Navkar Corp Ltd (BOM:539332) Q3 2025 Earnings Call Highlights: Strong Revenue Growth Amidst ...

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Fri, Jan 31, 2025, 12:04 AM 4 min read

Total Revenue: INR3,457 crores for the nine months ending December '24, a growth of 22% year-on-year.
Total EBITDA: INR1,885 crores for the period, reflecting a 22% year-on-year growth.
Net Profit: INR1,006 crores, a growth of 21% year-on-year.
Cargo Volume: 29.4 million tons in Q3 FY25, a 5% increase from the previous year.
Third-Party Cargo Volume: 14.3 million tons, representing a 31% growth year-on-year.
Operational Revenue for Port Segment: Increased by 13% to INR1,063 crores for the quarter.
Operational EBITDA for Port Segment: INR570 crores, a 19% increase year-on-year.
Consolidated Revenue: INR1,255 crores for the quarter, a 24% year-on-year growth.
Consolidated EBITDA: INR670 crores, reflecting a 20% year-on-year growth.
Profit Before Tax: INR276 crores for the quarter, compared to INR307 crores in the previous year.
PAT: INR336 crores, a 32% increase from the previous year.
Net Debt: INR827 crores as of December '24, with a net debt to EBITDA ratio of 0.4x.

Warning! GuruFocus has detected 3 Warning Signs with BOM:539332.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Navkar Corp Ltd (BOM:539332) reported a significant 22% year-on-year growth in total revenue for the nine months ending December 2024, reaching INR3,457 crores.
The company achieved a 21% year-on-year growth in net profit, amounting to INR1,006 crores for the same period.
Cargo handling capacity increased at multiple terminals, including Mangalore and PNP port, contributing to a total capacity rise to 174 million tons per annum.
Navkar Corp Ltd (BOM:539332) has been rated as low risk on ESG by Morningstar Sustainalytics, highlighting its commitment to managing ESG risks.
The logistics segment is set to expand significantly, with a target of INR8,000 crores in revenue by FY30 and an EBITDA margin of 25%.

Negative Points

The company recognized a mark-to-market unrealized loss of INR156 crores due to sharp depreciation in INR and changes in the yield curve.
Iron ore volumes experienced a sharp decline, impacting overall cargo volumes.
The logistics business currently operates at lower EBITDA margins compared to the port business, which may affect overall profitability.
There are concerns about muted growth at the Jaigarh and Dharamtar ports due to JSW Steel's capacity utilization constraints.
The company's expansion plans involve significant capital expenditure, with INR9,000 crores allocated for logistics and INR15,000 crores for port business by FY28, which could strain financial resources.

Q & A Highlights

Q: How do you see the volume growth for Jaigarh and Dharamtar ports given the current capacity utilization at JSW Steel? A: The Jaigarh and Dharamtar ports primarily serve the Dolvi Steel plant, which is expanding its capacity. Significant growth is expected once the plant expansion is completed around mid-2027. Until then, regular growth will continue, with a focus on increasing third-party cargo, maintaining a 10% volume growth for FY25.

Q: Can you provide insights into the logistics CapEx guidance and the asset-light model strategy? A: The logistics expansion involves setting up 15-20 terminals across India, leveraging group cargo, and utilizing Gati Shakti terminals to reduce costs. The INR9,000 crores CapEx till FY30 will be split between Navkar and JSW Port Logistics Company, aiming for a 25% EBITDA margin on INR8,000 crores revenue.

Q: What is driving the revenue growth in the ports business despite a lower volume increase? A: Revenue growth is driven by the inclusion of Navkar's logistics business and the high-margin oil tank terminal in UAE, which has margins of 85%+. This diversification has resulted in higher revenue and EBITDA growth compared to the port cargo alone.

Q: How does the company plan to achieve the targeted INR8,000 crores revenue from logistics by FY30? A: The strategy involves leveraging JSW Group's logistics spend, capturing a significant share of it, and expanding the logistics network. The logistics business will operate alongside the ports, with a focus on capturing third-party business and group cargo synergies.

Q: What are the expectations for iron ore volumes and the impact on future growth? A: Iron ore volumes have been affected by cyclical price changes and operational disruptions. However, major customers have restarted operations, and volumes are expected to recover in the next quarter, contributing to overall growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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