Snowman Logistics Ltd

Financials and Tax

• PAT declined about 15% on book; cash tax up by INR 1–2 crore.
• 5PL contribution rose about 6% YoY in distribution.
• Net debt-zero position reached earlier after paying special dividend.
• Contingent liabilities around INR 6,000 crores; majority bonds to government authorities.
• Total land bank about 475 acres; mix of freehold and leases.
• Garhi land 85–90 acres; valued around INR 25–30 crore per acre.
• Kerala land in JV; Snowman 60% stake.

Operational Trends

• JNPT rail share about 5%; expected to rise with Ankleshwar and Indore.
• Double-stack share around 39%, down from 40–42% last year.
• Ankleshwar EXIM to start by end-September; volume currently zero.
• Indore ICD to be operational by 2028; land expanded to ~26.4 acres.
• Indore construction ongoing; tenders awarded; pace slowed by rains.
• CFS business not tied to DFC; no sale planned.
• War in West Asia disrupted volumes; recovery depends on resolution.

Capex and Projects

• Pune adds ~24,000 pallets this year; Patna expansion planned next year.
• Ankleshwar ramp-up: start by end-September; ramp to similar volumes in 3–4 years.
• Indore land ~26.4 acres after adding 2.5 acres; construction ongoing.
• Indore tenders awarded; full ramp after September.
• Pallet capacity addition: ~24,000 more this year; similar in following years.

Outlook and Guidance

• Double-digit growth expected once war-related disruption clears.
• Medium-term topline growth guideline: 10–15%.
• Growth across all segments; domestic expansion plus new ICDs.
• DFC connectivity could shift volumes to JNPT; wait-and-watch.
• Pricing and labor costs: warehousing pricing up 5–7%; renewals to adjust.

Q&A Highlights

• JNPT volumes currently ~5%; expect increase as Ankleshwar/Indore operationalize.
• Rail EBITDA pressured by volume mix; imports down, exports up.
• Double-stack share around 39%; last year 40–42%.
• Ankleshwar EXIM starts end-September; ramp to similar volumes in 3–4 years.
• Land bank ~475 acres; Garhi 85–90 acres valued at INR 25–30 crore/acre.
• CFS sale not planned; not forced by DFC.

Facility expansion

• New 10,000-pallet temperature-controlled BTS facility planned in Hyderabad.
• Construction underway; operational by Q2 next year.
• Temperature range: -25°C to +20°C.
• Located along NH-44 in Hyderabad's northern logistics belt.
• Existing capacity 6,800 pallets; network capacity 154,319 pallets across 21 cities.
• New facility adds 10,000 pallets to capacity for cold-chain growth.
• BTS asset-light model to minimize capital expenditure.
• Hyderabad market growth driven by seafood, ice cream, QSR, pharma.
• Total capacity across Snowman network now 164,319 pallets after expansion.

Dematerialisation processing and listing

• The Registrar and Share Transfer Agent processed all dematerialisation requests for the reporting period.
• Securities dematerialised have been listed on the stock exchanges where previously issued securities are listed.
• Physical certificates for dematerialisation were mutilated and cancelled after verification, with depository substituted as registered owner within timelines.

Q4 FY26 operations

• West Asia disruptions kept volumes subdued; management saw no clear recovery timing.
• Impacted imports included U.S., Europe, and Middle East cargo.
• Exports hit included food and beverage, rice, and frozen foods.
• Double stacking was 40% for FY26 and 42% in Q4.
• Rail throughput was 188,000 TEUs in Q4; 96,000 rail and 91,000 CFS.

Expansion and capex

• Jaipur ICD next hearing is in July; management expects a quick order.
• Indore ICD is targeted to start operations in 2028.
• Ankleshwar domestic volumes are rising monthly; ArcelorMittal steel coil rake handling started.
• Gateway container business capex was about INR90 crores; Snowman capex about INR30 crores.
• FY27 capex guidance is about INR50 crores for Snowman and INR125 crores additional investments for Gateway.

Snowman outlook

• Snowman reiterated INR1,000 crores revenue as a plan, possibly delayed by about a year.
• At INR1,000 crores revenue, management targets about 15% EBITDA margin and INR150 crores EBITDA.
• Snowman warehouse utilization was about 86% to 87% for FY26.
• Dry capacity is about 9% to 10% of total capacity, and management is reducing it.
• Warehousing pricing is seeing acceptance of hikes, including pass-through of higher wage costs.

Q&A Highlights

• Analysts asked about West Asia impact; management said volumes remain subdued and recovery timing is unclear.
• Analysts asked about JNPT DFC impact; management said the last stretch is incomplete and volume shift is not yet measurable.
• Analysts asked about employee cost rise; management said headcount, retention bonuses, and future scaling drove it.
• Analysts asked about debt use; management said gross debt should keep falling, but capex needs remain significant.
• Analysts asked about cash taxes; management said MAT credits should avoid cash tax for about three to four years.
• Analysts asked about Snowman margins; management said new warehouses, DG power costs, and trading mix hurt EBIT margins.
• Analysts asked about Snowman revenue target timing; management said FY29 may be more realistic than FY28.
• Analysts asked about transportation strategy; management said the fleet will remain mixed owned and leased, not fully outsourced.

Business Expansion

• Snowman Logistics is constructing a 6,500-pallet temperature-controlled warehouse in Patna under a Built-to-Suit model.
• The Patna facility will operate at temperature zones from –25°C to +20°C and be operational by January 2027.
• The warehouse will serve seafood, ice cream, QSR, fruits & vegetables, and pharmaceutical sectors.
• This expansion targets Bihar and neighboring markets to enhance regional cold chain connectivity.
• Snowman currently operates 160,230 pallet capacity across 22 cities, including major Indian metros.
• The Patna facility supports Snowman’s strategy to expand in emerging consumption centers in eastern India.

Credit Rating Action

• India Ratings and Research affirmed Snowman Logistics Limited’s credit ratings with a Stable outlook.
• Rated bank loan facilities reduced from INR 2,025 million to INR 1,665 million.

Instruments/Facilities Rated

• Fund-based limits (Axis Bank): INR 500 million, rated IND A+/Stable/IND A1 (short-term).
• Term loans (Axis Bank): INR 356 million and INR 809 million, rated IND A+/Stable.

Rating Agency

• India Ratings and Research Private Limited (Ind-Ra).

Rationale

• Ratings reflect stable credit profile and verified credible information.
• No specific financial highlights or weaknesses disclosed.

Rating Sensitivities & Outlook

• Ratings may change with material shifts in company performance or information accuracy.
• Outlook remains Stable with no change in rating level.

Tax and Governance

• Company discloses detailed tax disputes and claims for transparency.
• Many tax issues closed last year under Vivad Se Vishwas amnesty with nominal payout.
• Management contests tax cases with merit; aims for timely closure where possible.

Rake and Capex Plans

• Current rake count is 34; 3 new high-capacity rakes ordered, swapping 3 old ones.
• Rake count expected to reach 37 by May-June 2026.
• Annual capex planned at INR100-150 crores, 75-80% financed by debt.
• Build-to-suit expansions planned with minimal capex and long-term leases.

Snowman Logistics Warehousing

• Warehousing EBIT margin declined from ~20% in FY21 to below 3% in Q3 FY26.
• Margin decline due to shift from frozen to more chilled and dry storage segments.
• Dry storage margins lower but serve quick commerce and QSR clients in same facilities.
• Dry storage prices improved from INR600-700 to INR850-1000 per pallet.
• Warehousing revenue grew 19% YoY and 5% QoQ; new warehouses added in Krishnapatnam and Kolkata.
• Pricing hikes secured in recent contract renewals to offset cost increases.

Q&A Highlights

• Analysts asked about tax disputes; management emphasized transparency and merit-based contesting.
• Rake expansion to 37 by mid-2026 confirmed with new high-capacity wagons.
• Snowman warehousing margin decline explained by segment mix and Park & Pay low-margin model.
• Dry storage added for customer stickiness despite lower margins; mostly co-located with chilled storage.
• 5PL inventory held for 15-20 days; financing varies by customer with charges if financed.
• Kopi Kenangan client growing with new cafes, supporting Snowman growth.
• Indore project to add 120,000 TEUs capacity, operational in ~2 years; land possession secured.
• Jaipur land dispute involves INR8-9 crores with aggregator; INR21 crores owned land clear.
• Net debt reached zero in January 2026 excluding Snowman; special dividend declared.
• Warehouse payback period targeted at 7-8 years; long-term assets with 25-30 year life.
• Effective tax rate increased to ~35% from prior 29-30%.
• US and EU trade deals expected to boost export volumes; capacity sufficient for 4x volume increase.
• Dedicated Freight Corridor (DFC) connection to JNPT expected by March 2026; double stacking to increase 2-3%.
• No current plans for Eastern DFC operations; focus remains on Western ports.
• Scrap paper import volumes stable but below peak; no new Eastern DFC operations planned.