TCI Express Ltd
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TCI Express Ltd
Earnings Call Analysis
Summary
Q2-2024
The company reported promising dynamics, with anticipated new products contributing to at least 25% of business in a few years and potentially half in 6-7 years. Strong demand from existing customers, particularly during the festive season, is driving growth, and specific sectors like pharma and auto are expected to expand in the second half. The company maintains its original growth plans despite the dynamic economy. Margins are forecasted to improve, with CapEx of around INR 80 crores for the year, and volume growth is expected to recover in later quarters. Prices have been hiked by approximately 1% last quarter and an additional 0.5 basis points this quarter, aligning with a target increase of 2% for the year.
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Ladies and gentlemen, good day, and welcome to the TCI Express Limited Q2 FY '24 Earnings Conference Call hosted by Phillip Capital India Private Limited. 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. [Operator Instructions] Please note that this conference is now being recorded.
I now hand over the conference over to Mr. Vikram Suryavanshi from PhillipCapital India. Thank you, and over to you, sir.
Thank you, Rohit. Good evening, and 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 question-and-answer session with the investment community. Management is represented by Mr. Chander Agarwal, Managing Director; Mr. Pabitra 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'll hear 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 Financial Year '24 Earnings Call of TCI Express Ltd. I would like to thank all of you for joining us here today. To start with, I will give an overview of the industry developments and business performance, and then we will hand over the call to Mr. Mukti, our CFO, to brief on our financial performance for the quarter and half year financial year '24. Our earnings presentation and press release have been posted on the website and stock exchange. I hope you have had a chance to review it.
We are delighted to announce that TCI Express delivered another quarter of sustained performance with improved sequential margins. The growth in margin improvement 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 last few quarters. In line with our reflection of performance and shareholders and the 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'm pleased to announce the appointment of Mr. Hemant Srivastava as Chief Operating Officer of Express Businesses Non-Surface of TCI Express. He has a distinguished career spanning 2 decades at TCI Group, he has undertaken diverse and impactful roles in financial management, including positions as zonal manager and regional express manager. Under his capable and experienced leadership, Mr. Srivastava will head an independent team responsible for overseeing non-surface express businesses, which also includes the new 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, drive more efficient operation to provide superior customer service. We are on the track to complete automation of a sorting center by March '24.
During the first half of the year, we have incurred a total CapEx of INR 21 crores, which has been primarily spent towards expansion of branch network, automation and construction of sorting center. 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 financial '24, beginning our presence in key business geographies. This expansion not only enhances our market research and reach but also improves the accessibility to customers, making us more agile and responsive to the needs. Our newly launched services are growing strength to strength, and we expect service offerings would contribute productively to the top line in the forthcoming quarters, enabling us to deliver higher business volume and margin levels.
From a balance sheet perspective, we continue to maintain strong capital structure, providing us the 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 being better than H1 as the volumes have started picking up already.
At TCI Express, we believe that sustainability is essential to a long-term success. As 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 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 over 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 aspects.
So during the quarter, our revenue from operations stood at INR 320 crores for Q2 as compared to INR 305 crores in Q1 and INR 300 crore -- INR 310 crores in Q2 of last year. The total income for the quarter was like INR 322 crores as compared to INR 306 crores in Q1 of this current year and INR 312 crores in Q2 of last year, registering a sequential growth of 5% and 3% on a year-on-year basis. Despite the delay in [indiscernible], we witnessed an improvement in EBITDA and EBITDA margin on a sequential basis. The EBITDA for the quarter stood at INR 52 crores, registering a sequential growth of 9% with margin of 16.2%. And our profit after tax for the quarter stood at INR 36 crores with a margin of 11.1%, compared to a margin (sic) [ profit after tax ] of INR 32 crores and margin of INR 10.6 crores in Q1 of this current year.
Overall, the income for the first half of this current year stood at INR 628 crores as compared to INR 605 crores same period last year, registering a year-on-year growth of 4%. The EBITDA for the period was also INR 100 crores with a margin of 16%, and profit after tax was INR 68 crores with margin of 10.8%. With the festive season on the horizon and resilient domestic demand, we are optimistic of higher 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 quarters. Our commitment will -- remains rooted in balanced growth and revenue quality. We are dedicated to expanding our margins and ensuring sustainable return on capital. So now thank you, everyone, very much. And now I would like to open the floor for questions and answers. Over to you, moderator, please.
[Operator Instructions] The first question is from the line of Amit Dixit, ICICI Securities.
Yes. I have a couple of questions. The first one is on the appointment of 5 senior management personnel. So while you have mentioned Mr. Hemant Srivastava's role, so 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's say, 1 or 2 years from now. So that is the first question.
So basically, I think there is some confusion there, not 5 new people. It's only Mr. Hemant Srivastava who has been appointed.
Okay. Because the release mentions 5, so that's why I was asking about it.
So probably the 5 I want to check again. The 5 are the products.
No, there are 5 people mentioned in the release. Anyway, if you could just highlight the broad contours of this Non-Surface Express business because that seems to be a focus area. I mean -- and the growth also you have mentioned in the PPT is also attributable to the better traction in Non-Surface Express. If we 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.
So we have thought that these products will be part of the business -- overall business of at least 25% in the next couple of years. But we are also wanting that it will become half of the business in -- going forward, the next maybe 5 years -- sorry, not 5 but maybe 6 to 7 years. So I think this will give us a very good chance to grow the company with a straight direct management control. And of course, this will be very new because I don't see any other logistics company do like 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 define people for their products, which will have substantial -- which has a substantial growth prospect.
Okay. The second question is essentially that the festive season this time around is a little bit back ended. So what kind of volume growth for the year can we expect? And what all segments do you see particularly going into second half that would contribute to this growth more?
Mukti?
Yes. So basically, the second half would be much better, and we will be looking whatever guidance we have given, we are aligned with that. And obviously, we will be -- achieve very great revenue growth in these 2 quarters -- remaining 2 quarters. And also, like I would like to mention one thing here, in this quarter, we could have also achieved like slightly higher growth. Because pre-festival month has been shifted to this October. And that's why we will get the benefit in this Q3 and that benefit we will get. So in Q3 and Q4, we will have the higher growth, and we will achieve the volume whatever we committed on that.
[Operator Instructions] Next line is from Alok Deora, Motilal Oswal.
Sir, just wanted to first understand what would be the volumes we would have done in the second quarter?
Yes. So volume is like we have taken 252,000 tonnes in this quarter.
Okay. Okay. And also, sir, so this -- earlier, we had mentioned about a double-digit growth in -- for FY '24. Now first half, we have done like around 3% to 4% growth on average. So even if we were to do like a 10%, 11% growth in the remaining 2 quarters, we will still be like ending the year with a 6% to 7% sort of a growth. So just wanted to understand on what's the number we are -- growth number we are looking at for this financial year?
I don't see any change in our numbers -- in our -- whatever numbers we have set out before. Because the economy is, again, it's very [indiscernible]. It is not as what we have -- what we project how it is and suddenly, nobody could imagine that the automobile sales are through the roof and it's such -- things are very dynamic now. So I don't see any sort of like change in my -- in the way the company has given its growth plans.
Sure. And 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. So what's the trajectory on margins going ahead once we gain even higher volumes in Q3 and Q4?
Definitely, I'm going to be seeing the margins improve in the second half year, for sure.
Sure. And just a last question. So if you could just highlight again on the CapEx for this year?
Mukti?
So CapEx -- so 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 crores. So I think we will finish this year around INR 80 crores.
And similar numbers next year also or it could be slightly higher?
Yes, we will be have around, again, INR 100 crores target. [indiscernible] through internal approvals only as usual.
The next question is from the line of Akash from Dalal & Broacha.
Yes. Hello?
Yes, Akash.
So my question is more on the industry point of view wherein we are seeing good growth in the number of e-Way bills that are being generated. There's again good growth when we see -- where we see in our competitors as well, the likes of Gati and all have posted good numbers on [indiscernible] on a Y-o-Y basis. So why are we struggling to grow, sir? And are we losing market share here?
So I cannot talk about what our company is doing on month-on-month. Instead I see the end result what comes out. So I think you should wait and see what the result -- the final result comes out. And then we can -- I think that question will be answered. What is your second question?
So I was just asking, are we losing our market share, sir? Because everyone is posting double-digit growth when it comes to logistics. I was just a bit perturbed by [indiscernible].
You can tell me which company is doing it and when the results come out, then we will talk. We are the first company which is doing our business, right?
Yes, correct.
So when we have a comparison, then we will see.
No, sir. So but the other companies give business updates. So they have already given a business update for this quarter.
Yes. I have also seen their like quarter 1 numbers, and they were not matched what they had shown in their volume numbers. And subsequently, revenue numbers was saying different story. So it may not mean that volume has grown, so their number -- their revenue has also grown. So we don't see whether there is match to these numbers with revenue or not. If you see compare their numbers in quarter 1, you will have your answer yourself.
Okay. And not only from a peer point of view or a competitor point of view, the industry level at total, I mean, the e-Way bills have also grow more than 15%, 16%, right, Y-o-Y basis.
Sorry, your voice is not clear. What you said lastly?
Like I'm not only speaking from a peer side point of view, I'm speaking on the whole industry. Like even the e-Way bills have grown at 15% plus, right, if you look at the Y-o-Y number.
e-Way bill is like -- there's a barometer of that, but it is not mean express industry is also like growing in the same way of that. This is not -- 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. So this is the thing.
Second thing that is also important, what segments we are really in. If these segments are like really manufacturing anything happening in this segment or not, that is also very important. So like [indiscernible] seeing the e-Way bill numbers is not giving any sense of that growth here in -- linked to this express industry.
Okay, sir. So like you here shared earlier that you are sticking to the guidance that you had given earlier this year. So where do you see the growth coming from, let's say, for the next half of the year and even FY '25, where would the growth come for TCI?
Pabitraji, would you like to answer?
Yes. Am I audible, sir?
Yes, sir, you are audible.
Yes, yes.
So we see a strong demand from our existing -- strong business from our existing customers, specifically the festival season requirement is growing in this month, you 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, it is going to grow. So these are the source and with this new product [Technical Difficulty].
[Operator Instructions] And the next question is from the line of Krupashankar NJ, Avendus Spark.
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 the lifestyle, consumer durables, pharma and auto. Can there be a proportion shared for the current first half performance?
Pabitraji, you want to answer on that?
Yes. So proportionately, the shared business of pharma and [Technical Difficulty]. Garment and lifestyle [Technical Difficulty] all are performing better so garment lifestyle [Technical Difficulty] due to [Technical Difficulty] and all. So this month and last month...
Sorry to interrupt, Pabitra Panda, sir, there is an echo from your line.
Hello?
Yes, sir. You sound clear now. Can you speak some.
Yes. So our auto vertical and pharma vertical, they are stable business that is growing. And the second half we will have seen better growth. And this garment and lifestyle, these have not that much growth in the first half. There was not that much growth, but in the second half, all our customers are doing well. And we see a better proportionate contribution.
Sir, what I was -- 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 '23 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.
See, around revenue share rate will be percentage-wise, it is roughly 17%, 18% that is pharma and auto, that we do. And pharma, garments and lifestyle, these are up to double-digit, so these are in top 5. And that is going to grow.
Got it, sir. So then with respect to the asking rate in the second half, it's looking quite steeper. While I do understand that in the third quarter, that the base effect would result in a strong, healthy growth. But still, fourth quarter is also -- has to fire all engines for you to achieve your guidance. So just wanted to understand that is this primarily only going be a function of base? Or is it also a function of new brand tradition? Because I could see that you added 12 new branches. Is there any incremental contribution coming in from new geographies or any -- or new services for that matter?
Yes. So new services Mr. Hemant has been appointed the COO here. He will be responsible for even more growth in the coming quarters and thereafter onwards. So yes, our quest is on to open the branches. We will open another 10 to 12 branches depending on this scope. We have done basically realignment also of the network by having the old manpower for the new products and also share branches in the main locations of business for the new products. So this sort of focus and focused approach of generating both business from the new products has been activated and it will definitely lead results in the short and long term.
And last part from my side. If you can highlight on the sorting center side, has it -- the benefits of the automation has started reflecting in your margins. And incrementally, it's more going to be more of operating efficiencies. Is my understanding correct? Or this further scope for the contribution...
Operation margin -- operation efficiency will result in better, higher business revenue and better profitability. That's for sure because we have such amazing highways, I always say. But our quality of trucks are 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 fast to the customer. So all these things have started -- everything takes time here in India, and it's not like we're putting up a plant or something that in 6 months, that we're ready to go. So our Pune sorting center is going to be up in -- by March '24. And thereafter, we definitely see the dual effect of these sorting centers. I think connecting the 2 most important golden points in India for business are north and west will be one of the most important aspects in any organizational -- in any operational organization structure.
The next question is from the line of Kunal Bhatia from Dalal & Broacha Stock Broking.
Sir, a couple of questions on 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 will it move on a month-to-month basis. So what was it at the start of the quarter, middle and end if you could give us some sense on that?
Yes. So basically, like utilization level is increasing with the business is increasing. And this is -- good thing is happening in this year, like we are growing sequentially. And that's why in this quarter it's higher than last quarter. It is around 84%. And monthly in last September, it was around 84.5%. And in the last 2 months, it's around -- sorry, it is 84.5%. And in the last 2 months is around 83.5%. In October month, it will be like, I think, cross like 85% utilization level and so on, yes.
Okay. And sorry, in terms of the -- since we are already 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 [indiscernible] even if we want to grow, say, 10% the first double-digit number on the overall basis for the year, we will have to at least cross the 14% to 15% mark for H2. So how confident are you to go on that line?
Yes. So that answer already we've given 2x. So I think we can also discuss separately. Yes.
And sir, any price hikes we've taken in the current quarter?
Yes. So that is actually -- in last quarter, we've taken kind of 1% price hike. And also in this quarter, around 0.5 basis point we have already taken. And we've taken a target for this year to increase prices by almost 2%. So we are aligned with that, and we will be surely achieve 2% price hikes target in this year.
Okay. Okay. And sir, finally, on the value-added business, what was the contribution in this particular quarter, vis-a-vis last quarter -- vis-a-vis the same quarter last year?
What you said? Sorry.
The new value-added business, what was the contribution in this quarter versus the last year same quarter?
So same quarter, there was a contribution of around 15.5%, and now it is 17% of overall revenue in this.
17%.
Yes.
And sir, generally, these value-added business, H2 would have a higher contribution. How has been historically the case?
Yes. So basically like air business and rail express business is obviously getting more margin than surface. Not like much, but yes, it is slightly higher.
[Operator Instructions] And the next question is from the line of Jainam Shah from Equirius Securities Private Limited.
Yes. Am I audible?
Yes.
Yes. So sir, my question relates to the branch addition that we have done. So we have added somewhere around 12 branches this first half. So just wanted to know in which part of the country it has been added. And you have initially given the target of 50 to 75 branches addition for FY '24. So are we on the track to have that 50, 75 branches given that 2H would be having major branch addition?
Chander, sir, you would like to answer on that?
Please go ahead, Mukti.
Yes, please. So basically, we have taken a target to be added like 50 to 75. We could already like 12 branches. Major branches we opened in West and North India. And in this year, second part of India, like we also want to be open in the range of 25 to 30. So basic reason why we are not opening. So we're really not opening up without any study of these branches. So wherever opportunities come, we're opening other branches. Somehow, we are not seeing like any growth aspect. So we -- just to open, we are not opening up the branches, and that's why less number are there. Not any specific reason for that, yes.
Got it, got it. And if you see the contribution of the newer businesses that we are having rail express and all other businesses. And if we exclude that from the revenue then for on a Y-o-Y basis, revenue has not grown significantly. And despite, we have added almost like 30, 40 branches over a period of time. So on a Surface Express, our volume has been stagnant for a Y-o-Y basis. Of course, there could be some festive impact last year, which has not come this year. Butt 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 express industry. Because again, if we are challenged, the whole economy is challenged, very simply put. So 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. So I'm talking not just for my company, TCI Express, but I'm talking to everyone. That makes a big difference is how the demand is playing out, how the supply is playing out, overall the micro and the economic situation. So I think a lot has to play when it comes to logistics, not just a few factors. We have been churning out 15% to 16% EBITDA, and we see that propensity to grow. So I mean, you can see very nicely that it's been cyclical because of the demand -- supply and demand flatting out. And then again, the growth will start. I mentioned this also in the last quarter that the high base created from COVID now is -- is now flattening out, and then the growth will start. It's obvious. It's how the economy works.
Got it. And so, sir, basically, we maintain that 2x of GDP guidance for the industry, and which is we have seen in the past as well?
Exactly.
The next question is from the line of Ravi Naredi from Naredi Investment Private Limited.
Our Gurgaon sorting center I visited with help of Mukti Lalji. Thanks for the assistance. And the working we saw is tremendous and will grow in time to come, we are sure for that. How sorting centers we may work for daytime only -- nighttime only. Can we improve to daytime also?
So it's very relevant question, but it is not required because operation is efficient in the nighttime. Then it is no use hiring extra labor and extra costs. For what? So it is not like -- the whole idea of automation is to reduce the time it takes, speed of operations, reduce the manpower. So all that is a key. So we don't want to go back reverse and add more manpower unnecessarily just because it's not idle in the -- it's idle in the morning.
Right, right, right. Chanderji, you always said earlier or late rise in GDP will boost our business. But in last 5 quarters, we barely grow and increase in margin is also not there. So can you tell the reason -- specific reason?
See, it's a very simple thing. Again, the economy growth is very critical. And depending on how this sector of the economy is growing, we are not studying it carefully. We are pretty much a barometer of the manufacturing sector of the economy. And when we see that -- past, I've 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 economic cycle. In COVID, it became negative, then it suddenly shot up because of low base. And it's settled down. It is flattening out. And then it's going to grow. It's a normal thing. There's nothing wrong with the company or any wrong strategy that we have taken INR 1,000 crores loan or anything like that. So I think it's very -- we have very strong fundamentals and everything is still very strong. So there is nothing to worry but just to wait and watch that thing.
[Operator Instructions] And the next question is from the line of Mayur Parkeria from Wealth Managers India Private Limited.
Sir, am I audible?
Yes, clear and loud and clearly.
Sir, actually, you mentioned right now and a couple of times that we are more linked to the manufacturing side of the economy. And rightly so, the Q2 GDP was also in the region -- for manufacturing was in the region of 4%. So we are -- obviously, how does that percolate down at the company level? We would expect slightly better numbers because we are -- we have execution capabilities, which is more and we are a more efficient company. But having said that, what is -- 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 2, 3 years? Or do we -- we will be more aligned on the -- only the domestic demand side of the manufacturing?
See, the export is also down. It is not high as you are saying. And again, we -- our air international products that we have is growing but, of course, not at the pace that we would like it to grow because of the factors affecting outside. There are 2 wars -- 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, right. And sir, on a vertical part of it, we -- do we have exposure on the electronics side of the 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. So...
So 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. So then we had to really relook and refocus our business with those type of companies. And same is the case with [indiscernible] goods. Barring 1 or 2 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. So we have to be very careful in how we proceed.
Sir, very -- it's heartening to know that the focus is on both balancing the growth and the efficiency. Sir, one small last point from my side. Sir, last quarter -- or rather 2 quarters before and last quarter, you were more specific on that, that there was -- the outlook was actually quite weak because you explicitly mentioned the prolonged impact of the economic slowdown happening. And we reduced our FY '25 target to INR 1,750 crores from INR 2,000 crores earlier, which we had. And so now we are saying that the outlook is more optimistic than what we were seeing. Is it only because of the festive season for H1 -- sorry, H2 or do you believe that over the next 2 years, we will be in a position to achieve those targets by FY '25?
See, as, again, a promoter, I don't look at short term. I have to look at long -- I always look at short and long term. So the long-term goal is never described by -- or never given out by just a short-term spurt in demand or something.
So I think 2025, it's a very high possibility that we will achieve the INR 2,000 crore mark also. I don't see any sort of a hinderance internally. We have to be very careful as to how everything plays out. There's also election coming up. And considering all the -- if you do a SWOT analysis, if you consider all of the existing issues, I think it is quite achievable or very close to it is quite achievable.
Now that we have also streamlined our management where we have now 2 COOs. So I think it will add that focus of the INR 2,000 crores that we were not looking at -- we had stopped looking at for one quarter.
Sir, that's a very positive sign I think people should take note of. Because we are at INR 1,250 crores. And in 2 years -- in 1.5 years, we are talking of almost INR 2,000 crores, sir. You -- sir, that is a very strong turnaround outlook which you are looking at. So...
Yes. I think I'm quite -- I'm also looking at the possibility of M&A and all that. So we are working in all -- we're firing in all cylinders. So let us see how everything plays out.
The next question is from the line of Krupashankar from Avendus Spark.
One question also. So you've taken the price hike of 0.5 basis points. Was it towards the end of the second quarter, sir?
Yes, it was on second quarter.
So sir, the remainder of your growth guidance. What is the -- so you were targeting about 2% price hikes and already 1.5% almost has already been done in the first 2 quarters. So the entire growth would come in from volume growth in the second half. Is that how it is?
Yes. Yes, that is true. And also, 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? So you've only taken 1.5%. So only 0.5% is remaining. So -- and then remaining -- of course, the growth in the volume side would be upwards of, again, 15-plus percent or 20% plus. So am I understanding things correctly here?
Yes. So volume and revenue growth difference would be like 2%.
The next question is from the line of [ Prit Nagersheth ] from [ Wealth Financial. ]
My question is more in regards to, see, if I look back the con calls that we used to have 2 years back, we've seen that the absolute volume, volume in absolute numbers has only increased, but the utilization has come down. It used to be around 86%, let's say, about 4, 6 quarters back. But -- so how is that possible? Why is the utilization coming down while absolute volumes have only increased?
So yes. So that is a very good question. Basically, this is -- I said earlier also, we said this is basically -- capacity is very dynamic. So supposing wherever we are not addition the other truck. Rather we're replacing with the higher capacity. So that's why we are able to manage this utilization level, and that's 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%. So that is actually very dynamic and this room we are getting because we have a like completely outsourced model we are using here. And wherever we want to we replace higher-capacity truck, we are replacing that. So that's why we're able to maintain this level of full year of around 84% to 85%. And with the high value, with the high growth, we will be like achieve even 86% and then we can be go up to 88% on these numbers.
The next question is from the line of Lokesh Manik from Vallum Capital.
Chanderji, my question was on competitive intensity. So in the last 6 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?
Yes. The question was on competitive intensity. If you have observed heightened competitive intensity in the last 6 months on ground, or do you believe that is a normal business that is going on?
No, I think it's absolutely normal business. There is no heightened competition or there's no like anything which is being laid out in a very different way. So I mean it's business as usual. The question is what other companies will be able to manage their costs or not better than how we are doing.
Right, right, great. And 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 are in our target area?
So we are also very choosy. We cannot be in raw material in the transportation business where you have 1% margin, 2% margin. There is enough business over there. But again, there will be no return to shareholders. So looking at that, I think we have captured the right sectors that are poised to grow and that are in control. We're not in sectors which are totally -- suddenly the demand will fall or our money will be stuck. If you see outstanding of other logistics companies, it's like almost 50%, which means almost 135 days. So how can any company be operational in that sense. So that way, we are quite well positioned for the future growth, which is going to happen.
So we should be looking at geographic expansion in terms of branch opening for growth. I mean, given that we've captured the industry, we've identified the areas where we want to grow.
[indiscernible] I had mentioned also that we have -- pointed out that we did a big consulting firm to do that.
The next question is from the line of Anshul Agrawal from Emkay.
Am I audible?
Yes, Anshul.
Great. I just had one question. So 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 just my -- that was my only question.
Chander sir, would you like to answer?
Can you repeat the question?
Sure. So since we plan on growing profitability -- profitably, what parameters do we look at before we select customers or before we enter new verticals? Like you just mentioned, Chanderji, that certain electronic players don't pay up on time, et cetera. So apart from probably customer health, what other parameters do we look at before we select a customer, before we select a new vertical that are going 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 [Technical Difficulty] liabilities of a large [Technical Difficulty] if they have any sort of [Technical Difficulty] or if they have any sort of [Technical Difficulty]
Sorry to stop you in between, I couldn't hear you.
I'm saying that we do a full check of the type of customers. We do an update of the customer before we sign a contract. We will check out 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. So all these things really matter a lot. That's why you've seen also that some of the large commodity type of companies, they are not working -- we're not working with them. It will see the likes of steel, aluminum, all commodity types of companies, we stay away from them.
The next question is from the line of Rahul Sony from ICICI Bank Limited.
Am I audible?
Yes, Rahul.
Sir, a couple of questions from my side. Sir, as you said earlier that you have like a high single-digit exposure to the textile sector, garment or lifestyle, and this sector is not -- currently not doing well. So how this slowdown in textile readymade garment has impacted your volumes? And if any impact was there, which other sector has compensated for that?
So basically, like in this H2, this segment has also picked up. So this will be given like bounce back. And whenever inflation is high, so this is a sector which first impacted overall. And now it has also come up. The second good sector, which we've seen an attraction is like bathware and kitchenware. These are the new sector, which is like itself is organizing. Earlier, it was like highly unorganized. Now is organizing and very new company and good companies entering in that sector, and we are getting the business from them. Yes.
Okay. And second question, sir, on the vehicle scrappage policy. So have your vendors or you experienced any kind of a negative impact due to this? And I want to understand what will be the impact of this on the -- as a sector as a whole and on your company?
No. So if you see like in our case, we're replacing the truck -- one truckage on a 7-year age. So there is no -- fundamentally, there's no impact on us at all. Second thing, if you see this all day, that is not moving on these extra routes or highways. Basically, it is utilized for a regional level and even some time in only Tier 3, Tier 4 cities. So overall, there is no impact of industry at all or -- in and out on supply side also or demand side also.
Ladies and gentlemen, that was the last question for today. I'll now hand over the conference to Mr. Vikram Suryavanshi for closing comments.
We thank the management of TCI Express 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 Private Limited, that concludes the conference call. Thank you for joining us and now you may disconnect your lines.
Thank you.