Gujarat Pipavav Port Limited (GPPL) Earnings Call Transcript

So good morning, everyone. This is Manish Agnihotri and we are -- welcome to Q1 FY '27 Earnings Call of Gujarat Pipavav Port Limited. We have Girish Aggarwal, Managing Director and Santosh Breed, CFO. Girish will start with the opening remarks, the financial performance of the company and overall business, and then we'll open the floor for Q&A. Over to you, Girish.

Thank you, Manish. The company delivered a strong financial performance this quarter. Year-on-year revenue for the quarter was higher by 33%. EBITDA was higher by 45% with margins at 64%. EBIT was higher by 8% and net profit was higher for 46%. This includes duty benefit scripts that of FY '15-'16, '16-'17, totaling at INR 31.6 crores. Excluding this, the underlying performance revenue was higher for the quarter by 20%. EBITDA was higher by 25%, with margins at 61%, which is a 200 basis point expansion, EBIT was higher by 31% and net profit was higher by 24%. In terms of volumes, Containers were up by 3%. This is in spite of the Middle East conflict. RoRo was up by 53%, dry bulk was down by 7%, largely minerals and liquids was down by 47% with a significant 63% decline in LPG volumes. In terms of overall financial year outlook, we now are looking at an overall EBIT growth between 20% and 24%, year-on-year. RoRo is expected to have a volume of about 260,000 to 270,000 cards. Liquids is expected between 1.3 million to 1.4 million metric tons. Bulk is expected between 2.4 million to 2.6 million metric tons and Containers is expected to have a 4% to 5% increase at approximately 700,000 TUs. I will pause here and then answer any questions that you may have.

Thanks, Girish. So the floor is open for Q&A. Deepak, please go ahead with your questions.

Could you please repeat the guidance again because you were a little fast and it's very difficult to grasp over the line?

EBIT growth of 20% to 24%. Containers approximately 700,000 TEUs about a 4% to 5% increase, RoRo at 260,000, 270,000 carts. Liquid between 1.3 million to 1.4 million metric tons and bulk between 2.4 million to 2.6 million metric.

Okay. Now coming back to the Container performance, right? I recall that during the last call, you had guided somewhere around 5% to 7% growth during the first quarter. Volumes did grow by about 3%. Just wanted to understand where was the gap? And do you think that the new service, which is coming through from the July quarter? And also, what is the situation with respect to normalization of services? Any comments around that would be helpful with respect to the Container cargoes. And then I'll move on to the other questions.

So container essentially -- I mean it's been a [indiscernible] quarter. with the Middle East conflict. We have one service, Shahin, which is a Middle East service between us and Jabalali, which has remained suspended so far. We are now assuming it will remain suspended for the full financial year or the remainder of the year. And that is a substantial 70,000 to 80,000 TEU kind of volume that we will lose this year because of Shahin. But what has helped is the growth from the new service, which started towards the end of June. So we believe, of course, the full year impact will be in the next 9 quarters. FY 2, this is a Maersk service. What we have also done now is multiple opportunities of transshipment that are available. We're going and we have captured some of that proactively, and we expect that to kind of stay with us for at least the next 3 to 4 months, and then we'll see how that progresses. So overall, the guidance is still around 4% to 5% growth on the Container volume for the financial year.

Okay. And for this [indiscernible] service with Maersk, which has started since June, what is the contribution of this particular service? Is there's some information available on that?

Yes. So I mean, It's early days, right? So it's about 4 calls that have happened so far. Usually, the services start small and then they start to grow. But I would expect that -- I mean, not Shahin will be gone for 12 months and assuming 9 months of this. But like-to-like basis, it will eventually turn out to be similar to Shahin, volume on a weekly basis.

Okay. Okay. And with respect to the cash outlook, right, now [ 1.3 to 1.4 ] is somewhere about 8-odd percent decline year-on-year. Now this implies that there's sequential improvement during the rest of the quarters compared to where we were in the first quarter. What are the trends which you have seen so far in July and middle of August? How -- if you could allude to how the second quarter is performing with respect to liquid particularly? And if you can, about the rest of the cargoes as well.

So I will not comment on this quarter's how we are doing from an overall volume perspective. I can give you overall guidance. Roughly a [ 0.3 million ] decline over last year is [ 1.6 million ]. gives us an overall decline of about 18%, right? So we expect a 15% to 20% decline in volumes as -- on the overall Liquid side. Liquid is obviously the first quarter is difficult, but now LPG started to come from the U.S. So we do expect some catch-up happening in the remainder of the year.

Okay. Okay. And if Santosh can help us with the realizations because it seems that on a like-for-like basis, excluding the script the duty reversals, right? The realization seems to be on the higher side. So if you could run us through the typical number which you help us with and that will be insightful.

Sure, sure. So the realization for container is around INR 9,500 crore to INR 10,000 per TEU. Now this change which has happened as compared to the previous quarter, driven mainly by two things. One was the favorable exchange rate, benefiting in this quarter? And second is the tariff increase that we have taken in January. Some of those have started materializing based on the contextual arrangement with the customers from this quarter. So those two are the reasons for the change in the realization. Having said this, what you see in the numbers are substantially higher. So one is the ACIS or the duty scrips what we have mentioned. But apart from that, we also had some one-offs on the provision reversal as well as the opportunities what we got -- on the opportunities, what we've got for transhipment volumes, the storage revenue on those also helped us to push the revenue up. So that one-off also sitting in this number. And that's why you see the realization on the higher side.

Okay. And then for the bulk liquid, is it the same run rate as what we saw last quarter or you're seeing...

For bulk and -- so bulk remains at INR 650 to INR 750 per metric ton and Liquid remains at INR 650 -- sorry liquid is a bit better with the cargo mix for this quarter, around INR 650 to INR 700 per metric ton.

Okay. Okay. That's very helpful. And Girish, Santosh, both of you, if you can help me with -- we have been seeing a lot of news flow about containers being backlogged most ports in India, be it Mundra, Nava Sheva right? And then there are even reports of carriers having to skip calls because they cannot load or offload because of the excessive waiting times. So if you could help us understand what kind of congestions if at all, there are any in your port? And if there's no congestion or if it is a management level, are you seeing an opportunity to capture ad hoc calls because your peers are unable to handle those vessels?

No. So currently, there are no congestions in Pipavav. Monsoons, of course, always remains -- I mean, at times is difficult. But in general, our port is fully functional, no birthing dealers largely for any vessels, which is the situation in being -- and that's why I said, in spite of the fact that we are going to lose Shahin. We are aggressively looking at tapping opportunities of transshipment, which we've done this quarter. We see that continuing to happen. So yes, so that's going to happen. There is also, of course, subject to the draft any vessel requirements, et cetera.

Okay. So is it fair to conclude that you might get some opportunities because ...

We're already getting that.

You're already getting that. Okay. Okay. That makes sense. And then the standard question with respect to the concessions, any developments since we last spoke, 3 months back?

Yes. I think things are progressing positively with the Gujarat Maritime Board. Again, there are no red flags, also nothing further to report where we are today vis-a-vis 3 months back, but I will be coming back to you as soon as we have something from the GMP, but things moving in the right direction.

Okay. And my last question is, what is the CapEx outlay for this year, if you could help us understand that. Any changes since we last spoke? And if you can put a number to what you expect the CapEx to be for this year, including the expansion which you're doing in the liquid jetty.

Yes. So no major changes what we spoke from last, but we expect around close to around INR 200 crores to be spent. And again, major spend is happening on the liquidity, what we are going to commission in this financial year.

Mr. Rajiv Rupani, please go ahead.

This is my first call, and I'm new to the company. And I have a follow-up question on the session agreement. So you have said that the talks are progressing well. So I mean, when do we come to know -- I mean in -- because the concession agreement expire in September '28. So we will come to know in the year '28 only or 1 year before or what? This is my first question.

So, it's difficult to answer that question. It entirely depends on the of Gujarat Maritime Board and Government of Gujarat. So what I can confirm as soon as we get to hear, we will disclose it.

Okay. My next was a follow-up question. So once we get the approval, right, you have mentioned that a parent APM will invest about INR 17,000 crores for expansion. So this total investment will be made by the parent only or GBPL will make investments? Could you clarify?

This is a GBPL investment.

So the whole investment will be made by GBPL?

Yes.

Okay. And could you also guide us how much will be invested in phases? And how much time will it take? What will the capacity afterwards, some brief idea, please?

I cannot give that brief idea today, Rajesh, it is not possible. There's a lot of things that will go before we get to that discussion. I think the overall contours of INR 17,000 crores are broadly known. But we're still working with our master plan, business plan. We will discuss this with Gujarat Maritime Board. Whenever they want us to have that discussion agree with them and then come back, right? At this point in time, it is very premature.

Okay. And my next question on this CapEx for the [indiscernible] cargo and our capacity is going from 2 million metric tonnes to 5 million metric tons. So when does it get complete? And how much will it add to our revenues approximately?

Yes. So current closure is March 2027. So no impact this financial year. And then it will progressively grow. So I don't have ready information to give you in terms of what's the revenue additive in '27-'28. Are you looking at '27-'28 or...

Approximately.

Okay. But that we can get back to you separately.

Okay. And what will be the capacity utilization you expect of this 5 million metric tons approximately once it's complete?

This will be phased over a period of time, right, in terms of growth, not the entire thing will come -- I mean we will not fill the [indiscernible] immediately as it gets commissioned, right? So it will progressively improve. But we expect over the next 3 years, we should be back to 3 to 4 years, we should be back to full.

[indiscernible], please go ahead with your question.

Just wanted to harp on this additional revenue that we have secured aside of the duty scripts, these one-off provisions and ad hoc opportunities, can you quantify approximately how much did they contribute additionally to the revenue? And secondly, is that something we should assume at a sustainable rate for the year?

So first of all, these are very ad hoc, right? So these are not something which we can say is sustainable. The opportunities will keep on coming on transshipment and then, of course, we'll use those opportunities. And we will have some additional revenue, but if we are able to quantify what those revenues will be. And even on the provisions, again, these are one-offs. So I would like [indiscernible] to quantify anything on that front as well.

And just a clarification, our realizations on the transshipment volumes compared to non-transshipment would be lower? Or how does that mix -- They're lower?

They are lower. However, what is also is happening and there was this question also on the congestion, et cetera, in the other ports there is additional -- it comes with additional storage. It comes with additional -- even a lot of these transshipment is also refer so that also comes with additional charges. So in general, I think, we've been able to -- there's not too much of a difference, at least what we saw this quarter. Let's see how that goes the next quarter.

Got it, sir. And my second question was with respect to the [indiscernible] pipeline. Is that per now complete? On the last call, I think you mentioned around 8-odd kilometers for spending.

Yes, 70-odd kilometers, we are now expecting October this year. That's the current time line that I have.

Sir, Rajeev, you have some more questions? You have your hand raised.

A follow-up question, this -- what will be the dividend policy going forward since?

Yes, sorry, the Board will decide the dividend policy. As of now, there's no change to the policy as and when the Board decides a change, we would communicate that.

Mr. Parimal Mithani, please go ahead with your questions.

Sir, recently, the parent has made a lot of statements regarding the Indian markets? And is there any thought process how do you see your business over the next 3 to 4 years?

And the what were you talking about the parent -- I'm sorry, you're not very clear.

AP Moller has made a substantial commitment about India growth prospects and about investments in terms of sports and all. Can you give -- if there's any guidelines, how do you see your business going for the next 3 to 4 years from here?

No, no. So the guidance guidelines, et cetera, guidance given by AP Moller I cannot comment. I can only comment only on from a GPPL matter perspective. If you're saying what is the GPPL outlook for the next 3, 4 years? Is that how I should see your question?

Yes, if you can.

Yes, yes. I mean I think, Of course, a lot is dependent on the concession extension. So hence, we do not go out and give our overall guidance for the next 3 to 5 years. So the right thing would be that we secure the concession and then we -- any which has come back to what we plan to do. I mean there are a lot of questions about the investment, et cetera, et cetera. So as the business plan unfolds, then we can talk about it. It's again, as I said, a little premature. Let the concession thing get closed out first.

Any question from anybody here? Yes, continue. Please go ahead with your questions.

Couple of questions Question on the realization side, right, even bulk looks slightly higher, if I understood the number, [indiscernible]. Is there anything that we should note there -- I mean ...

The question is on bulk realization?

Yes, yes.

The realizations have been maintained, so there is no impact on the realization. The changes what you say is mainly for the cargo mix that has been handled.

Understood, sir. And sir, secondly, on the concession agreement, what is the kind of conversation that is happening with the Maritime Board. Is it that they'll call for bidding and then there will be [indiscernible] kind of thing? Or is it some methodologies being discussed? Or is it like a one-on-one negotiation, what is the -- what are options that are happening there?

So that cannot be discussed on -- I think it is suffice to say that we are progressing well with our discussions with Gujarat Maritime Board. And anything that comes up, we will then disclose. I mean at this point in time, there is nothing to disclose. Neither there is any red flag that, we are at least at the management level, worried about.