Ladies and gentlemen, good day and welcome to the TCI EXPRESS LIMITED Q2 FY 2024 earnings conference call hosted by PhillipCapital (India) Pvt Ltd. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company. As on the date of this call, these statements are not guarantees for future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is now being recorded. I now hand the conference over to Mr. Vikram Suryavanshi from PhillipCapital India. Thank you, and over to you, sir.
Thank you, Rohit. Good evening and a very warm welcome to everyone. Thank you for being on the call of TCI Express. We are happy to have the management with us here today for a question and answer session with the investment community. Management is represented by Mr. Chander Agarwal, Managing Director, Mr. Pabitra Mohan Panda, Chief Operating Officer, Mr. Mukti Lal, Chief Financial Officer, and Mr. Hemant Srivastava, Chief Operating Officer for Non-Surface Express Business. Before we start with the question and answer session, we will have opening comments from the management. I will hand over the call to Mr. Chander Agarwal for opening comments. Over to you, sir.
Thank you. Good evening, and welcome everyone to Q2 and H1 FY 2024 earnings call of TCIEXPRESS LIMITED. I would like to thank all of you for joining us here today. To start with, I will give an overview of industrial developments and business performance, and then we will hand over the call to Mr. Mukti Lal, our CFO, to brief on our financial performance for the quarter and half year FY 2024. Our earnings presentation and press release has been uploaded on the website and stock exchange. I hope you all had a chance to review it. We are delighted to announce that TCI Express enjoyed another quarter of consistent performance with improved sequential margins.
The growth and margin improvements during the period were primarily driven by execution and acceleration of automation and steady demand from the MSME sector, which has witnessed a strong uptick in the last few quarters. In line with our reflection of performance and shareholder-friendly capital allocation policy, the board of directors have recommended an interim dividend of INR 3 per share and a payout of 150% of the face value, reaffirming our commitment to delivering value to our shareholders. Coming to the business update, I am pleased to announce the appointment of Mr. Hemant Srivastava as Chief Operating Officer of Express Businesses Non-Surface of TCI Express. With a distinguished career spanning two decades at the TCI Group, he has undertaken diverse and impactful roles in financial management, including positions as Zonal Manager and Region Express Manager.
Under his capable, experienced leadership, Mr. Srivastava will head an independent team responsible for overseeing non-surface express businesses, which also include the remote business verticals, ushering into a new era of innovation and excellence within TCI Express. As far as our future focus is concerned, we will continue to invest in technology and automation to drive a more efficient operation to provide superior customer service. We are on track to complete automation of our Pune sorting center by March 2024. During the first half of the year, we have incurred a total CapEx of INR 21 crore, which have been primarily spent towards expansion of branch network, automation, and construction of sorting centers. These are integral to our goal of improving operational efficiency and customer service. Additionally, we have expanded our footprint by adding 12 new branches during H1 FY 2024, deepening our presence in key business geographies.
This expansion not only enhances our market research and reach, but also improves our accessibility to customers, making us more agile and responsive to their needs. Our newly launched services are going strength to strength, and we expect service offerings to contribute productively to the top line in the forthcoming quarters, enabling us to deliver higher business volume and margin values. From a value chain perspective, we continue to maintain a strong capital structure, providing us a financial flexibility to focus on balanced capital allocation. Looking ahead, we are optimistic about the industry's potential, and we also look at the half year H2 doing better than H1 as the volumes have started picking up already. At TCI Express, we believe that sustainability is essential to our long-term success.
In recognition of our steadfast commitment to sustainability, we are happy to share that TCI Express has received the esteemed title of Sustainable Organization from The Economic Times for adopting sustainable practices and promoting environmental consciousness. Our growth strategy remains focused on achieving a balanced growth of revenue quality, expanding margins, and ensuring sustainable returns on capital. With our unmatched combination of scale, expertise, and technology, we are well-positioned to capitalize the growth opportunities presented by the Indian economy and the evolving logistics landscape. Now I would like to hand over the dais to Mr. Mukti to talk about the financial performance of the last quarter.
Thanks, sir, and good evening, everyone. Now I would like to discuss the financial performance of the company. Our Managing Director has already highlighted the achievements during the quarter, and I will deliver into the financial aspect. During the quarter, our revenue from operations stood at INR 320 crore for Q2, as compared to INR 305 crore in Q1 and INR 310 crore in Q2 of last year. Our total income for the quarter was INR 322 crore, as compared to INR 306 crore in Q1 of this current year, and INR 312 crore in Q2 of last year, registering a sequential growth of 5% and 3% on year-on-year basis. Despite the delays and hesitations, we witnessed an improvement in EBITDA and PBT margin on a sequential basis. The EBITDA for the quarter stood at INR 52 crore
registering a sequential growth of 9%, with a margin of 16.2%. Our profit after tax for the quarter stood at INR 36 crore with a margin of 11.1%, compared to a margin of INR 32 crore and margin of INR 10.6 crore in Q1 of this current year. Overall income for the first half of this current year stood at INR 628 crore as compared to INR 605 crore same period last year, registering a year-on-year growth of 4%. The EBITDA for the period was also INR 100 crore with a margin of 16%, and profit after tax was INR 68 crore with a margin of 10.8%. With the festive season on the horizon and resilient domestic demand, we are optimistic of high capacity utilization, better contribution from our new offerings like rail, cold chain, pharma, C2C, et cetera.
The impact of these changes will be reflected in our financial performance in the forthcoming quarter. Our commitment remains rooted in balanced growth and revenue quality. We are dedicated to expanding our margins and ensuring sustainable return on capital. Thank you very much. Now I would like to open the floor for question and answer. Over to you, moderator, please.
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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only headsets 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 Amit Dixit, ICICI Securities. Please go ahead.
Yeah. Hi, good evening, everyone, and thanks for taking my question. I have a couple of questions. The first one is on the appointment of five senior management personnel. While you have mentioned Mr. Hemant Srivastava's role, I just wanted to understand in greater detail about the other key personnel, the specific responsibilities that they would be expected to shoulder. As well as in non-surface express for which Mr. Hemant Srivastava is the guardian. I would like to understand the kind of broad contours from this business, what kind of revenue we expect, what kind of contribution margin, let us say one or two years from now. That is the first question.
Basically, I don't think there is some confusion there, not five new people. It's only Mr. Hemant Srivastava who has been appointed.
Okay, because the release mentions five, so that's why I was asking about it.
No, probably it's the five. I'll have to check again, but the five are the products.
No, there are five people mentioned in the release. Anyways, if you could just highlight the broad contours of this Non-Surface Express business, because that seems to be a focus area. The growth also, you have mentioned in the PPT is also attributable to the better traction on non-surface express. So if you could get some specific revenue target you might be having in mind at this point in time, the growth that you see, because the focus is now with the appointment of Mr. Srivastava, I think the focus is in a more acute manner towards this particular business vertical.
We have thought that these products will be part of the overall business of at least 25% in the next couple of years. We are also wanting that it will become half of the business going forward in the next maybe year, five years. Sorry, not five, but maybe six to seven years. I think this will give us a very good chance to grow the company, with a straight direct management control. This will be very new because I do not see any other logistics company doing that. Any other express company focusing so much on development of the new products like that. If you see competition also, nobody is that focused to have just defined people for their products which has a substantial growth aspect.
Okay. The second question is essentially that the festive season this time around is a little bit back-ended. What kind of volume growth for the year can we expect? What all segments do you see particularly going into H2 that would contribute to this growth more?
Mukti?
Yeah. Basically, H2 would be much better, and we will be looking whatever guidance we have given, we are aligned with that, and obviously we will achieve the very great revenue growth in these remaining two quarters. Also, I would like to mention one thing here. In this quarter, we could have also achieved slightly higher growth because pre-festival month has been shifted to this October, and that is why we will get the benefit in this Q3 and all that benefit will get. In Q3 and Q4, we will have the higher growth and we will achieve the volume, whatever we committed on that.
Okay. That is reassuring. Thanks and all the best, sir.
Yeah. Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Next line from Alok Deora, Motilal Oswal. Please go ahead.
Hi. Good evening. Sir, just wanted to first understand what would be the volumes we would have done in the second quarter?
Yeah. So volume is like we have taken 252,000 tons in this quarter.
Okay. Also, sir, earlier we had mentioned about a double-digit growth for FY 2024. Now, first half we have done on a like around 3%-4% growth on average. Even if you were to do like a 10%-11% growth in the remaining two quarters, we will still be like ending the year with a 6%-7% sort of a growth. Just wanted to understand what's the growth number we are looking at for this financial year?
I don't see any change in our numbers, in whatever numbers we had set out for because the economy is, again, it's very fluid. It is not as what we project, how it is. Suddenly nobody could imagine that the automobile sales are through the roof, and things are very dynamic now. So I don't see any sort of change in the way the company has figured out its growth plans.
Sure. We saw decent margin improvement coming in despite the kind of a subdued growth. So margins are nearly at around 15.8% at the EBITDA level. What's the trajectory on margins going ahead once we gain even higher volumes in Q3 and Q4?
Definitely, I am good to see the margin improve in the second half year for sure.
Sure. Just last question. If you could just highlight again on the CapEx for this year.
Mukti
the CapEx. On CapEx side, we are on line with like we spent INR 20 crore in first half. Second half would be like again around INR 60 crore. I think we will be finished this year around INR 80 crore.
Similar numbers next year also, or could be slightly higher?
Yeah, we will have around again INR 100 crore target.
Sure. That is all from my side.
It is internal approvals only as usual.
Got it. That is all from my side. Thank you, sir.
Thank you. The next question is from the line of Akash Vora from Dalal & Broacha. Please go ahead.
Yeah. Hello.
Yes, Akash.
Yeah. Hi, sir. Thanks for giving me the opportunity. My question is more from the industry point of view, wherein we are seeing a good growth in the number of E-way bills that are being generated. There is again good growth when we see in our competitors as well, the likes of DTDC and all have posted good numbers on a month-on-month basis and on a year-over-year basis. So why are we struggling to grow, sir, and are we losing market share here?
I cannot talk about what a company is doing on month-on-month because I see the end result, what comes out. I think we should wait and see what the final result comes out, and then we can, I think, that question will be answerable. What is your second question?
Sir, I was just asking, are we losing on market share, sir? Everyone is pushing double-digit growth when it comes to logistics. I was just a bit put off by TCI Express.
You can tell me which company is doing it. Let the results come out, then we will talk.
Yeah.
These are results, right?
Yeah, correct.
Please, to have a comparison and then we will see.
No, sir. But the other companies give business updates. They have already given a business update for this quarter.
Yeah.
They have grown.
I had also seen their quarter one numbers, and they were not matched what they had shown in their volume numbers, and subsequently, revenue numbers was saying different story. It may not mean the volume has grown, so their revenue has also grown. We don't see whether it match to these numbers with revenue or not. If you compare their numbers in quarter one, you will have your answer on that.
Okay. Not only from a pure point of view or a competitor point of view, the industry level at total, sir, I mean, the E-way bills have also grown more than 15%-16%, right? Year-over-year basis.
Sorry, your voice is not clear. What you said lastly?
I am not only speaking from a pure sale point of view, I am speaking on the whole. Even the E-way bills have grown at a 15%+ rate, right? If you look at the year-over-year number.
E-way bill is like this is a barometer of that, but it does not mean the express industry is also growing the same way of that. We are majorly driven by manufacturing happening in India. So that number you can see, manufacturing is not that great what everyone has anticipated for this year, actually. This is a thing. Second thing, that is also important, what segment we are really in. If these segments are really manufacturing happening in this segment or not, that is also very important. So, plain vanilla to seeing the E-way bill numbers is not giving any sense of that growth here linked to this express industry.
Okay, sir. You reassured earlier that you are sticking to the guidance that you had given earlier this year. Where do you see the growth coming from, let's say for the next half of the year and even FY 2025, where would the growth come for TCI Express?
Pabitra, you would like to answer?
Yes, yes. Am I audible, sir?
Yes, sir. You are audible.
Yeah.
Yes. So we see a strong demand from our existing strong business from our existing customers. Specifically, we see festival season garment is growing in this month, we can see more than 20%. This lifestyle products, that is also growing. Even consumer durables, that is growing. And our major source of business is pharma and auto. That is stable, and this second half, that is also going to grow. So these are the major source, and these new products will also grow. This is our basic. So that industry.
Next question, please.
Participants, I requested you to restrict your questions to two per participant. And the next question is from the line of Krupa Shankar NJ, Avendus Spark.
Good evening, and thank you for the opportunity. So my first question is, can there be a breakup provided on the end user industries, for example, as right now it was mentioned that lifestyle consumer durables, pharma and auto. Can there be a proportion shared for the current first half's performance?
Pabitra, you want to answer on that?
Yeah. See, proportionately, the share of business of Pharma and Auto is our key Garment, Lifestyle and Consumer Durables are coming lower. All have performed better, so garment and lifestyle have really picked up due to this Puja and all. So this month and last month—
Sorry to interrupt, Pabitra Panda, sir. There is an echo from your line.
Hello.
Yeah, sir. You sound clear now. Can you speak sir?
Our Auto vertical and Pharma vertical, they are stable business that is growing. This second half, we are seeing better growth. This Garment and Lifestyle, these are not that much grown in first half. That was not that much build-up. But in second half, all our customers are doing well, and we see a better proportionate contribution.
Sir, what I was more referring to this existing contribution of these end user industries to your overall revenue, based on the first half performance or FY 2023, if you can share, what could be the contribution with respect to either on tonnage or revenue of, let's say, Pharma and Auto, Consumer Durables and Lifestyle and Garments?
Around revenue share weight will be percentage-wise, it is roughly 17%-18%, that is Pharma and Auto that we do. These are Government and Lifestyle. These are up to double-digit, but these are in top five.
Got it.
That is going to grow. That is going to grow more.
Got it, sir. With respect to the asking rate in the second half, it is looking quite steeper. While I do understand that in the third quarter the base effect would result in a strong, healthy growth. Still, fourth quarter also has to fire all engines for you to achieve your guidance. Just for me to understand that, is this primarily only going to be a function of base, or is it also a function of new branch addition? Because I could see that you added 12 new branches. Is there any incremental contribution coming in from more geographies or new services, for that matter?
Yes. New services, Hemant, as we have been appointing the COO, he will be responsible for even more growth in the coming quarters and thereafter onwards. Yes, our quest is on to open the branches. We will open another 10 to 12 branches depending on the scope. We have done basically realignment also of the network by having their own manpower for the new products, and also shared branches in the main locations of business for the new products. This sort of focused way and focused approach of generating more business from the new products has been activated, and it will definitely give results in the short and long term.
Thank you. Last part from my side, if you can highlight on the sorting center side, has the benefits of the automation started reflecting in your margins and incrementally it is going to be more of operating efficiencies, is my understanding correct, or there is further scope for contribution from that?
Yes. Operation margins, operation efficiency will relate in the better higher business visibility and better profitability. That is for sure. Because we have such amazing highways, as I always say, but our quality of trucks are really not up to the mark. Therefore, we have to see that how can we really make the difference of reducing the transit time in India and also delivering faster to the customer. All these things have started. Everything takes time here in India, and it is not like you are putting up a plant or something that it is ready in six months and we are ready to go. Our Pune sorting center will be up by March 2024, and thereafter we will definitely see the dual effect of these sorting centers.
I think connecting the two most important building points in India for business, north to west, will be one of the most important aspects in any operational organization structure.
Thank you, [inaudible].
The next question is from the line of Kunal Bhatia from Dalal & Broacha Stock Broking. Please go ahead, sir.
Yeah. Sir, thank you so much for the opportunity. Sir, a couple of questions from my side. One is I just wanted to know this time our utilization was approximately 84% for the entire quarter. So if you could just give some sense on how did it move on a month-over-month basis. What was it at the start of the quarter or middle and end, if you could give some sense on that.
Yeah. So basically, utilization level is increasing with the businesses increases, and this is good thing is happening in this year. We are growing sequentially, and that's why in this quarter is higher than last quarter. It is around 84%. And monthly, in last September, it was around 84.5%, and in last two months it was around 83.5%. In October month, it will be, I think, cross 85% utilization level, and so on. Yeah.
Okay. And, sir, in terms of the, since we have only 18, 20 days in the current month, what is the kind of growth or volume pickup you've already seen in terms of the numbers? And also, meaning just a rough back of the envelope calculation point as even if you want to grow, say, 10%, the first double-digit number on the overall basis for the year, you will have to at least cross the 14%-15% mark for H2. So how confident are you to go on that line?
Yeah, so that answer already we've given two times. So I think we can also discuss separately.
Okay.
Yeah.
And, sir, any price hikes you've taken in the current quarter?
Yes. That is actually in last quarter, we've taken kind of 1% price hike. Also in this quarter, around half basis point we have already taken, and we've taken a target for this year to increase prices by almost 2%. We are aligned with that, and we will shortly achieve 2% price hike target in this year.
Okay. And sir, finally, on the value-added business, what was the contribution in this particular quarter vis-à-vis the same quarter last year?
What you said, sorry?
In the new value-added business, what was the contribution in this quarter versus the last year's same quarter?
Same quarter, there was a contribution of around 15.5%, and now it is 17% of overall revenue in this.
17%?
Yeah.
And sir, generally, these value-added business, H2 would have a higher contribution? How has been historically the case?
Yes. So basically, air business and rail express business is obviously getting more margin than surface. Not much, but yes, it is slightly higher on that.
Okay.
Yeah.
Fine, sir. Thank you so much.
Thank you.
Participants are requested to restrict your questions to two per participant. Thank you. The next question is from the line of Jainam Shah from Equirus Securities Private Limited.
Yeah, am I audible?
Yes.
My question relates to the branch addition that we have done. We have added somewhere around 12 branches this first half. Just wanted to know in which part of the country it has been added, and you have initially given the target of 50-75 branches addition for FY 2024. Are we on the track to have that 50-75 branches given that H2 will be having major branch addition?
Mukti Lal, you would like answer on that? Please go ahead, Mukti.
Yes, please. Basically, we have taken a target to be added 50 to 75. We could already done 12 branches. Major branches we open in West and North India. In this year, second part of India, we also want to be open in the range of 25 to 30. Basic reason why we are not opening up. We really not opening up without any study of these branches. Wherever opportunities come, we opening up the branches. Somehow, we are not seeing any growth aspect, just to open, we are not opening up the branches, and that's why less number are there. No any specific reason for that. Yeah.
Got it. If you see the contribution of the newer businesses that we are having, rail express and all other businesses, and if you exclude that from the revenue, then on a year-over-year basis, revenue has not grown significantly. Despite we have added almost 30, 40 branches over a period of time. On a surface express, our volume has been stagnant for a year-over-year basis. Of course, there could be some festive impact last year, which has not come this year. Overall, how we are looking at express industry going forward? Is it going to be a challenging year specifically to the express industry as compared to the LTL or something?
I don't think it will be a challenging situation for the express industry because, again, if we are challenged, then the whole economy is challenged, very simply put. If we see that the logistics sector is not growing, it's not because there's a problem with the company, it's because of the problem with the economy, simply put. I'm talking not just for my company, for TCI Express, but I'm talking for everyone. That makes a big difference in how the demand is playing out, how the supply is playing out in overall the macro and the economic situation. I think a lot is to play when it comes to logistics, not just a few factors. We are still churning out 15% EBITDA, and we still have the capacity to grow.
You can see very nicely that it's been cyclical because of sudden rise in demand, then demand flattening out, and then again the growth will start. I mentioned this also in the last quarter, that the high base created from COVID, now it starts flattening out, and then the growth will start. It's obvious. It's how the economy works.
Got it. Visually, we maintain that 2x of GDP guidance for industry, which we have seen in the past as well.
Exactly.
Got it, sir. Thank you, sir. That is it from my side.
The next question is from the line of Praveen Reddy from the Reddy Investments Pvt Ltd. Go ahead.
Our Gurgaon sorting center, I visited with help of Mukti Lal. Thanks for the assistance. The working we saw is tremendous and will grow in time to come, we are sure for that. How sorting center we may work for nighttime only. Can we improve to daytime also?
So, it is a very valid question, but it is not required. Because operation is efficient in the nighttime, then it is no use hiring extra manpower and extra costs for what? So it is not like the whole idea of automation is to reduce the cost, the time it takes to, cooperation, reduce the manpower. So all that is achieved. So we do not want to go back, reverse and add more manpower unnecessarily just because it is not idle in the morning.
Right. Chander, you always said earlier that rise in GDP will boost our business, but in last five quarter, we barely grow and increase in margin will also not there. So can you tell the specific reason?
See, it is a very simple thing. Again, the economy growth is very critical. And depending on how and which sector of the economy is growing, we must study that carefully. We are pretty much the barometer of the manufacturing sector of the economy. And when we see that, I have been noticing also that last year things have not been great for the country. And again, one of the main reasons is because of the economical cycle. COVID came, it became negative, then it suddenly shot up because of low base. Then it settled down, it started flattening out, and then it is going to go up. It is a normal thing. It is nothing wrong with the company or any wrong strategy that we have taken INR 1,000 crore loan or anything like that. So I think we have very strong fundamentals and everything is still very strong.
There is nothing to worry but just to wait and watch. That is all.
That is important and we wish all the best and happy Diwali to all of you. Thank you very much, sir.
Thank you.
A reminder to all participants, please restrict your questions to two per participant. Thank you. The next question is from the line of Mayur Parkeria from Wealth Managers (India) Private Limited. Please go ahead.
Good evening. Am I audible?
Yes, clear and loud and clear, please.
Yes. Sir, thank you for taking my question. Sir, actually, you mentioned right now and couple of times that we are more linked to the manufacturing side of the economy and rightly so the Q2 GDP for manufacturing was in the region of 4%. How does that percolate down at the company level? We would expect slightly better numbers because we have execution capabilities which is more and we are a more efficient company. Having said that, will it be right to say that even the export side of manufacturing which is doing better we would benefit out of that over the next two, three years? Or we will be more aligned on the only the domestic demand side of the manufacturing?
No, export is also down. It is not high as you think. Again, our international products that we have, it is growing but of course not at the pace that we would like it to grow because of the factors affecting our side. There are two global wars going on. So we have to be very alert and careful that our money doesn't get stuck and we have to be wary of too many things nowadays.
Right. And sir, on a vertical part of it, do we have exposure on the electronic side in GDP or the economy? Because that is one segment which is showing a lot of growth because of the setup of manufacturing capabilities along the electronics and digital products.
We are doing business in the manufacturing side of electronics. But again, it is something which is very, very highly cyclical. And we have to be very careful because what happens is that when we used to work with mobile manufacturers earlier, the Indian companies, our payments used to get stuck. It was a given thing. They used to delay payments for 90 days, 120 days, and that was not acceptable to us or our shareholders. Then we had to really re-look and refocus our business with those type of companies. And same is the case with your white electronic goods. Barring one or two companies, major companies have a strong policy of delayed payments. So are we ready to accept it? Perhaps not at this stage. So we have to look at it also that demand is slowing down and all of that.
We have to be very careful in how we proceed.
Sir, it is heartening to know that the focus is on both balancing the growth and the efficiency. Sir, one last point from my side. Sir, last quarter or rather two quarters before and last quarter you were more specific on that the outlook was actually quite weak because you explicitly mentioned the prolonged impact of the economic slowdown happening. And we reduced our FY 2025 target to INR 1,750 crore from INR 2,000 crore earlier which we had. You are saying that the outlook is more optimistic than what we were seeing.
Yes.
Is it only because of the festive season for these H2, or do you believe that over the next two years we will be in a position to achieve those targets by FY 2025?
See, as a promoter, I do not look at short-term. I always look at short and long term. The long-term goal is never described by or never given out by just a short-term spurt in demand or something. I think 2025, it is a very high possibility that we will achieve the INR 2,000 crore mark also. I do not see any sort of a hindrance internally. We have to be very careful as to how everything plays out. There is also election coming up, and if you do a SWOT analysis, if you consider all of the existing issues, I think it is quite achievable or very close to quite achievable. Now that we have also streamlined our management, where we have two COOs. I think it will add that focus of the INR 2,000 crore that we stopped looking at for one quarter.
Wow. Sir, that is a very positive sign I think people should take note of because we are at INR 1,250 crore and in one and a half year, we are talking of almost INR 2,000 crore, sir. Sir, that is a very strong turnaround outlook which you are looking at.
Yes, I think I am also looking at the possibility of M&A and all that. We are firing on all cylinders, so we will see how everything plays out.
Thank you, sir, and wish you all the best.
Thank you.
Thank you. The next question is from the line of Krupa Shankar from Avendus Spark. Please go ahead, sir.
Thank you for the follow-up, sir. One question on, you have taken the price hike of 0.5 basis points. Was it towards the end of the second quarter, sir?
Yes, it is on second quarter.
Sir, the remainder of your growth guidance, what is that? You were targeting about 2% price hike, and already 1.5% almost has already been done in the first two quarters. The entire growth would come in from volume growth in the second half. Is that how it is?
Yeah. That is true. Whatever hikes we have to be is also applicable on second half also, similarly.
So for the entire year, but it was 2%, right, sir?
Yes.
So you've only taken 1.5%, so only 0.5% is remaining. And then remaining, of course, the growth in the volume side would be upwards of, again, 15%+ or 20%+. Am I understanding things correctly here?
Yes. So volume and revenue growth difference would be like 2%.
All right, sir. Okay. Got it, sir. Thank you.
Thank you. The next question is from the line of Priti Narkhede from Wealth Financial. Please go ahead.
Yeah, thank you. Good evening. My question is more in regards to, if I look back the con calls that we used to have two years back, we have seen that the volume in absolute numbers has only increased. But the utilization has come down. It used to be around 86%, let us say about four, six quarters back. How is that possible? Why is the utilization coming down while absolute volumes have only increased?
That is a very good question. Basically, I had said earlier also, we said capacity is very dynamic. Supposing wherever we are not addition the other truck, rather we are replacing with the higher capacity. That is why we are able to manage this utilization level and that is why we are able to manage like 85%. Supposing we always adding wherever we need the higher capacity or you can say like additional capacity, then if supposing we add another truck, then we always under utilization level, like maybe even below 80%. That is actually very dynamic and the room we are getting because we have the completely outsourced model we are using here, and wherever we want to be replaced higher capacity truck, we are replacing that. That is why we able to maintain this level of full year of around 84%-85%.
And with the high growth, we will achieve even 86%, and then we can go up to 88% on these numbers.
Got you. Okay. Thank you.
Thank you. The next question is from the line of Lokesh Manik from Vallum Capital. Please go ahead, sir.
Yeah. Thank you. Good evening to you, team. Chander, my question was on competitive intensity. So in the last six months, have you seen any unusual spike in that area or do you believe this is manageable from your end?
Sorry, can you repeat that question again?
Yeah. The question was on competitive intensity. If you have observed heightened competitive intensity in the last six months on ground or do you believe that is normal business that is going on?
No, I think it's absolutely normal business. There is no heightened competition. There's no anything which is being laid out in a very different way. It's business as usual. The question is whether other companies will be able to manage their costs or not, better than how we are doing.
Right. Great. The second question was, do you believe we are underrepresented in any part of the industry in this economy or do you believe we have captured all the industries that were in our target area?
We are also very choosy. We cannot be in raw material in the transportation business where we have 1% margin, 2% margin. There is enough business over there, but again, there will be no return to shareholders. Looking at that, I think we have captured the right sectors that are poised to grow and that are in control. We are not in sectors which are totally suddenly the demand will fall or our money will be stuck. If you see our standing of other logistics companies, it is like almost 50%, which means almost 135 days.
Sure.
How can any company be efficient in that sense? That way, we are quite well-positioned for the future growth which is going to happen.
We should be looking at geographic expansion in terms of branch opening for growth. I mean, given that we have captured the industry, we have identified the areas where we want to grow.
Absolutely. I had mentioned also that we have appointed a reputed big consulting firm to do that.
Great. That is all from my side, Chander. Thank you so much.
Thank you.
Thank you. The next question is from the line of Anshul Agrawal from Emkay. Please go ahead, sir.
Hi, am I audible?
Yes, Anshul.
Great. Thank you for the opportunity. I just had one question. Since we look at growing profitability, what parameters do we look at before we select customers or before we plan on entering new verticals? That was my only question.
Mukti Lal, you would like to answer?
Can you repeat the question?
Sure. Since we plan on growing profitability, what parameters do we look at before we select customers or before we enter new verticals? You just mentioned, Chander, that certain electronic players don't pay upon time, et cetera. So apart from probably customer health, what other parameters do we look at before we, say, select a customer, before we select a new vertical that we want to enter?
Yes, that's a very important question. We do a total check of the customer, of a large customer. If they have any legal liabilities of a large claim. If they have any sort of litigation against them, or if they have anything which is against the policy of the government of today or pollution or anything.
I'm sorry to stop you in between. I couldn't hear you.
I am saying that we do a full check of the type of customers. We do an audit of the customer before we sign a contract. We do a full check of whether they are doing any sort of working against what the government policies are in terms of environmental, social, and in terms of if they have any liabilities, large financial liabilities, or if they have any large debts which they have to pay off. All these things really matter a lot. That is why you see also that some of the large commodity type of companies, we are not working with them. If you see the likes of steel, aluminum, all commodity types of companies, we stay away from them.
Great. Thank you so much.
Thank you.
Thank you. The next question is from the line of Rahul Soni from ICICI Bank Limited. Please go ahead.
Hello. Am I audible?
Yes, Rahul.
Yeah. Thanks for giving me the opportunity, sir. Sir, a couple of questions from my side. Sir, as you said earlier, that you have a high single-digit exposure to the textile sector, like Garment and Lifestyle. How this slowdown in the textile readymade garment has impacted your volumes? If any impact was there, which other sector has compensated for that?
Basically, like in this H2, this segment has also picked up. This will be given a bounce back and whenever inflation is high. This is a sector which first impacted overall, and now it is also come up. But second, good sector which we see in an attraction is glassware and kitchenware. These are the new sector which is organizing. Earlier, it wasn't highly organized. Now it is organizing and very new company and good companies entering into that sector, and we are getting the business from them. Yeah.
Okay. Second question, sir. On the vehicle scrappage policy. Have your vendors or you experienced any kind of a negative impact due to this? I want to understand what will be the impact of this on the sector as a whole and on your company.
If you see, in our case, we're replacing the truck once reached on a seven-year age. There's no fundamentally, there's no impact on us at all. Second thing, if you see, this old age truck is not moving on these express routes or highways. Basically, this utilized for a regional level and even sometime in only Tier 3, Tier 4 cities. Overall, there is no impact of industry at all or in and out on supply side also, demand side also.
Okay. Thanks.
Ladies and gentlemen, that was the last question for today. I now hand over the conference to Mr. Vikram Suryavanshi for closing comments.
We thank the management of TCIEXPRESS LIMITED for giving us an opportunity to host the call and taking time out for interaction with the stakeholders. Thank you all for being on the call.
Thank you. On behalf of PhillipCapital (India) Pvt Ltd , that concludes the conference call. Thank you for joining us. Now you may disconnect your lines.
Thank you