for us also. And unfortunately, even what I understand is that the overall economic growth in Q3 was very poor. So looking at that, yeah, we had that, but we have to look at the future always and we have to see that.

Ravi Naredi — Naredi Investment Private Limited — Analyst

Right, right, right. Definitely, definitely. I agree. And sir, who is our peer one and two, can you give the name or will you skip that question?

Mukti Lal — Chief Financial Officer

So you can — so I think Gati and second one is Blue Dart.

Ravi Naredi — Naredi Investment Private Limited — Analyst

Gati and Blue Dart. And sir, our sorting center, Pune, Gurgaon, Kolkata, Chennai, anymore in line?

Mukti Lal — Chief Financial Officer

Yeah. So on that, we already launched Gurgaon one is fully automated one.

Ravi Naredi — Naredi Investment Private Limited — Analyst

Yes, this is number one?

Mukti Lal — Chief Financial Officer

It is the number one. And second, we already built up, but we are not automated yet, we will be automated in FY ’24 by ’24 and then subsequently will be automatized all Chennai, Kolkata, Bangalore, Ahmedabad and all subsequently.

Ravi Naredi — Naredi Investment Private Limited — Analyst

Chennai, Kolkata, Bangalore?

Mukti Lal — Chief Financial Officer

And Mumbai.

Ravi Naredi — Naredi Investment Private Limited — Analyst

Bangalore and Mumbai. Okay. And all will be in one year or a different, different fortune?

Mukti Lal — Chief Financial Officer

So it is a long-term strategy of like three, four years. So we are targeting to be at least to making in a average like three in a two-year time.

Ravi Naredi — Naredi Investment Private Limited — Analyst

Okay.

Amit Dixit — ICICI Securities — Analyst

See, we don’t want to be also doing too much beforehand before too fast. We want to go with the flow of the economy of the business also.

Ravi Naredi — Naredi Investment Private Limited — Analyst

Yes, sir. And how is the Rail Express working and can you tell railway has changed the — in last few years working has that been changed in few years?

Chander Agarwal — Managing Director

So railway what services we are giving, this is a rail service through passenger train.

Ravi Naredi — Naredi Investment Private Limited — Analyst

That I knew, that I knew.

Chander Agarwal — Managing Director

And that include a lot. On that, efficiency has improved a lot, all trains are on time now, schedule is maintained. They are very aggressive on to be giving that space to us and all. So that’s why it’s fantastic.

Ravi Naredi — Naredi Investment Private Limited — Analyst

Yes. Because without railway — help of railway, we can’t run this railway express, right?

Chander Agarwal — Managing Director

Yeah.

Ravi Naredi — Naredi Investment Private Limited — Analyst

And sir, what will be the capex in Gurgaon office, sir, our corporate office?

Chander Agarwal — Managing Director

So capex — land, we just bought. And construction we may be take like INR20 crores, INR25 crores. We will be like — it will be maybe take like two year to construct.

Ravi Naredi — Naredi Investment Private Limited — Analyst

It is a small one. Okay, thank you very much. All the best, sir.

Chander Agarwal — Managing Director

Yeah.

Operator

Thank you, sir. We take the next question from the line of Mr. Rakesh Wadhwani from Monarch AIF. Please go ahead, sir.

Rakesh Wadhwani — Monarch AIF — Analyst

Hello, thank you for the opportunity. Sir, I have one question, can you please tell us the volume tonnage for the nine months and for the FY ’22?

Chander Agarwal — Managing Director

Yeah. So in this nine month, we have a total volume of 7,30,000 tonne for that nine months. And last year it was 6,30,000 tonne for nine months and for this quarter we have achieved 2,53,000 tonne and same quarter of last year was 2,30,000 tonnes.

Rakesh Wadhwani — Monarch AIF — Analyst

Thank you, sir. That was very helpful. Sir, I have a second question, we have given the guidance like we want to double our revenue and the EBITDA 20%. So just wanted, in the last two years because of the COVID, business were impacted, so we did not witness a tonnage growth. But in the coming years, what kind of tonnage growth you are witnessing? Because are you less foresee.

Chander Agarwal — Managing Director

So tonnage growth will be again it will depend on the business growth also. Therefore, if everything is in order, we know that we are still under the impact of — the economic impact of COVID this year, not because there is COVID, but of the leftover problems. So if all in all, things are in order next year, then we will definitely see higher volume growth also.

Rakesh Wadhwani — Monarch AIF — Analyst

No, so in order to achieve a INR2,000 crores revenue by FY ’25, we — so some growth will come from the tonnage and some growth will be become from the improvement in the efficiency that we have done in the past two years that we have — the company has shown. So just want to understand like now the growth will be coming from both, tonnage growth, as well as the improvement in efficiency. So I just want to understand if you can put more color on the like volume, how you’re seeing that will be very helpful?

Chander Agarwal — Managing Director

So on that part, like in this year, we were not able to take any price hike, not much price hike, like I — we have taken like 1.5% [Phonetic] — 0.5% or 1% price hike on this. So volume growth and revenue growth is more or less same in this year. Otherwise, in each year, we would like to be — take like 2%, 3% at least difference in a price hike and that will be continuing on next year and next year onwards, like we have also done in the past also same way. So next year onwards, we are also targeting volume growth in a 18% kind of and then revenue growth like 20%, 21%. And also like in the next year as well. So like we’ve taken a target of INR2,000 crores, maybe reach in the range of like INR1,900 crores also. With the EBITDA margin, still we are hopefully to achieve this 19%, 20% EBITDA margin by 2025.

Rakesh Wadhwani — Monarch AIF — Analyst

Okay, okay. Sir, that was very helpful. Just one last data point. So you mentioned for the nine months, the volume was 7.3 lakh tonnes and versus 6.3 lakh for the full FY ’22 for the nine months?

Chander Agarwal — Managing Director

Nine months, I’m talking.

Rakesh Wadhwani — Monarch AIF — Analyst

Okay. Sir, can you please give the number for the whole FY ’22?

Chander Agarwal — Managing Director

That was I think — it was 8,65,000 tonne.

Rakesh Wadhwani — Monarch AIF — Analyst

8,65,000 tonne.

Chander Agarwal — Managing Director

Yeah.

Rakesh Wadhwani — Monarch AIF — Analyst

Okay, sir. Thank you. I’ll come back in the queue. Thank you.

Chander Agarwal — Managing Director

Thank you.

Operator

Thank you, sir. [Operator Instructions] Thank you. We take the next question from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking. Please go ahead.

Bhavya Gandhi — Dalal & Broacha Stock Broking Limited — Analyst

Yeah, thank you for taking my question. Am I audible?

Operator

Yes, sir.

Chander Agarwal — Managing Director

Yes.

Bhavya Gandhi — Dalal & Broacha Stock Broking Limited — Analyst

Yeah. Sir, is it possible to share the current utilization level and the utilization level for previous quarter as well?

Chander Agarwal — Managing Director

Yeah, so utilization level in this quarter is reduced to 83% and that was in fact of like, in that Diwali time, that was a long weekend of almost five days, and that’s why on that month, our utilization level has dropped from 84%, 85% to 75% to 76% and average of this quarter is reached to 83%.

Bhavya Gandhi — Dalal & Broacha Stock Broking Limited — Analyst

Okay. And the previous quarter?

Chander Agarwal — Managing Director

Previous quarter it was 85%.

Bhavya Gandhi — Dalal & Broacha Stock Broking Limited — Analyst

85%, right. And also wanted to understand on the Rail Express, what would be a margin, if at all you can share that and how much revenue does it contribute as of now?

Chander Agarwal — Managing Director

So revenue is, we are not divulging that because not on a big amount. And by again, we had given a long-term strategy by FY 2025, we will be reach on 25% service overall — overall revenue on our part of that. So by 25% like including all C2C Rail Express, Cold Chain Pharma, Air, Domestic and International all put together.

Bhavya Gandhi — Dalal & Broacha Stock Broking Limited — Analyst

Right, I understand that, but rail would be a major chunk of it, right? And as of now, how much does it contribute, less than 5% if I’m not wrong?

Chander Agarwal — Managing Director

No, it is not, rail is not the biggest one, right now surface and followed by the C2C services.

Bhavya Gandhi — Dalal & Broacha Stock Broking Limited — Analyst

Okay. And is it —

Chander Agarwal — Managing Director

[Indecipherable] rail yeah.

Bhavya Gandhi — Dalal & Broacha Stock Broking Limited — Analyst

Okay. Is it possible to share the margins for Rail Express?

Chander Agarwal — Managing Director

Yeah. So margin level is always around 18% to 20% on this

Bhavya Gandhi — Dalal & Broacha Stock Broking Limited — Analyst

Okay, fair enough. I’ll get back in the queue. Thank you.

Operator

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

Krupashankar NJ — Avendus Spark — Analyst

Good evening, sir and thank you for the opportunity. A couple of questions from my side. First, just on the competition side, so are you seeing any increase or change in the competitive dynamics of the industry over the last quarter. And if so, does it — are you looking that given that outlook was looking tougher. The pricing wise, it’s going to be a challenge to increase further going ahead.

Chander Agarwal — Managing Director

So, I don’t think the competition is giving any sort of a problem, because most of the competition is not focusing on SME, like the way we do, number one. Number two, the — what is happening is that, the pricing is a factor of not how we want to take but also a big reason of how the economy is doing. The economy is doing well. We — manufacturing is going well, if things are moving in the right direction, times will give price hike, they will take a price hike. But the fact is that fuel price in India has been stable. And then there is no reason as such to have an incurred higher cost.

Therefore, two factors that played in was the fuel was normal, it did not increase. And secondly their own manufacturing was impacted severely or rather still they are under the duress of the COVID. So, I think, it’s only a matter of time when all these things will start cleaning out and our price mechanism will start again. We took a very good price hike even during COVID. And when things like other modes, air and sea cargo when their prices have already started coming down, big time. And once that also starts rationalizing, the demand for air cargo is also going to grow very high, sorry, for road cargo is also going to go very high. So that — saying that, it’s I think only a matter of maybe a quarter or more when from next year we will start see things going well for the road sector.

Krupashankar NJ — Avendus Spark — Analyst

Okay. So your branch addition plans that continues to remain at the steady pace. So right now, what you’re seeing is that about 28 new branches added for nine months. So the expectation would be about at least previous commentary was about 50 branches plus. Are you continuing to hold on to that sort of addition going ahead?

Chander Agarwal — Managing Director

Yeah, so, branch, we will be keep adding and we are not adding the branches just to add, because we’re seeing a branch at least as to be in a breakeven point in a within two months’ time. And that is strategic, we are going on. And so each year, we had a target of 100 branches. I think in this year, we will be finishing around 40 plus.

Krupashankar NJ — Avendus Spark — Analyst

Got it, got it. And one last question for me —

Operator

Sorry to interrupt. sir. May we request you to join the question queue, as we have several participants waiting for their turn.

Krupashankar NJ — Avendus Spark — Analyst

Sure, thank you.

Operator

[Operator Instructions] We take the next question from the line of Ms. Nidhi Babaria from Envision Capital. Please go ahead.

Nidhi Babaria — Envision Capital — Analyst

All thank you, sir, for taking my question. Sir, what would be the new business contribution in this quarter there always railways, surface and TTC [Phonetic] all these segments come?

Chander Agarwal — Managing Director

Sorry, can you repeat your question? I did not —

Nidhi Babaria — Envision Capital — Analyst

New business contribution in this quarter.

Chander Agarwal — Managing Director

New business contribution, okay.

Mukti Lal — Chief Financial Officer

Rail business contribution.

Chander Agarwal — Managing Director

No, no new business. So actually, other than surface is almost around 18% business we had put together, like air and — air international and all, C2C, rail and cold chain pharma put together. That we want to be increased to 25% and by 2025.

Nidhi Babaria — Envision Capital — Analyst

Okay. And how much was this contributing last year same quarter?

Chander Agarwal — Managing Director

So last year because we just launched these services, so there were around it I think is 15%.

Nidhi Babaria — Envision Capital — Analyst

Okay, okay, sir. And sir, I just wanted to understand like nine — our nine month revenue, four year CAGR is roughly around 5%, which is like mid-single digit and we are, like we are targeting some 18% to 20% kind of revenue growth from here onwards. So what is going to contribute the overall growth apart from the industry growth, apart from the normal economic growth which [Indecipherable]?

Chander Agarwal — Managing Director

So you talked about nine months to CAGR?

Nidhi Babaria — Envision Capital — Analyst

Yeah, yeah.

Chander Agarwal — Managing Director

For how much year, you just checked?

Nidhi Babaria — Envision Capital — Analyst

Yeah, sir.

Chander Agarwal — Managing Director

No, for how much time you have taken that CAGR for what are the periods?

Nidhi Babaria — Envision Capital — Analyst

Four years, which is FY ’19 to FY ’23.

Mukti Lal — Chief Financial Officer

So that is the only [Indecipherable] because in ’21 the revenue was dropped actually, otherwise if you see after the merger, we have grown almost 15%, 16% up to FY ’20 and then ’21 is dropped and last year we grown 28% in FY ’22. And in this year we will be finishing around 16%. So that’s why you can’t be compared like nine month because that was only one reason, but because revenue was dropped on that year. Otherwise, so is directly linked with the GDP growth rate and government is also targeting in the next year 7.5% to 8% and we are just doing 2 times of that.

So, good example of that this quarter, I think GDP will be growing 5% or 5.5% and we grow on a 10%. So usually we grow on a 2 times of GDP growth rate, GDP will be grown good, we will be grown good. So this is again Mr. Chander has mentioned, it is all depend on the manufacturing and GDP situation. So we hopefully like if GDP is growing 8%, hopefully we grow in a 16% to 18% on the volume side.

Nidhi Babaria — Envision Capital — Analyst

Okay. So going ahead —

Operator

Sorry to interrupt, may we request you to join the question queue, as we have participants waiting.

Nidhi Babaria — Envision Capital — Analyst

Yeah. Thank you.

Operator

Thank you. 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, on your admin and [Indecipherable] expenditure, is this one-time or any one-off in these cost line items? And on that question, I had a further clarification, so you had mentioned in your guidance that we would be expanding a margin by 50 bps every year. So the ask rate for about — for the next quarter becomes higher. So just wanted to clarify if you are on track to achieve that? Thank you.

Mukti Lal — Chief Financial Officer

Yeah. So, thank you. So basically for admin cost, it is a two type cost of involved here, like now everything is opened up and our traveling costs and convinced costs has also increased. And one-time of advertisement cost is also there, so that would may not be come in next year, but other side if you see this, my admin cost is still is below to pre COVID levels of like we have the cost on FY ’20 and we are in running in ’23 so still cost is there and that will be — so there is no high increase will be happened over the period in the next two, three year also, it will be keep continue at the same pace.

And another aspect like you asked for the increase in a 50 basis point margin enhancement for this year, I think it looks tough for this year. I think we will be finished in the same margin level of last year. But, yes, obviously next year onwards, we will make effort to again achieve to be in the range of 50 basis points to 100 basis points improvement in each year like we did in the last six years. That is the only exceptional one year which we are I think not able to achieve that.

Deepak Lalwani — Unifi Capital — Analyst

Understood, sir. Sir, on the one-time advertisement cost, if you can quantify that what percentage of revenue is that? Will that come in the next year also?

Mukti Lal — Chief Financial Officer

So, if you see this also not significant increase on admin costs is like 10% increase on that. So amount of advertisement is not so much significant of that.

Deepak Lalwani — Unifi Capital — Analyst

Okay. Yeah. Okay, got it. So on the gross margin side, we will be at this 31% or so?

Mukti Lal — Chief Financial Officer

Yes, it is on a 31% for this quarter and for the whole year — for nine month, it is 32%.

Deepak Lalwani — Unifi Capital — Analyst

Sure, got it. And if you can give us a sense of how January has been, however, the pickup has been pushed the October month post-Diwali?

Mukti Lal — Chief Financial Officer

Sorry, come again.

Deepak Lalwani — Unifi Capital — Analyst

If you can — there were sense of how January is looking like you said that October was a bit slow because of a long weekend and lower festive season sale. So if you can just give a sense of how activity has picked up post that.

Chander Agarwal — Managing Director

I think it is again we have seen that this quarter, the activity was not that strong compared to last year and we were expecting that manufacturing and consumption will be at an all-time high, but I think the inflation did play its part. There was pretty much no rural demand, there was not much manufacturing happening. So in general, we saw that the overall growth that is expected in the — as we say Q3 Diwali quarter did not happen.

Deepak Lalwani — Unifi Capital — Analyst

Sure. Okay sir, I’ll come back in the queue. Thanks.

Operator

Thank you, sir. We take the next question from the line of Radha from B&K Securities. Please go ahead with your question.

Radha Agarwalla — B&K Securities — Analyst

Hi, sir. Thank you for the opportunity. Just one question on my side. So you mentioned about muted demand, so could you tell us the user industries from where — where we have seen a bit of slowdown and where there is a relatively stable demand?

Chander Agarwal — Managing Director

See, we already did the Q3 with growth in terms of revenue, it’s not like — it was lull demand. Definitely, B2C was hit big time and thankfully we are not in B2C. B2B, again, it grew at what almost 5% and GDP I think is what we are targeting is what the numbers will come out and we’ve grown double of that. So in general, we are in line with what the economy holds true. And there has been no change in that. It’s just that the consumption stocks, B2C where we are not present is impacted heavily.

Radha Agarwalla — B&K Securities — Analyst

Understood. Okay. Thank you. That’s it from my side.

Operator

Thank you. We take our next question from the line of Aejas Lakhani from Unifi Capital. Please go ahead.

Aejas Lakhani — Unifi Capital — Analyst

Yeah, hi, thanks for the opportunity. Are you able to hear me gentlemen?

Chander Agarwal — Managing Director

Yeah, I do very well.

Aejas Lakhani — Unifi Capital — Analyst

Okay, thanks. Sir, my first question, Muktiji is that you mentioned that we — given the fourth quarter, we closed in at the same margins that we have done last year. If that is the base case, sir that would imply that you have to do about 18% to 19% margins in the fourth quarter from an exit perspective. So number one, is that really possible?

Mukti Lal — Chief Financial Officer

Yeah, in Q4?

Aejas Lakhani — Unifi Capital — Analyst

Yes, sir. So if you have to maintain that 16.2% for the full year, it would imply that would do about 18% to 19% in the fourth quarter.

Mukti Lal — Chief Financial Officer

Yes, that is true. So last year we also achieved 17% and that is what we said like in Q3 that the impact of only is the drop in utilization level, nothing else. So in this year, in this quarter, we hopefully again we will be achieved the highest quarterly revenue for the Q4. And accordingly, revenues grow revenues, so utterly, it will be converted to higher utilization of trucks and then ultimately we will be achieved the kind of hopefully 17.5% to 18% EBITDA margin in this Q4.

Aejas Lakhani — Unifi Capital — Analyst

Got it. And sir, could you quantify what is the actual associated increased expense for the admin and advertising? Could you just quantify that number in this quarter?

Mukti Lal — Chief Financial Officer

So, increase is hardly 10% on that, likely it is increased from INR17 crores to INR19 crore rupees only, so it is at — INR2 crores increase there. So if you want to like advertisement expenditure was only INR1 crore and other cost like increase in traveling cost and convenience cost and other physical training, we also started. So we are using hybrid model, but we are doing the physical meetings also, that’s why it has increased by almost INR1 crores in that.

Aejas Lakhani — Unifi Capital — Analyst

Okay. So sir, basically then this — the expenses that we’ve incurred this quarter, that’s the new normal, right, that we should be assuming for the year — the times ahead?

Mukti Lal — Chief Financial Officer

Yes. So that will be the right run rate of this admin expenditure, which is also not so high, would be in the range of INR18 crores, INR19 crores per quarter.

Aejas Lakhani — Unifi Capital — Analyst

Got it, got it. And sir, got it sir, okay. And sir then, one other point you mentioned earlier was that you’ve taken a price crore this year. So were you talking about this quarter or for the nine months?

Mukti Lal — Chief Financial Officer

I’m talking about for nine months.

Aejas Lakhani — Unifi Capital — Analyst

Okay. So basically this year whatever growth has been, it’s — all these in volume base this year?

Mukti Lal — Chief Financial Officer

Yes, that is correct.

Aejas Lakhani — Unifi Capital — Analyst

And, because sir, you’ve explained to us in the past several times that this 2% to 3% is almost like a given that you have this kind of a pricing power and you are fragmented customers all across lots of SMEs. So why was this 2% to 3% not taken this year or what is the reason for that?

Mukti Lal — Chief Financial Officer

Only one region, because all — our customers also like taking the hit due to high inflation in their other costs. So that’s why — and another was our sluggish demand now. So that’s why they don’t want to be take the other hit and we are also not pursuing so high for that, that’s the only reason.

Aejas Lakhani — Unifi Capital — Analyst

Okay. Did this strategy help you in gaining incremental market shares or so?

Mukti Lal — Chief Financial Officer

Sorry. I couldn’t get what you said.

Aejas Lakhani — Unifi Capital — Analyst

Sir — Muktiji, you did not — you chose to hold back on this 2% to 3% price gains which you take and that’s a fair point, I understand. But have you gained anything that you can quantify like did you gain market share by having the strategy of not increasing the price or anything — did you gain anything in exchange of not taking the price hike?

Mukti Lal — Chief Financial Officer

So we were able to also maintain our operation costs quite well. And looking at that point of view, we were able to show the 10% growth in nine months and profit. If we became more greedy, then it would mean that the competition would possibly lower the price even further. And then — and they would have a lot of very good, I don’t think they will have very good numbers anyway. So I did not want the loss of business happening in any way. And there could be a possibility of a shift also. So in order to have all aspects well taken care of, we had two manage this, this way.

Aejas Lakhani — Unifi Capital — Analyst

Got it. I hear you loud and clear, if competition decreasing rate by any chance to gain business?

Operator

I’m sorry to interrupt you, Mr. Aejas, may we request you to join the question queue, sir. We have several participants waiting for their turn.

Aejas Lakhani — Unifi Capital — Analyst

Yeah, sure.

Operator

Thank you. [Operator Instructions] We take our next question from the line of Harsh Shah from Jefferies. Please go ahead, sir.

Harsh Shah — Jefferies — Analyst

Yeah, hi. Thank you for the opportunity. Firstly, can you just provide the split of the MSME and the corporates for the quarter?

Mukti Lal — Chief Financial Officer

So, share of this two category of customers?

Harsh Shah — Jefferies — Analyst

Yes.

Mukti Lal — Chief Financial Officer

It is almost 50%-50% and intentionally actually we want to keep that. We always try to — that business is getting very fast on the big customer and very slow speed from that small customer, but we always maintained that since last one decade and we will be keep continuing with that way only.

Chander Agarwal — Managing Director

And that’s why you also have growth with profitability, whatever increase in profitability has also happened because of the SME customers. Well, one year could be bad, but if we look at — if you remind me, look at 2020, it was the SMEs that really cropped up faster than anyone else for us.

Harsh Shah — Jefferies — Analyst

Sure. And secondly, on the revenue growth guidance which we had given 18% to 20% earlier. So what’s your revised number for the FY ’23?

Mukti Lal — Chief Financial Officer

It will be in the range of 16% to 17% now.

Harsh Shah — Jefferies — Analyst

Okay. And lastly, just clarification, this 28 odd branches which we have added, that is on a nine-month basis, right?

Mukti Lal — Chief Financial Officer

Yes, true.

Harsh Shah — Jefferies — Analyst

Right. And this volume growth which you mentioned that 10% volume growth for the third quarter and if we see there is a revenue growth of 10%, so naturally, it means that there was no price hike during the quarter, correct.

Chander Agarwal — Managing Director

No price hike during the quarter, yes.

Harsh Shah — Jefferies — Analyst

Sure, sure. Okay, thank you so much.

Mukti Lal — Chief Financial Officer

Thank you.

Operator

Thank you sir. We take our next question from the line of Mr. Shobhit Tiwari from Canara Robeco Mutual Funds. Please go ahead, sir.

Harsh Shah — Jefferies — Analyst

Hello sir?

Mukti Lal — Chief Financial Officer

Yeah.

Harsh Shah — Jefferies — Analyst

So question again pertains to the growth rate for the company. So just wanted to get your sense, we have some new lines of business, which is now contributing 18%, they are growing at a much faster rate. And then we have our base business, which as compared to our listed peers, is not going — growing at that rate at which these guys are growing. So you mentioned that the market has kind of taken a — seeing a slowdown, but somehow the underlying business drivers for all the companies which are there, they’re showing a growth. So what is it like, which is kind of driving this less revenue growth relative to peers.

Chander Agarwal — Managing Director

What is the main idea about India business, in logistics, is that, if you want volume, if you want poor quality volume, what I mean by poor quality is no margin or 1%, 2% margin, volume, profit margin volume, that is available, but I am not in that business. So you have to please, be very clear, what sort of business I am in, okay. If you compare me to FTL, if you compare me to unorganized segment, if you compare me to supply chain company, if you compare me to freight forwarding company, I am not in that business. Therefore, please understand the line of business I am in.

Harsh Shah — Jefferies — Analyst

Got it, sir. Got it. And incrementally now that you have also cut the revenue guidance and given the demand environment, are you confident enough of like kind of growing at a like 20-odd-percent rate to achieve the five years target going ahead?

Mukti Lal — Chief Financial Officer

Which, I want to add to that, which express trucking company is giving nine months INR100 crores PAT? Listed company or unlisted company, you can tell me. Listed company, definitely you can show me if any other company is giving or not, no one is giving, continue so —

Chander Agarwal — Managing Director

Yeah. So incrementally, it is possible. Because we, again, will we keep the same strategy to have price hike of 2%, 3% and volume growth in the range of 16% to 17% and obviously like new services or this line of services we have launched only last year. So these also started to be contributing in a good manner. So this is a base of that and again we will be keep adding our branch network to be cater to SME customers.

Again, it is very easy to get the business from the like subdued rates and from the low rates or low margin, which is not in our DNA and we want to be the business with profitable one only and want to combination of big customer and small customer, we don’t want to get diluted from the like 50%-50%. And we also don’t want to be diluted on our credit terms also like like we also — you’ve seen my consistent receivable days are in the range of 50 days since that’s one the case. So if you see on a — if you watch our qualities consistent actually. And we will be keep growing that thought only.

Harsh Shah — Jefferies — Analyst

Got it, sir. Thanks, sir.

Operator

Thank you, sir. We take the next question from the line of Mr. Aman Vij from Astute Management. Please go ahead.

Aman Vij — Astute Management — Analyst

Yeah, good afternoon, sir.

Mukti Lal — Chief Financial Officer

Yeah, good afternoon, Aman.

Aman Vij — Astute Management — Analyst

My first question is, in the announcement, we have mentioned that we are opening up a new corporate office also. So if you can talk about the same what will be the cost, why are we doing it and how long it will take for us to move in?

Mukti Lal — Chief Financial Officer

So we bought the land. So we bought the land and construction will start in the next year and I think it will take at least two to three years to construct and cost would be — construction would be not more than I think INR25 crores rupees.

Aman Vij — Astute Management — Analyst

Sorry. The question was also how it’s been helped us and what is the area?

Mukti Lal — Chief Financial Officer

So actually help — existing office is now just like becoming short, we like in TCI, we are already in TCI corporate office that has already built 25-year back and now there is an employee strength has increased. So that’s where we want in a second corporate office and that’s the only way.

Aman Vij — Astute Management — Analyst

Sir, that office will continue, this is an addition, we won’t shift totally to this new office.

Mukti Lal — Chief Financial Officer

No, no totally shift.

Aman Vij — Astute Management — Analyst

Okay. So we’ll leave that and we’ll shift to this office with all our strength?

Chander Agarwal — Managing Director

Yes.

Mukti Lal — Chief Financial Officer

Yeah.

Aman Vij — Astute Management — Analyst

Okay. And my second question is, Mukti sir, you talked about that December month utilization was quite low at 75%, 76%, but with still debt like 83% utilization for the Q3. Just talk about what was the utilization in November and December as well as for say January and going forward, what kind of utilization we are seeing?

Mukti Lal — Chief Financial Officer

Yeah. So consistently, it is in the range of 84% to 85% or on each quarter, average was around 85% sometimes also increases on 86% also. So only that October month was on a problem only that we our utilization was dropped from average of 84%, 85% to 75% to 76%, and November and December was again, is the normal one. And January is also going normal one, there is no challenge on that and that will happen only, because if you see — you may — I think you might be noticed that Diwali one day, so you know, factories and everything was start to close on by Friday only, so Friday, Saturday, Sunday, Monday Tuesday, Wednesday. So that was almost closed for the five, six days and we decided not to be deterred any services to customer and that’s why we even rather get a hit on that utilization level and that is the only matter for that particular month. Otherwise it is a consistent one, there is no challenge on the capacity utilization at all.

Aman Vij — Astute Management — Analyst

Sure, Mukti, and if you can answer the previous part second question —

Operator

I’m sorry to interrupt sir, may we request you to join the question queue. We have several participants waiting for their turn.

Aman Vij — Astute Management — Analyst

Sure, sure.

Operator

[Operator Instructions] We take our next question from the line of Mr. Krupashankar from Avendus Spark. Please go ahead, sir.

Krupashankar NJ — Avendus Spark — Analyst

Thank for the follow-up. Just wanted to check what is the key reason for setting up the subsidiary and what sort of business we are trying to do from Singapore?

Mukti Lal — Chief Financial Officer

Well, the — what we understand is that the natural course of expansion has to be domestic and overseas. So we are still exploring and it’s in exploratory stage. And we’ll keep updating as to what the progress is happening.

Krupashankar NJ — Avendus Spark — Analyst

All right. So we are not planning into freight forwarding or anything —

Mukti Lal — Chief Financial Officer

Not at all. No, no. Any business, less than 20% margin we are not doing.

Krupashankar NJ — Avendus Spark — Analyst

Got it. Thank you, sir. That’s it from my side.

Operator

Thank you. We’ll take our next question from the line of Kunal Bhatia from Dalal & Broacha Stock Broking Limited. Please go ahead, sir.

Kunal Bhatia — Dalal & Broacha Stock Broking Limited — Analyst

Yeah, thanks for the opportunity. I just had one question, sir. How has been the month of Jan, because we are almost at the end. So, because there is a big leg room which is wanted for the growth for the entire year. So how was Jan panned out and what has been the utilization in them?

Chander Agarwal — Managing Director

So — so we don’t want to give the figure in that way, but yes, it is again, we will be done the double-digit growth in Q4 as well. And margin target, we are taking like 18% EBITDA level for that Q4. Yeah.

Kunal Bhatia — Dalal & Broacha Stock Broking Limited — Analyst

Okay. And sir this with the quarter-on-quarter rise in the operating expenses, so I know many people ask but could you give the quantum of one-off in that expenses, which would not come in Q4 or the going quarters are hedged.

Chander Agarwal — Managing Director

For you talked about like admin expenses?

Kunal Bhatia — Dalal & Broacha Stock Broking Limited — Analyst

Yes, sir. So, meaning our operating expenses were on a higher base in this quarter. So could you give us any one-off either admin or advertisement, what was the total quantum which would not get repeated?

Chander Agarwal — Managing Director

No, no, so that that wasn’t a only one reason, of that because utilization level of truck was less on October month and that will not be happened in this quarter, that’s why [Indecipherable]. Our gross profit will again reach to level of like 30% to 33% which was in this quarter was around 31% and 30.5% to 31%.

Kunal Bhatia — Dalal & Broacha Stock Broking Limited — Analyst

Okay, okay. Okay, fine sir. I’ll get back in the queue. Thank you.

Operator

Thank you, sir. We take our next question from the line of Jainam Shah from Equirus Securities. Please go ahead.

Jainam Shah — Equirus Securities — Analyst

Yeah, thanks for the opportunity. Sir just one bookkeeping question. So sir, what is the cost of the land that we’ve acquired? I understand the INR25 crores would be construction cost, if you can quantify the cost of the line as well.

Mukti Lal — Chief Financial Officer

So the cost of land actually we acquired in a auction in Gurgaon, so cost is INR45 crores for landline.

Jainam Shah — Equirus Securities — Analyst

Okay sir. Thank you, sir.

Mukti Lal — Chief Financial Officer

Yeah.

Operator

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

Ronald Siyoni — Sharekhan Limited — Analyst

Yeah, good evening, sir. I just have one question regarding the road infrastructure surpassed our funds. So over the past few years, we have been seeing significant improvement in these days and going forward, we are going to say less than [Indecipherable] Mumbai kind of highways and all the long stretches neutral essentially. It will be used to reduce the travel time. So, I mean, what kind of growth that should stay infra improvement in the past implementing utilization levels and this would be again there is a possibility with this kind of infrastructure coming up that utilization levels further improve.

Mukti Lal — Chief Financial Officer

So if you remember my from the last con call, I had said that do things, the highways are good, but the quality of the drugs are not that rate. Therefore, we will be offsetting the speed and the high-quality — and the low-quality of drugs with automation. That’s point one. Point two, the big challenge what remains, what the government will now be focusing on, is that the manufacturing units in large cities or within the city, which have a problem of no entry. So that needs to be also addressed equally. Because till the factories are inside the cities, there will be problem of pickup and collection or in general in logistics and those factories will be difficult to be taken out of the city or whatever, unless there’s a big change in the city infrastructure.

So that’s why highways are great. Sure, no doubt, Delhi, Bombay, two hours. I mean, eight hours. Sure, what kind of vehicles will go on that? That can do in eight hours is a question that I have always asked. So we have to be always very of the fact that there are multiple rules that play in deciding how and what will be the ultimate outcome because in India, we don’t have one single, it’s not a single input for a single output. You have multiple inputs and what you get is multiple output. So, I think we should just wait and see how this rolls out as we go along.

Ronald Siyoni — Sharekhan Limited — Analyst

Yes, thank you very much. desktop, one thing that Dan this manufacturing in cyber city hub-and-spoke model cannot resolve this things or it’s not that easily you can resolve that.

Chander Agarwal — Managing Director

Sorry, I missed out, what?

Ronald Siyoni — Sharekhan Limited — Analyst

The hub-and-spoke in the city, so even we go to outskirts and thereafter, you cover with the faster highways, hub-and-spoke in city, yeah, so that cannot be used.

Mukti Lal — Chief Financial Officer

Sorry?

Ronald Siyoni — Sharekhan Limited — Analyst

That cannot resolve the problem of higher — only the truck quality let them in, right?

Mukti Lal — Chief Financial Officer

Now, the question is like, if you have, I mean just think hypothetically if you have these beautiful highways and if you had Fiat, Padminis or Ambassadors, you know that is a state of trucks. Can we go in four hours — in eight hours? No, we cannot. So then we have to now government has to work on all angles.

Ronald Siyoni — Sharekhan Limited — Analyst

Thank you, sir. Thank you.

Chander Agarwal — Managing Director

Thank you.

Operator

Thank you sir. We’ll take our next question from the line of Harsh Shah from Jefferies. Please go ahead.

Harsh Shah — Jefferies — Analyst

Yeah, hi, thank you for the follow-up, just on this capex number, which we have done of INR99 crores in nine m. So. I just wanted to understand what is the breakup of this. Basically, you just mentioned INR45 odd crores is the cost of land and what is the balance, I just net out.

Mukti Lal — Chief Financial Officer

I mean like another land in Kolkata, which was on I think INR20 crores. Another another part of like we have given the advance for the another land parcel for Ahmedabad.

Harsh Shah — Jefferies — Analyst

Okay. And what about this office, the new corporate office.

Mukti Lal — Chief Financial Officer

It’s the land only which we have just mentioned. Construction will be start in the next year onwards.

Harsh Shah — Jefferies — Analyst

Okay, sure. Thank you.

Operator

Thank you, sir. We take the next question from the line of Rikesh Parikh from Rockstud Capital. Please go ahead.

Rikesh Parikh — Rockstud Capital — Analyst

Yeah, thanks for the opportunity. Most of my question has been answered. Just one thing, wanted to understand about this Gurgaon center which we have upgraded. So can we have some quantifiable numbers or benefit we received from this center post up there automation?

Mukti Lal — Chief Financial Officer

So there is, Rikesh, there is two kind of thing happened like my turnaround time of truck has been reduced from idle time like from 16 hour to eight hour, they took a total time of 24 hour, now this will get reduced to eight hour. Another aspect we also able to reduce my labor component and third aspect dependence on labor on a peak time was festival season, it has been drastically reduced. So that is a quantification number, I can be separately — we can be discussed on that, but yes, these are the visible benefit we had taken out of this.

But another aspect I think last time, we also mentioned, once we will be become a one more two, three sorting center, then we have to be get the more benefit of that because we are creating the efficiency here in Gurgaon, but not able to destination center, so this way we need to be do the lot of work and that’s where we want to be fastened this process to be automized this center at least on 10 cities and that’s we are in the process.

Rikesh Parikh — Rockstud Capital — Analyst

Just in extension to that hypothetically, once we achieve automation in three, four centers, probably we can get in additional margin benefit of roughly 100 basis points, 200 basis points, hypothetically.

Mukti Lal — Chief Financial Officer

From one center, we’re targeting to be at least, we had the benefit of overall like 50 basis points.

Rikesh Parikh — Rockstud Capital — Analyst

Okay. Thank you. That’s it from my side.

Operator

Thank you, sir. The next question is from the line of Keshav Bagri from VT Capital. Please go ahead.

Keshav Bagri — VT Capital — Analyst

Thank you for that question. First question was [Technical Issues].

Operator

I’m sorry, Keshav, sir, we can’t hear you.

Keshav Bagri — VT Capital — Analyst

Am I audible now?

Operator

Yes.

Keshav Bagri — VT Capital — Analyst

My first line of question will be, have we instated a revenue guidance to INR1,900 crores from INR2,000 crores for FY ’25? And the second question would be on the EBITDA margin front, we had targeted a margin of beyond 20% — 22% in the range and now we have reinstated to 20%. Have I got it right?

Mukti Lal — Chief Financial Officer

Sorry, can you ask one by one what you said first question, please. Can you repeat that?

Keshav Bagri — VT Capital — Analyst

I heard you’re saying that we have reinstated our revenue guidance from INR2,000 crores which you are targeted for FY ’25 to INR1,900 crores. Given the current run up. And the second part would be on the EBITDA margin front, like we are adding new verticals, because of the fact that they are high margin fronts and we are expecting margins to be beyond 20%. But like in the call, we have reinstated it to 20% flat. So have I got it right like for FY ’25, we are targeting INR1,900 crores of revenue and 20% EBITDA margins.

Mukti Lal — Chief Financial Officer

Yes.

Keshav Bagri — VT Capital — Analyst

Okay. My second question would be on the fact that we have — if I would see the realization per kg, it has been hovering around INR12 to INR12 — INR11 to INR12. So are we compromising on the profitability front to get the volume and the tonnage because that has never been the strategy for TCI which sets it apart from all the other listed players like I’ve been following the company for like 68 quarters.

Mukti Lal — Chief Financial Officer

We are not doing anything of that sort.

Keshav Bagri — VT Capital — Analyst

Okay. And the last question would be on the branches front, can you please break up the branches for quarter one, quarter two, quarter three, how much branch addition did we make in Q1, Q2 and Q3 of FY ’23?

Mukti Lal — Chief Financial Officer

I think H1 till H1 we have done 21 branches and now in seven branches in this quarter. That is a breakup.

Keshav Bagri — VT Capital — Analyst

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

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. Thank you, and over to you, sir.

Chander Agarwal — Managing Director

Well, thank you everyone for joining us today. I would like to conclude by saying that the leading logistics provider, TCI Express with a pan-India presence, we are well-positioned to capitalize on the India’s growth story and very optimistic on the growth trajectory that we are on. We look forward to meeting you again next quarter. Please be healthy and safe and feel free to reach us for any questions remain unanswered. Thank you once again.

Mukti Lal — Chief Financial Officer

Thank you. Thanks everyone.

Operator

[Operator Closing Remarks]