Allcargo Gati posts strong Q2FY25 results amid cost optimization efforts

Allcargo Gati Limited, a leading name in India’s express distribution and supply chain management sector, reported significant financial growth for the second quarter of FY25, driven largely by successful cost optimization strategies and infrastructure advancements.

The unaudited financial results for the quarter ended 30th September 2024 reveal a notable improvement in key metrics, underscoring the company’s commitment to efficiency and innovation. EBITDA for H1FY25 stood at INR 39 crore, an 18% increase compared to the previous year. This improvement in EBITDA highlights the company’s strategic focus on cost initiatives and operational efficiency, which continue to enhance the financial health of the firm.

Revenue Slightly Down, but EBITDA Shines

Allcargo Gati reported a consolidated revenue of INR 374 crore for Q2FY25, which marks a 3% decline compared to Q2FY24. Despite the slight dip in revenue, EBITDA showed a significant jump of 20% year-on-year, reaching INR 19 crore. The company attributes this rise in EBITDA to its relentless pursuit of cost optimization and infrastructure upgrades, which has allowed the business to improve its margins.

The Deputy Managing Director, Ketan Kulkarni, noted that October 2024 has been a record-breaking month for Allcargo Gati, with the highest-ever monthly volume of 118,000 tonnes. This marks a substantial growth over September 2024’s volume of 108,000 tonnes, demonstrating a significant increase in operational capacity. Kulkarni emphasized that this achievement is a reflection of the company’s unwavering focus on providing seamless and reliable logistics services.

Infrastructure and Technology Upgrades Continue to Boost Performance

Allcargo Gati continues to augment its infrastructure and technology capabilities by progressing into Phase II of its infrastructure development plan. The introduction of new technology modules is set to further enhance the company’s operational visibility, allowing for greater efficiency and supporting innovation. CEO Pirojshaw (Phil) Sarkari explained that these infrastructure developments and tech deployments are in line with Allcargo Gati’s growth strategy, which aims to balance operational expansion with financial sustainability.

The company also rolled out over 1,700 rebranded vehicles, including a variety of Alternative Fuel Vehicles (AFVs), as part of its broader sustainability initiative aimed at achieving carbon neutrality by 2040. This move aligns with the Allcargo Group’s sustainability goals and underscores their commitment to environmental, social, and governance (ESG) standards. The expanded fleet enhances the company’s reach and operational efficiency, especially in first- and last-mile deliveries across India’s vast network.

Significant Growth in Express Business Vertical

The Express Distribution business, housed under Gati Express and Supply Chain Pvt. Limited (formerly Gati KWE), recorded significant progress during the quarter. Gross margin for the express business saw a 10% year-on-year increase, reaching INR 99 crore for Q2FY25. This growth is reflective of strategic enhancements in both technology and infrastructure, which have contributed to improved cost management and operational efficiency.

Allcargo Gati is making strides in expanding its footprint across India’s logistics landscape, offering direct delivery services to over 5,400 pin codes and access to 19,800 pin codes across 735 districts. The company’s expanded network is particularly beneficial for businesses in tier 2 and tier 3 cities, enabling them to scale operations with enhanced traceability and reliability. This extensive reach has solidified Allcargo Gati’s position as a key player in India’s logistics and supply chain sector.

Expert Insight: Growth Strategy Yields Positive Results

Industry experts believe that Allcargo Gati’s approach to balancing growth with cost optimization is positioning the company well for continued success. Analysts have lauded the firm’s focus on improving efficiency through infrastructure and technology investments while expanding its green fleet to align with sustainability goals. These initiatives not only boost operational performance but also enhance the company’s reputation as a responsible logistics provider in India.

“Allcargo Gati’s strategy to enhance operational visibility and efficiency, coupled with its push towards sustainability, is likely to continue yielding positive results,” noted a sector analyst. The deployment of alternative fuel vehicles and ongoing infrastructure upgrades demonstrate the company’s proactive approach to addressing environmental concerns, which is increasingly becoming a priority for both investors and customers.

The Road Ahead

As Allcargo Gati looks ahead, the company aims to build on the current momentum by expanding its operational capabilities and ensuring a seamless logistics experience for its customers. The combination of infrastructure expansion, technology upgrades, and the continued rollout of alternative fuel vehicles places the company on a robust growth path, well-aligned with its sustainability objectives.

Allcargo Gati’s recent initiatives and financial performance underscore a strategic commitment to delivering value while fostering operational excellence and sustainability. With ongoing infrastructure projects and technological enhancements, the company is well-positioned to continue meeting the evolving needs of businesses across India.