TVS Supply Chain Solutions Ltd (NSE: TVSSCS) Q1 2026 Earnings Call dated Aug. 11, 2025
Corporate Participants:
Unidentified Speaker
Prabhu Hariharan — Head Investor Relations
Ravi Viswanathan — Managing Director
R. Vaidhyanathan — Global Chief Financial Officer
Analysts:
Unidentified Participant
Sukruth Patel — Analyst
Ishant Lalwani — Analyst
Somil Shah — Analyst
Kunal Sabnis — Analyst
Darshan Jhaveri — Analyst
Riya Sharma — Analyst
Presentation:
operator
Ladies and Gentlemen, good day and welcome to TVS Supply Chain Solution limited This conference call may contain forward looking statements about the company which are based on beliefs, opinions and expectations of the company as on date of this call. The statements are not guarantee of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants line will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone.
Please note that this conference is being recorded. I now hand over the conference to Mr. Prabhu Hariharan, Head of IR of TVS Supply Chain Solution Ltd. Thank you and over to you sir.
Prabhu Hariharan — Head Investor Relations
Moderator Good morning and welcome all to TVS Supply Chain Solutions Earnings call for Q1FY26. I hope everyone had a chance to look at the financial results which were posted on the company’s website and also on the stock exchange. We have with us today Mr. Ravi Viswanathan, our managing director and Mr. R. Vaidyanathan, our global CFO. We commence the call now with opening remarks from our management along with the business performance update. It will be followed by an open forum for Q and A. Before we begin a customary remark, I would like to point out that some of the statements made during this call may be forward looking in nature and must be reviewed in conjunction with the risk that the company faces.
A disclaimer to this effect has been included in the investor presentation. I request and hand it over to Ravi to make the opening remarks. Over to you Ravi.
Ravi Viswanathan — Managing Director
Thank you Prabhu. Good morning to all of you. Firstly, let me welcome all of you once again to our earnings call to discuss the performance for the first quarter ended June 30, 2025. Let me start with the key highlights for Q1 we delivered year on year growth in revenue and profitability driven by disciplined execution, continued cost focus and benefits from our strategic investments. A major highlight was a substantial swing to profitability both year on year and sequential in our integrated final mile business in the UK and Europe. This performance underscores the effectiveness of our turnaround plan and the structural changes that we have implemented over the last year.
Our balance sheet remains healthy and we are well positioned to capture opportunities in our priority markets. As you may recall, in our last earnings call we have spoken about a series of strategic actions including leadership restructuring, headcount, rationalization and right shoring, with a sharp focus on lowering operational expenditures across our entities. I am glad to Say that all of these actions are well underway across all the regions. Let me start by explaining the structural transformation we have initiated in our UK and Europe business. Effective April 2025, we have combined our integrated supply chain solutions and integrated final mile businesses in the UK and Europe under a single leadership.
The integration of ISCS and IFM reflects a fundamental shift in how we want to deliver value, aligning our services with how our customers consume our services. By bringing these businesses together, we are creating an integrated platform by combining warehousing, distribution and final mile that enables more seamless engagement and stronger cross sell opportunities. The unified leadership and operating structure will enable us to present one face to the customer, unlock synergies and efficiency in service delivery and drive sharper commercial focus while meeting the integrated solution needs from our customers. The integrated business in Europe is now led by John Croydon.
John brings over 30 years of experience in operations and logistics. He began his journey with TV as he’s a Managing Director within the IFM business in the UK and Europe and subsequently elevated to the CEO of IFM in 2023 and he has been successfully leading the turnaround of that business. This change in operating model also led us to realign our segment reporting structure. Starting this quarter we have made two changes in our segment reporting. One, ISCS now includes integrated final mile services while gfs, reflecting freight forwarding business, will be a stand alone segment. This segmentation reflects the way we manage and serve our customers going forward.
We have undertaken a reclassification of warehousing contract services. Certain warehousing contracts in Singapore and Thailand which were previously grouped under GFS have now been merged with ise. Out of this structural integration emerged our formal restructuring and transformation program for the UK and Europe business which we call as Project one. Project one is designed to integrate the two businesses across every layer from leadership to operations, commercial processes and support functions. It also involves consolidating warehouse infrastructure, streamlining our brand architecture, remove all manpower overlaps and bring other synergies which will drive efficiency across the platform. Project 1 is expected to deliver about 110 to 120 crores in annualized cost savings with about 50 to 60 crores benefits starting to reflect in FY26 itself.
Under the new structure we have taken significant steps to simplify and strengthen our operating model anchored around the key pillars right sizing, simplifying and bringing leaner organization layers through integration right shoring, transitioning certain roles and activities from high cost to optimized cost locations Management restructuring which is streamlining leadership to support the unified operating model warehouse consolidation, rationalizing and consolidating warehousing infrastructure to drive scale and efficiency brand realignment, harmonizing our go to market identity under one unified brand to reflect all of our integrated offerings and finally a consolidated business development team focused on unlocking cross selling opportunities.
All of this is currently underway in UK and Europe as a consequence of Project 1. We have recognized certain one time restructuring costs in this quarter and we had already mentioned this in our Q4 earnings call. VAIDI will elaborate more on this shortly. Another important milestone for the quarter is that we have realized value from our early stage strategic investment in TVS industrial and logistics power. While our core model is asset light, we made a strategic investment in TVS ILP several years ago, a business that acquires and develops warehouse infrastructure in Q1. TVS ILP transferred approximately 11 million square feet of developed assets into an invid platform backed by marquee global and domestic investors.
This transaction has delivered significant value we recorded 177crores as our share of profit in this quarter. Let me now briefly touch upon our financial performance for the quarter. We reported a consolidated revenue of 2,592 crores reflecting a growth of 3.7% sequentially and 2.1% year on year. ISCS segment continued to deliver steady growth across regions while GFS segment saw sequential improvement with uptick in volume despite ongoing macro challenges and soft pricing. Our adjusted EBITDA stood at 173 crores with a margin at 6.7% showing clear recovery from quarter 4 FY25. We also delivered a strong improvement in our PBT.
Our underlying adjusted PBT excluding the share of profit from associates in improved to Rupees 19 crores this quarter up from 14 crores in Q1FY25 and 17 crores in Q4FY25. Additionally, the share of profit from our strategic investment in TVS ILP stood at 177 crores this quarter, significantly uplifting our reported PVT to 196 crores. Our GFS segment continues to face macroeconomic pressures particularly around uncertain tariff environment and softening freight rates which all of you are well aware of. In our Q4 earnings call, I have specifically called out that GFX is impacted by uncertainty and potential contraction influenced heavily by policy induced trade disruptions.
We have seen this playing out in Q1FY26 and we expect this volatility to continue with the above strategic initiatives outlined in today’s call. We remain committed on our growth targets and to achieve Our target of 4% PBT by quarter 4 FY27 Let me now hand it over to Vaidi, our global CFO to take you through our financial highlights for the company in detail. Over to you Vaidi.
R. Vaidhyanathan — Global Chief Financial Officer
Thank you Ravi. Good morning to all. Thank you for joining us today. Before I get into the financial performance I would like to call out few critical highlights in Q1 FY26. As Ravi mentioned, Project 1 is a major transformation initiative to integrate our ISCS and IFM businesses in UK and Europe. This program is expected to generate approximately 120 crores of sustainable annualized cost savings with 50 to 60 crore savings expected to start approving in FY26. This will be one of our key levers to achieve our 4% PBT target by Q4FY27. In line with this we have recognized a one time exceptional cost of 91 crores during Q1FY26.
It is important to note that out of 91 crores, 53 crores is expected to be the cash expense primarily towards employee tendency cost and site consolidation cost. The remaining 38 crore is related to impairment of legacy brand which is non cash in nature. Also, out of the 53 crores we had provisioned in Q1 we have incurred approximately 17 crores and the balance is estimated to be incurred in Q2 and Q3 FY26 which is already provisioned in Q1. This is expected to improve both the EBITDA and EBITDA percentage going forward as outlined in our earnings presentation.
We have made changes in our segment reporting IFM business and certain warehousing contracts in GFS business is now reclassified to ISCS segment. GFS reflects the freight forwarding business as a stand alone segment. Going forward our segment will consist of and gfs. The erstwhile NS segment will only have GFS and accordingly is renamed as GFS segment. Third, lastly, our strategic investment in TVS ILP has enabled us to realize significant gain in Q1 FY26 as TVS ILP has transferred their warehousing assets through the Invid listing. Rupees 177 crores is our share of profit in TVS ILP in Q1FY26TBs ILP will continue to develop warehousing assets and transfer to the ENGVID platform.
Now I will walk you through the financial performance. We reported consolidated revenue of rupees 2592.3 crores reflecting a growth of 3.7% sequentially and 2.1% on year. On year basis. ISCA segment which now includes the integrated final mill business in UK and Europe delivered steady growth with revenue at 1982.9 crores compared to 1943.4 crores in Q for FY25 and 1905.6 crores in Q1 of last year. This translates to a growth of 2% sequentially and 4.1% year on year. On the GSS segment we reported 609.4 crores of revenue this quarter marking a 9.7% sequential growth largely on the back of volume uptick, partially offset by a sharp decline in the rates.
On a year on year basis revenue declined by 3.8% primarily due to the continued pressure on the freight rates. Pricing continues to remain under stress both sequentially and year on year and macroeconomic uncertainties and tariff volatility continue to weigh on the segment. Overall. We remain encouraged by the positive momentum in the ISCA segment while continuing to be cautious on the GFS business with geopolitics and trade uncertainties. Based on various discussions with the investors over the last few quarters, the question often asked is the impact of the freight business in the overall performance with our new segment structure.
Investors can now have a clear visibility on the impact of the volatility in the GFS business to the overall margins of our consolidated operations. Now moving into the cost structure, freight clearing, forwarding and handling expenses declined from 733.3 crores in Q1 FY25 to 680.3 crores in Q1FY26. This reduction primarily reflects the lower freight rates within the GFS segment as both ocean and air freight rates tapered during the quarter in response to the subdued global trade. On a sequential basis it increased from 632.8 crores in Q4FY25 to 680.3 crores in Q1FY26 in line with the revenue growth from the GFSA.
Subcontracting expenses increased from 343.3 crore in Q1FY25 and from 357 crores in Q4FY25 To 377.1 crore in Q1FY26 in line with the growth in the ISCS revenue and also due to change of business mix. Material related costs remain largely stable on a year. On year basis employee expenses increased from Rupees 577 crores in Q1FY25 and 610 crores in Q4FY25 to 619 crores in Q1FY26. This increase was primarily attributable to the higher operational volumes in the ISCS business and due to yearly inflation. In terms of profitability, our adjusted EBITDA for the quarter stood at 173.3 crores translating to a margin of 6.6.7%.
This compares to 185.3 crores at 7.3% in the same quarter last year. While the decline was largely attributable to the GSS segment which saw a year on year compression in the margin due to rate decline and pricing pressure on a sequential basis, we saw a clear improvement. EBITDA improved from 161 crores at 6.5% in Q for FY25 driven by margin recovery in both the segments specifically within IFS, ISCs and IFM operations delivered a step up in profitability as we had communicated last quarter that IFM would see gradual increase in margin going forward. With respect to the gfs, margins improved sequentially on the back of operating leverage from higher volumes despite continued pricing headwinds.
Our adjusted PVT before share of profit from TVs INP was 19 crore up from 14 crores last year, a growth of 35% year on year and reflecting margin improvement to 0.7% from 0.5% on a sequential basis a growth of 12%. This is rupees 17 crores in queue for FY25. Our reported PBT before exceptional items for the quarter is rupees 195 crores including share of profit of 177 crores from TBS IFP. Our reported PAT for the quarter was rupees 71.2 crores as compared to a loss of 3.9 crores in Q4FY25 and a profit of 7.5 crores in Q1FY25.
Before I conclude I would like to call out slide 28 of our Q1’s FY26 earnings presentation where we had explained our approach to improve the pbt percentage to 4% by Q4FY27.3 Core Levers Driving the PBT growth are the IFM turnaround which should improve our PBT margin by 0.4% primarily on account of the actions we had taken to turnaround that business that include significant pricing corrections in the market. Second savings to the Project 1 which should deliver approximately 1.2% of the PBT. As I explained earlier, the annualized savings on Project 1 is estimated to be approximately 110 to 120 crores due to combination of factors such as unified leadership structure, site consolidation, rightsizing and rightsoring in the UK and Europe business.
And lastly, improvement in the operating leverage is expected to deliver additional 1.9% PVT improvement. While we grow the revenue and gross margin, our overhead growth will grow at a much lower rates resulting in higher operating leverage. Our diversified portfolio, leaner cost base and the actions we had taken and the other initiatives that are currently underway gives us high confidence in reaching this goal. With this I will hand it back to Rani.
Ravi Viswanathan — Managing Director
Thank you Vaidi for the detailed analysis. Let me now touch upon our business development efforts and key customer engagements which continue to support our revenue momentum. In Q1FY26 we secured new business wins of rupees 124 crores representing around 5% of Q1FY25 revenue. The contribution from these wins have been relatively muted this quarter primarily due to lower than anticipated volumes from some of the new contracts as well as delays in revenue start dates for a few key engagements. We expect both volume ramp up and revenue recognition to improve in the upcoming quarters. Our order pipeline remains strong at rupees 5300 crores giving giving us solid revenue visibility going forward.
During the quarter we won several notable contracts. On the ISCS side we secured mandates from one of the large global agri equipment companies based in the usa, the largest diversified omnichannel retailer in India, a leading global tech and entertainment company from India, a premium electric vehicle manufacturer from Asia, European telecom infrastructure services from a global footwear brand with manufacturing and retail presence in India, a German engineering and technology conglomerate in Asia, an Indian IT services and consulting firm with operations in the uk, a leading personal computing and printing solutions provider in the UK and a global IT services company with a strong presence in the uk.
On the GFS side we added a global commercial vehicle manufacturer, a global leader in battery technology, an Asian multinational food and beverage company, a global health supplement and cosmetics firm and an international retail refrigeration equipment vendor. These wins reflect the trust leading global and domestic brands place in our capabilities and position us well for continued growth in the coming quarters. In summary, our year on year performance with improving profitability highlights a steady momentum in our business. We are consistently winning key deals and tapping into emerging opportunities across sectors and geographies. With the new structure. We are well positioned to participate and convert more opportunities in the future and we remain confident about sustaining the growth trajectory and creating long term value for all our stakeholders with a clear Roadmap to achieve focus in PBT by Q4FY20.
With this we’ll open the floor for questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchstone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sukrit Patel from Eyesight fin Trade Private Limited. Please go ahead.
Sukruth Patel
Good morning to the TVS team and good morning Mr. I have a bit of a telescopic question. As US supply expands this integrated network solutions, how are you thinking about deploying AI across demand forecasting, warehouse automation and freight routing? And do you think it can drive the margin improvement? And do you see this helping TVS build a scalable tech driven edge in global supply chain solutions over the next two to three years? Thank you sir. That was my question.
Ravi Viswanathan
Thank you Sukrit, this is Ravi here and great question. I had mentioned in my earlier calls, I think sometime the last fiscal year that we have started pilot programs in AI. We actually have scaled deployment of AI in select engagements in in uk, US and India where we use a fair amount of visual computing and bringing in orders of efficiency. I think the question that you asked specifically around demand forecasting, these are models that we already have in our software tools and we are building AI into it. But let me just say that where there is great opportunity to bring AI is in our operations.
Agentic AI is something which we will talk about over the next few quarters. We believe that there is great scope for us to improve process efficiency and bring down the ability or increase our ability to drive more volumes with less using agentic AI. So we have multiple AI AI engagements which are in various stages of both initiative and in deployment. AI for our automation and agentic AI for our process automation and significant amount of AI that we are deploying. We have our own tool set called Sidekick which is like a ChatGPT kind of tool which helps us drive internal efficiency especially in tapping into the various knowledge nuggets that we have within the enterprise.
So multiple initiatives. We will update you as we go forward in our journey. But thank you Sukrit, I hope I’ve answered your question.
Sukruth Patel
Yes it is, thank you very much and pretty much answers my query and the next few quarters would be very interesting to watch for tva. Thank you very much.
Ravi Viswanathan
Thank you.
operator
Thank you before we take the next question we would like to remind participants you may press star and one to ask a question. The next question is from the line of Ishant Lavani from Ashika Institution Equity. Please go ahead.
Ishant Lalwani
Hi, thanks for taking my question. So with the recent segmental restructuring where ISPS now includes the IFM business, what are your revised short term and long term revenue and EBITDA targets for each segment?
R. Vaidhyanathan
Okay, thanks Vishalant. As we said as of now the ISCS segment is hovering around 8.3% adjusted EBITDA margin and in the medium term we expect this to go to around say 10, 10.5% and as decided in the past the revenue would be somewhere around mid teens. And revenue target the. Revenue growth would be.
Ishant Lalwani
Yeah, okay. Also on despite absolute profitability holding up, adjusted EBITA margins have declined. So what are the key reasons behind it?
R. Vaidhyanathan
Aan has we mentioned that it’s primarily because of the GFS segment where you know where there was a drop in the freight rates which impacted the absolute profitability. One of the primary reason is the.GFS segment
Ravi Viswanathan
just wanted to qualify that. We continue to see that as there will be a fair amount of volatility given the overall trade environment. And if you see even in our, even in our restated numbers you will find that the GFS has been fairly volatile and that volatility has impacted the overall EBITDA delivery.
Ishant Lalwani
Okay, and how should we view the contribution from TGS ILP for the full year?
R. Vaidhyanathan
Please repeat your question. Your voice is big.
Ishant Lalwani
So how should we view the contribution from TS ILP for the current year given that it has affected inflated PBT?
R. Vaidhyanathan
Yeah, so I think see what happened in Q1 is you know ILP has transferred their warehousing assets and because of which we had higher share of gain in Q1 I think going forward it will be a normalized share of profit from ILP for the rest of the quarters.
Ishant Lalwani
Just a last question. The exceptional item expense related to your Project 1 will this recurring FY26 or was it a one off?
R. Vaidhyanathan
But this is a, this is a one off expense ishan because relating to the Project 1 restructuring cost as I called out out of the 91 crores, 53 crores is a cash expense that is likely to be incurred including Q2 and Q3 where we have taken a provision in Q1 itself because the program calls for, you know there is an obligation for us to recognize this cost now itself as per the accounting standards. So we have recognized this cost because it’s a Formal restructuring program that we are doing in UK and the Europe. And because of the obligations we had to recognize this cost in Q1 itself.
Even though the actual cost will be incurred in Q3 and Q2 and Q3, the 38 crore is a brand, legacy brand. We had, as you know we have done lot of acquisitions in the past and we are carrying this legacy brand and as part of this project one we are integrating everything into a unified brand architecture. That is why we had taken this write off of 38 crores of brand and which is non cash niche.
Ishant Lalwani
Okay. All right, thank you. Thank you.
Ravi Viswanathan
Yeah.
operator
Thank you. Participants, if you wish to ask a question, please press star and one on your Touchstone phone. The next question is from the line of Somil Shah from Paras Investments. Please go ahead.
Somil Shah
Yeah, hi management. Good morning and congrats on a very good set of numbers. Sir, my question was related to TVS ILP. So basically we are having 25% holding in this company and this 177 crores is our share, right? 25%.
R. Vaidhyanathan
Correct.
Somil Shah
So I mean in the previous quarter we were not having any gains from such sale.
R. Vaidhyanathan
Soumil. This year, I mean this quarter since ILP went through a invid process, they transferred their warehousing assets to the INVIT platform because of which they had a gain and we are getting a share of that gain at the rate of 25%.
Somil Shah
Okay, so I mean going forward, how can we look at this particular segment? I mean every quarter we will have some of the other gains or I mean it would be like a once in a year kind of a realization.
Ravi Viswanathan
Yeah, I think has and has and. When ILP starts developing warehousing assets and they will be transferring to an INVIT platform and at that time there will. Be a gain because what has. What has happened in Q1 is that they have transferred almost 11 million worth of warehousing assets to the INVIT platform through which we have recognized this gain in Q1. As they keep developing more warehousing assets and transferring to the trust, there will be a. Depending upon the market conditions, there will be a gain.
Somil Shah
Okay, so basically what is the size of the development? So 11 million has generated 177 crores. So what is the total size what they are developing right now?
Ravi Viswanathan
So they have in their prospectus said that they have a plan to develop about 20 million square feet, but there is no definite time period. I would say in the next, in the, in the medium term that is their plan. But as they continue to develop Assets they will continue to put it in the invid platform. That’s their plan.
Somil Shah
So currently whatever they have developed they have already so I mean transferred it. So right now, as of now for next few quarters we will not get any such gains.
Ravi Viswanathan
We don’t anticipate in the next couple of quarters for sure.
Somil Shah
Okay, so how should we look, look at this. I mean this would be one off kind of exceptional items or it is a TVS group only profit.
Ravi Viswanathan
So how do I look at this? Understood. The way you look at it is that you know the plan of TVS ILP is around 20 million square feet of which they have invent about 11 million. So there is a balance of 9 million in the mid term, in the medium term and that’s the way to look at it and not from a quarterly perspective.
Somil Shah
Okay. Because sir, as a shareholder, I mean it’s been a long wait, more than two years, our stock has not performed, in fact it’s even below our IPO price. So please don’t get me wrong, there is no question on management’s integrity. But I mean for last two years shareholders have suffered. So can you please give some comfort to the shareholder community that what’s our growth outlook for next few quarters? I mean what we are guiding 4% PBT and mid teens kind of a revenue growth. So are we on track to achieve it?
Ravi Viswanathan
So you know Samuel, firstly let me thank all the investors for their trust and patience. Yes, I, I completely appreciate and acknowledge it. Having said that I think like Vaidi outlined there is a clear plan for us to get to 4% PBT and that should unlock significant value. And that’s our belief and the management is absolutely focused in doing that. All of the actions that we have taken, especially in bringing the structures together and leaning the organization and taking significant cost out of the organization is all focused on this one concept of profitable growth. So I just want to reassure you, if you look at the pipeline, it’s probably a very healthy pipeline.
We continue to grow our pipeline. The GFS segment has been incredibly volatile and that has had I would say a fluctuating impact. But we are well on a track to get to a 4% pvt. So just want to reassure all of the investors on that.
Somil Shah
And along with the revenue growth growth guidance of mid teens.
Ravi Viswanathan
That’s correct. The key for us is to convert the. Continue to convert the 5350 crores and keep building the pipeline. And if you see the trend, we have been increasing our pipeline on a quarterly basis and our revenue Growth has been consistently up. So I think all the leading indicators are showing positive signs. That’s the way I will, I will guide.
Somil Shah
Okay. Okay. So we really hope that this quarter to be a turnaround quarter and we start delivering to our promises. That’s it. From my side. Thank you and all the best.
Ravi Viswanathan
Thank you so much.
operator
Thank you. A reminder to participants, if you wish to ask a question, you may press the. The next question is from the line of Kunal Sables from Nine Rivers Capital. Please go ahead.
Kunal Sabnis
Hey. Hi. Thanks a lot for the opportunity. Just confirming the Project 1 impact. What you mentioned was that in quarter one 17 crores hit, you have taken on the back of that and the total impact will be 53 crores for the full year. The cash impact. Right. But you also said that some 50 to 60 crores of savings will be there in fiscal 26. So which means that the project one is neutral for this year and then you have a cost savings of 120 crores next year.
R. Vaidhyanathan
Correct? Kunal, I think whatever is the initiatives that we have taken that will give us a savings in FY26 itself about 50, 60 crores. The annualized savings is the number which is 110 to 150 crores.
Kunal Sabnis
Got it. But you in, in. In fiscal 26 you also take a hit of 53 crores. That’s the understanding is correct, right?
R. Vaidhyanathan
Correct.
Kunal Sabnis
Perfect. And one thing on the GFS side. What so, so I mean I, I understand things are in a flux and a lot of things are uncertain. What’s the normalized EBITDA margin of this carved out piece which is now or freight forwarding.
R. Vaidhyanathan
GFS on a normalized basis should. Should be somewhere around three, three and a half percent. Kunal, if you look at the.
Kunal Sabnis
Got it. Three and a half percent.
Ravi Viswanathan
Correct.
Kunal Sabnis
Yeah. And. And ICS should be ten to ten and a half. That’s the correct.
R. Vaidhyanathan
Yeah.
Kunal Sabnis
Great. Thanks a lot. That’s all from my side.
operator
Thank you. Before we take the next question, we would like to remind participants you may press star and one to ask a question. The next question is from the line of Darshal Zaveri from Crown Capital. Please go ahead.
Darshan Jhaveri
Hello. Good morning sir. Thank you so much for taking my question. Hopefully I’m audible. Yes. Yeah. Hi. Hi sir. So just wanted to ask like in terms of our, you know, project, like our PBT margins, the guidance is quite filler for FY27 but how will we be exiting, you know, FY26 so these benefits will be seeing accruing. Q or like it’ll be more back ended towards FY27.
R. Vaidhyanathan
Okay, thanks. See what will happen in FY26? No, there will be a sequential improvement in the PBT margin. Okay. And as I said, the project one, the IFM turnaround will start giving us the, the benefits. And you can see, you can start seeing those benefits coming from the early quarters of FY27 and by, by the time we reach Q4, FY27, I think we’re confident of hitting that 4% PBT.
Darshan Jhaveri
Okay. And so just wanted to ask one more thing. Like currently like in our, you know, planning that we have, we accounted for this GFS up and down because the idealized margin could be around three, three and a half percent. But right now we are at 2%. So because of that there’ll be, will there be some, you know, operating deleverage or you know, some, you know, volatility in the margins because of that? Sir.
Ravi Viswanathan
So let me just say it’s very difficult to model the current volatility that we are seeing. Having said that, what the company has done is to significantly reduce our cost structure so that we remain within a very narrow band in terms of overhead to revenue volatility. So if the revenue increase or decreases then we should not have a linear increase or decrease in the overhead. That’s the plan. So we have taken a lot of steps in terms of redundancy. We had mentioned it even in the last earnings call. We continue to take cost out of that business to make sure that we remain very lean and agile.
But it’s very difficult right now in the current environment to look at what impact it will be. And one of the things I think the new segmentation does is for investors like you to see the gfs. The impact of the GFS based on all of the things that we are seeing around us by calling them out. Because previously it was in the network Solutions segment. So by culling it out it gives us better ability to model our numbers going forward. But I’m sorry, you know, that’s the best answer at this point that I can give.
Darshan Jhaveri
No, I get it, I get it. It’s a bit difficult to model. But just like my question is towards that, is there like a slight risk because of the GSS segment will not be able to reach our goal because of the volatility that just because I’m assuming in the PBT margin of 4% we would have modeled around 3, 3.5% EB margin. But if it sustains like this for some more time, then Our margins will not improve the way we want them to improve. Is that the fair understanding of it?
R. Vaidhyanathan
Correct? Darshul? I think we have assumed that the GFS one probably in one or two quarters it will return to some kind of a normalcy. No one’s uncertainty tapers off and we’ll, you know we’ll hit the three, three and a half percent PBT margin, no the EBITDA margin for the GFS segment. But as Ravi mentioned right now the situation is bit uncertain so we will have to wait for more stability in that segment.
Darshan Jhaveri
Okay, fair enough. I just wanted to understand with regards to you know our bid pipeline right now. So any more conversations happen or how does you know in general the 50 crore pipeline, how do, how soon can we see tuition? What would be maybe our win rate of it?
Ravi Viswanathan
We you know as a company our win rate is about 22%. We continue to see how we can improve that. And you know some of the, especially the ISCS segment has large gestation deals. The good thing is you know they are long term deals and they are multi year deals but it also takes a long time to fructify. But our, the pipeline that I’ve shared is actually our annualized revenue pipeline which means that if I win all of the deals that’s the revenue I’ll be able to recognize for the year. So I would say that given the pipeline we remain confident on the, on the revenue growth.
The revenue growth should be around mid. Teens right sir, that is the, that is the current outlook. Yes.
Darshan Jhaveri
Okay. Okay, fair, fair enough. That’s it. From my side. Thank you so much. All the best. Hello. That’s also my Sir. Thank you.
operator
Thank you.
R. Vaidhyanathan
Thank you. Darshan.
operator
A reminder to participants, if you wish to ask a question you may press star and 1. The next question is from the line of Kamil Shah from Paras Investments. Please go ahead.
Somil Shah
Yeah, hi. Thanks for allowing me a follow up. So in our presentation I think we mentioned that the best, I mean industry class, other companies they are having a PBT of 8 to 11% whereas we are targeting for 4% by Q4FY27. So I mean what would be our long term guidance for this beyond Q4 FY27?
Ravi Viswanathan
Yeah, clearly I think we have articulated that you know we want to get to that benchmark but our first step is to get to 4% PBT by Q4FY27 and then we see how we can deploy additional levers and there are quite a few opportunities like the first caller had mentioned, I mean the agentic AI and the AI pilots that we are doing are aimed towards changing that trajectory. And we expect those to get deployed sometime in the later part of the next fiscal. So those are things that we can keep building on as we see opportunities increase.
But our immediate goal is to get to 4% Pvt. Y Q4FY27 and then build a roadmap to get to the 8 to 11%. So we’ll have to take it one step at a time as you can appreciate. So many.
Somil Shah
Okay. Okay. And so any debt reduction plans for this year?
R. Vaidhyanathan
So many as of now I think we are comfortable with the debt and most of the debt is only for working capital. So we are comfortable with the debt position.
Somil Shah
Okay. Okay. That’s it. From my side. Thank you.
Ravi Viswanathan
Thank you.
operator
Thank you. A reminder to the participants, anyone who wishes to ask a question may press star and 1. The next question is from the line of Rhea Sharma from CK Capital. Please go ahead.
Riya Sharma
Hello. Am I audible?
Ravi Viswanathan
Yes.
Riya Sharma
Hello. So sir, I have two questions for you. The first one is the new business wins considerably dropped for this quarter from the usual 10 to 12% to 5%. Any reason for this? And how is the deal pipeline currently going?
Ravi Viswanathan
Okay, is that two questions?
Riya Sharma
Yeah. So that is the first question.
Ravi Viswanathan
Okay, let me answer it first. I think touched upon it in my commentary that we secured new business winds of 124 crores which was muted compared to what we have generally seen. Predominantly it came on two counts. One is volume reduction lower than anticipated volumes in some of our existing deals. But also a couple of large deals that we assigned had a. I would say the delays in revenue start days for those engagements. So from a pipeline perspective we remain very healthy. 5,300 crores of active pipeline and it continues to grow. The number of opportunities that are in different stages in our pipeline gives us tremendous confidence that we will stay on our growth to growth plan.
So lead indicators are good. Yes. I did mention in my summary that the revenue growth which Normally is about 9 to 10% was only around 5% this quarter which is on account of lower than anticipated volumes. I guess it’s a reflection of the overall trade environment and also some engagements we started a bit later than the plan.
Riya Sharma
Okay, got this. And the second question is that the overall India business of ISTs and GFS this quarter has been on a slow slowdown since past few quarters. Now can you throw some light on the same two things?
Ravi Viswanathan
I think if you see the Q1 numbers from India Inc. Itself has been muted. So in a way I would say that, you know, from a supply chain side that we reflect that. But again, like I said, you know, the lead indicators are good. Number of opportunities that we are chasing are still on the up. So we remain confident. But yeah, in many ways it’s a reflection of the overall performance here of India in Q1.
Riya Sharma
Thank you sir. This is from my side.
Ravi Viswanathan
Thank you Rihanna.
operator
Thank you Ladies and gentlemen, that was the last question for today. As there are no further questions, I would like to hand over the conference to management for closing comments.
Ravi Viswanathan
Before we wrap up, let me first thank you for your questions, your interest and we remain very committed to our overall trajectory of growth that we have spoken about. Let me reiterate the key takeaways from this quarter. Q1 has been a strong start of the year driven by disciplined execution. The project one we have initiated in the UK and Europe, combining ISCs and IFM under one leadership, optimizing our footprint and realigning our brands, is already setting the foundation for a leaner and more customer focused organization. Project one will also be one of the key levers delivering our 4% PVD target by Q4FY27 alongside the sustained turnaround of IFM, an operational leverage that we can get across our other regions.
We remain watchful of the macroeconomic and geopolitical certainties, but our diversified portfolio, disciplined cost management and healthy balance sheet positions us well to navigate volatility and capture growth opportunities. We are confident that the actions we are taking today will deliver sustainable value creation for our shareholders in the quarters ahead. Once again, thank you all for your time, your questions and your continued interest in the journey.
operator
Thank you. On behalf of tvs, Supply Chain Solution limited concludes this conference. Thank you for joining us and you may now disconnect your line.