Gujarat Pipavav Port Limited (GPPL) Earnings Call Transcript

Good afternoon, and welcome to the Q1 FY '26 Earnings Call of Gujarat Pipavav Port Limited. My name is Manish Agnihotri, and I'm the Company Secretary. I have along with me Girish Aggarwal, Managing Director; and Santosh Breed, CFO. [Operator Instructions] We'll start with the opening remarks from Girish and then we'll be opening the floor for Q&A. Over to Girish.

Thank you. Good evening, everyone. Our overall revenue this quarter increased by 2% year-on-year, largely because of robust growth of about 21% in the Liquid business and 11% in the RoRo business. Our Container business broadly was flat or 0.6 percentage lower. Overall, EBIT declined by 3% year-on-year with EBITDA margins at about 59%. This was largely due to one-off expenses of INR 25 million in higher repairs and maintenance costs. Excluding the one-off expenses, EBIT would have been lower by 1%. In terms of outlook, we believe Liquid volumes will continue to grow at a healthy pace of about 20% this financial year and RoRo by about 25% in this financial year. Because of various geopolitical challenges, we will maintain our container volumes to be flattish this financial year. As we progress in the year, I'll give you more commentary on it as more clarity emerges on tariffs, et cetera. In terms of overall EBIT for this financial year, we expect a 5% to 7% overall growth on the EBIT year-on-year. I will pause here and take your questions.

[indiscernible] Please go ahead with your question.

Just had a question on the Container outlook. If I recall last quarter, we were speaking in terms of 3% to 5% growth. But this quarter, it seems like a downgrade in the guidance to flattish for the year. So maybe if you could help us understand what is driving this flattish growth outlook despite a very low base, which we had last year?

[ Deepak ], fair question. Essentially, it's on the basis of the geopolitics that we are seeing as well as the 50% tariffs announced. We believe retail segment or government segment, at least at this point in time, will be negatively impacted. And hence, we are kind of giving a muted guidance on the container volume. Let's see how this develops and then maybe as we move forward in the year, we'll get more clarity. But at least what we are seeing based on the 50% tariffs by the U.S. government, we believe it will have a negative impact on our retail government growth, export [ connects ].

On the same point, if you could clarify what is the kind of exposure which you have to the U.S.-bound trade or imports from the U.S. for that matter, basically the India-U.S. trade. What is your exposure to that trade lane for us to help us understand why this -- how this plays out actually?

Yes. So overall, I would say roughly 13-odd percent is something that is at an exposure based on the service. I mean, there's no commodity split that I can give you. I don't have the exact commodity split. But if I look at the service split that we handle, I would argue about 13% of our volume is U.S. bound, but it's not all retail, right? So it is a mix of multiple commodities. So that's -- I would argue at least at this point in time is the exposure. Let's see what really transpires. Also, I mean, we must understand that this is more the retail season. This is when the contracting happens. This is where everything happens out of India. So the timing is also not very good.

And if I've heard it correct, it is 13%, right?

Yes, 13%.

Yes. Great. And then for the financial EBIT guidance, which you mentioned, could you please repeat the numbers? The line was very distorted.

5% to 7% growth.

5% to 7%. Okay. And the typical realizations which you guide or which you have realized during the quarter, if you could help us with those.

So the realizations have stayed more or less same. Container in the range of INR 9,000 to INR 9,500 per TEU. For bulk it's INR is 550 to INR 650 per metric ton and Liquid INR 600 to INR 650 per metric ton.

INR 600 to INR 650 per metric ton. Okay. And in terms of the RoRo volumes, right, I believe these are all export bound. And are these also impacted by the tariffs in any way? Or are these for different markets altogether?

Different markets, not impacted.

Okay. And I mean, with respect to -- given that the Container volumes are slowing down, right, you're looking at flattish volumes there and Liquid volumes are growing very fast. So does that mean that the margin outlook will also be under pressure? Or is it that the weakness in Container is offset by a very high-margin Liquid business?

Yes, it's offset by both high-margin business of Liquids and RoRos. I'll maintain a 60% to 61% -- I mean, let's say, 60%, 61% overall annual EBITDA margins.

Okay. Okay. And any color on the bulk volumes, how is that shaping up or how you expect it to shape up?

So bulk, we are keeping a flattish summary. Essentially, this quarter was a little low simply -- I mean -- but this Q2 will be good. This is the fertilizer season. We're seeing a robust fertilizer import. Overall, we're still maintaining a 2.25 million to 2.5 million metric tonnes of dry Bulk.

Okay, of dry bulk. Okay. And one last question before I fall in the queue, sorry. The vessel positioning or the services calls at GPPV, right? Last year, we had this big impact of Red Sea capacity being pulled away from non-East -- pulled away into the Eastwest routes, right, particularly the U.S. and the Europe routes, and that led to some of the vessels calling less at your ports. How is that vessel call scheduling shaping up?

So far, everything looks okay. But again, with the tariffs, I mean, a lot will depend on how these tariffs play out, Deepak. China is still -- I mean, it's just got another 90-day pause. So we see a lot of inventory buildup in the U.S., whether the U.S. will continue to buy out of China. Peter, sorry, you are I think on camera. So we'll have to do a little bit of a wait and watch here. But as of now, I think broadly similar, we haven't seen any further impact of moving out of vessels.

Okay. So that has stabilized at least for now?

Yes, for now, right? But let's see now is the 50% of India and [indiscernible] in China. Let's see what happens.

[ Katak Jehan ] please go ahead with your question.

Sir, first, I wanted to understand what would be the revenue share as per our current concession, which we pay to the Maritime Board currently?

So again, we don't pay a revenue share to the Maritime Board. It is based on the volume handle and the rate commodity to commodity.

And commodity to commodity, and it's a published number and then there's a concession royalty to us, yes.

So can you just give a percentage like out of the INR 9,000 realization for Container, what would be the percentage just around?

I'm not able to give you a percentage by business stream.

And it will not make sense also because [ MT ] is different, [indiscernible] is different, body weight is different. So I mean these are published numbers on the web. I think by GMV, any which way you can figure that.

Understood. Okay. So I understand why I was asking this. I just wanted to understand in the case of the concession extension, what is the more likely route will the Maritime Board extend with a higher royalty or put the asset for rebidding? And if it comes for renewal, how long do you think will it likely be extended for 20 years or 30 years? Just some thoughts on these.

No, no. I cannot give you any commentary on that. That will be left to the government of Gujarat. So we'll see as it comes up.

So no estimates or anything, how we're...

There's no point in talking about estimates and our discussions that are happening. That's -- those are all speculative in nature at this point in time.

[indiscernible] Please go ahead.

Sir, my first question is with respect to Liquids, the new jetty that is being constructed. What is the time line you see when it can be commissioned?

November, December 2026.

Understood. Understood. Also, AVTL has expanded the LPG handling capacity at your ports. And additionally, they have also announced an ammonia plant and are also building a railway gantry for Liquids. So considering all of these, what is your outlook on Liquid volumes for a slightly longer term, say, '27, '28?

Okay. So this year -- we will give guidance for this year, at least at this point in time, [indiscernible], which we said is roughly 20%. But as we move forward, I mean, again, the capacity expansion for us and full VLGC handling capability will come to us by November, December 2026. So I think you could expect -- and this is a 3.2 million tonnes expansion. So you could expect at least 1/3 of it to be operational, 1/3 to be in year 1 and then expand gradually beyond over a period of time. You didn't also mention the Gorakhpur Kandla pipeline, Kandla-Gorakhpur pipeline that also come online within this year. So the -- so I think overall, I think Liquid will continue to see very robust growth.

Sure. And one last question from my end. Sir, can you give the CapEx guidance for this year and potentially for the next year?

CapEx guidance for this year, in general, overall, a large portion of expense of the Liquid jetty, which we announced $90 million will be expensed out this year and that's max or major CapEx this year.

Okay. So the major part of that will happen this year only?

Just in terms of CapEx, yes. And then some part will be next year.

Achal, please go ahead.

Sir, first question, if you could help us understand -- sorry, I missed the initial couple of minutes. If you could talk about how the EXIM cargo growth has been for the West Coast? And have we seen a market share loss for the first quarter?

West Coast, I think it has been -- I mean, the growth is largely in Maharashtra for quarter 1 where JNPT has grown volumes by, I think, 6% or 7%. Gujarat overall volumes are sort of flattish. Overall, our share is similar in nature.

That you're seeing from a Y-o-Y perspective or Q-o-Q perspective, sir?

Y-o-Y.

Y-o-Y.

Okay. Understood. So given the number what you mentioned in terms of our 13% of -- I presume Container volumes you said from -- are exposed to U.S.A. Is this a little higher than the peers according to you? Or this is very much similar for the other ports on the West Coast?

It will be much lower. We are more import -- Container volume will be much lower.

Okay. Got it. The other question I had, if I see from a Container utilization perspective, how do you see that going forward? I know you don't want to give a guidance, but broadly speaking, till the time you don't have a visibility on concession, does it mean that there won't be any further capacity addition likely on the Container front? Is that a right understanding?

See, currently, I mean, we are not waiting for the concession to be extended from an investment perspective. You already know that we are investing in a liquid jetty without any clarity on concession. So our priority is to complete [ GP ] as we call it, which is November, December next year. After which next year as we get on with our analysis and assessment, we will try and understand how do we expand. But there will be expansion on the Container side. That's without a doubt, whether it will happen before '28 or after '28 is yet to be decided. Our first focus is to do liquid jet expansion. And again, if it is needed, we will expand. We will not hold back CapEx as we have shown on the liquid side.

Fair point. Just last question, if I may, sir. In terms of the -- given the DFC connection is expected finally at JNPT by December or June '26, how does it affect you? What percentage of our services are also calling JNPT? If you could help us with that number, sir?

I don't have that number handy. But I can tell you the ONE services call both Nhava Sheva and us. One of the OOCL vessels calls up in Nhava Sheva. So some of them is call, but the percentage, I don't have it now.

No, I'm just curious because once that is there, would discharging at or picking up at JNPT be a more lucrative or cost-efficient option given if these are destined for North?

Yes. But no, according to me, no, simply because the railway tariffs will be higher for Nhava Sheva because the distances are higher than Pipavav. So if any exporter wants to discharge or I mean do imports export out of Nhava Sheva and not us or Mundra for that matter, it will be more expensive for them.

I thought because of the double stacking, it will become a bit more cheaper than the -- I mean, more optimal double stacking in JNPT.

We are also double stacked. So that's -- there's no difference from that double stacking. All railways slabs are [ basis ] kilometers. So the kilometers increase, the slabs will increase and one has to pay more.

Right. Sorry, I'm harping on this, if I may, sir. I presume we are like Mundra and Pipavav are unable to do the double stacking in the sense TEU on a TEU. Right now, it is FEU on a TEU as a double stack. Is that understanding right?

And how does that matter?