TVS Supply Chain Solutions Ltd

MoU details

• Strategic MoU signed with Sankyu Inc to collaborate on supply chain and engineering services.
• Sankyu to acquire 0.5% equity stake in TVS SCS, subject to regulatory approvals.
• Initial focus on opportunities in India, with potential expansion to other markets.
• Joint steering committee to identify growth opportunities and oversee strategic initiatives.

Collaboration scope and outlook

• Collaboration will combine TVS SCS's logistics with Sankyu's engineering and Japanese ecosystem networks.
• Initial emphasis on India, with potential expansion into Asia, the Middle East, Africa.
• Regulatory approvals are required for Sankyu's equity stake.

Key financial & corporate actions

• Board approved unaudited standalone and consolidated results for quarter ended June 30, 2026.
• Consolidated revenue from operations: 3,335.22 crores; total income: 3,348.83 crores.
• Standalone revenue: 586.66 crores; total income: 623.86 crores.
• Consolidated quarterly profit after tax: 22.48 crores.
• Acquisition: Fit 3PL acquired 80% stake in Swamy & Sons 3PL for INR 59.56 crores.
• Enterprise value for Swamy & Sons ~ INR 88 crores (provisional allocation).
• Initial agreement Jan 28, 2026; 80% stake acquired May 22, 2026.
• Includes 3 subsidiaries and 1 joint venture; equity accounted investee share: 0.42 crores.
• Exceptional items: 91.29 crores (2025) and 4.34 crores (2026).
• Audit: Limited review by S.R. Batliboi & Associates LLP.

Financial Performance

• Consolidated revenue: Rs 3,335.2 crores; YoY +28.7%, QoQ +10%.
• Adjusted EBITDA: Rs 232.2 crores; YoY +34%; margin 7% (up 30 bps).
• PAT (Q1 FY27): Rs 22.5 crores; Q1 FY26 included InvIT gain.
• ISCS revenue: Rs 2,417 crores; YoY +21.9%, QoQ +5.9%.
• GFS revenue: Rs 918 crores; YoY +50.6%, QoQ +22.6%.
• ISCS EBITDA margin: 8.1%; onboarding costs weigh margin; stabilization expected.
• GFS EBITDA margin: 4.1%; margin improvement driven by volumes & cost actions.
• New business wins: 21% of Q1 FY27 revenue; 40 days inclusion of Swamy & Sons 3PL.
• Order pipeline: Rs 7,500 crores plus; pipeline remains robust.
• ALA Group JV (defence/aerospace): first steps; year-5 revenue potential Rs 2,000 crores.
• Geography/Tech: Oracle ERP deployed for India ISCS; AI/robotics integrated.
• Global footprint: present in 26 countries across 4 continents.

Segment Update

• ISCS revenue Rs 2,417 crores; YoY +21.9%; QoQ +5.9%.
• ISCS EBITDA margin 8.1%; initial contracts incur onboarding costs; will stabilize.
• GFS revenue Rs 918 crores; YoY +50.6%; QoQ +22.6%.
• GFS EBITDA margin 4.1%; margin expansion aided by volumes & sourcing.
• ISCS benefits from Oracle ERP; warehouse automation and AI-driven insights ongoing.

Growth, Pipeline & M&A

• New business wins contributing 21% of quarterly revenue.
• Order pipeline Rs 7,500 crores plus; diversified wins across ISCS and GFS.
• Swamy & Sons 3PL acquisition completed in Q1; included for 40 days.
• ALA Group JV: defence/aerospace; first warehouse in Italy; potential revenue growth in H2.
• Year-5 revenue potential from ALA JV around Rs 2,000 crores.

Guidance & Outlook

• FY27: mid-teens top-line growth aspiration.
• FY27: 4% PBT margin aspiration; FY28: 4% PBT target achieved.
• ISCS margin trajectory: ~9% in Q2; ~9.5–10% by Q4.
• GFS margin target: 4.5–5% EBITDA; current around 4.1%.
• Africa/Middle East expansion on radar; partnerships to crystallize before formal announcements.
• No equity dilution from mergers; FIT 3PL not merged; 100% TVS SCS subsidiaries.

Q&A Highlights

• Execution priorities: growth, technology, partnerships.
• Biggest risk: recession; mitigations include close customer engagement and cost optimization.
• ISCS margin path: 9% in Q2; 9.5–10% by Q4; profit growth to outpace revenue.
• Pipeline conversion: historically 20–25%; 12–18 months horizon.
• New logos vs existing customers: ~1/3 new logos; ~2/3 from existing customers.
• Ala JV: margin accretive; defense/aerospace pricing and traceability advantages.
• FIT 3PL merger: not planned; no dilution; consolidating subsidiaries reduces compliance cost.
• Warehousing capacity: about 25 million sq ft; utilization ~85%; automation for capacity ramp.
• Second half typically stronger; Q4 expected strongest; timing for guidance feedback requested.

Risks and Watchpoints

• Fuel cost pass-through to customers; time-lag considerations across geographies.
• Manpower availability varies by geography; dedicated teams to secure supply.
• Interest rate risk; treasury measures in place.
• Container costs and availability volatility; ongoing mitigation measures.
• Regulatory and geopolitical uncertainties impacting global logistics.

Meeting Details

• Date: August 11, 2026; time not specified.
• Type and mode: group earnings call; audio recording.

Participants

• No specific management participants named in the filing.

Purpose

• Discuss Q1 FY27 unaudited results for the quarter ended June 30, 2026.

Additional Notes

• Audio recording available on company website; accessed via Investor Relations.

Business Overview

• ISCS and GFS provide end-to-end supply chain services across 26 countries with 435 warehouses.
• Swamy & Sons 3PL acquisition completed; strengthens FMCG/FMCD and regional distribution.
• Strategic levers include ALA partnership and Project One in Europe.
• Tech-first approach with control towers, AI, automation underpin operations.

Operational Highlights

• Q1’FY27 revenue 3,335.2 Cr; revenue up 28.7% YoY and 10% QoQ.
• New business wins total 543 Cr; highest quarterly new revenue.
• Order pipeline stands at INR 7,500 Cr; robust growth momentum.
• Swamy & Sons 3PL acquisition included in Q1 FY27 results.
• Oracle ERP deployed in SCS India.
• Credit rating outlook upgraded to Ind AA Positive.
• GFS revenue grew 50.6% YoY; Adj EBITDA up 196% YoY.
• ISCS India grew 30% YoY; GFS India grew 84% YoY.
• FY26: 25.1 Mn sq ft warehouses; 243 Cr operating cash flow; 613 Cr cash.

Financial Performance

• Q1’27 revenue from operations 3,335.2 Cr; Adj EBITDA 232.2 Cr; margin 7.0%.
• PAT for Q1’27: 22.5 Cr; Adj PBT 32.1 Cr; Adj PBT margin 1.0%.
• FY26 revenue 11,003 Cr; Adj EBITDA 773.1 Cr; margin 7.0%.
• FY26 operating cash flow 243 Cr; cash and equivalents 613 Cr.
• FY26 order book 6,100 Cr.

Capital Structure & Liquidity

• Credit rating outlook upgraded to Ind AA Positive; indicates improved liquidity.
• Cash and equivalents stood at 613 Cr as of Mar 31, 2026.

Strategic Outlook

• Mid-teen revenue growth target for FY27; driven by new wins and expansion.
• Europe expansion via Project One; ALA partnership strengthens defence logistics.
• ISCS and GFS to sustain profitability through cost optimization.

Risks & Mitigation

• Geopolitical and macro risks; mitigated by diversified geographies and cost initiatives.

Governance & Leadership

• Swamy & Sons 3PL acquisition completed; integrated into results.
• Vikas Chadha: Managing Director; R Vaidhyanathan: Global CFO.

Overview

• Q1 FY27 results reported; consolidated revenue up 28.7% YoY to ₹3,335 Cr.

Financial Highlights

• Adj EBITDA ₹232.2 Cr; Adj PBT ₹32.1 Cr; PAT ₹22.5 Cr.
• Order pipeline over ₹7,500 Cr.
• India revenue ₹997.7 Cr; +43.9% YoY.

Segment Performance

• ISCS revenue ₹2,417.2 Cr; YoY +21.9%; Adj EBITDA ₹196.3 Cr; margin 8.1%.
• GFS revenue ₹918 Cr; YoY +50.6%; Adj EBITDA ₹37.9 Cr; margin 4.1%.

Margins & Outlook

• Consolidated adj EBITDA margin 7.0%; ISCS 8.1%; GFS 4.1%.
• Management guides mid-teen growth in FY27.

Credit & Outlook

• India Ratings upgraded credit outlook to Ind AA/Positive.

Financial results

• Unaudited standalone and consolidated results for quarter ended June 30, 2026 approved.
• Limited Review Reports issued by S.R. Batliboi & Associates LLP.
• Results filed with exchanges and hosted on the company website.

Overview

• Amalgamation of five transferor entities into the listed transferee within the same group.
• Intercompany restructuring with cancellation of subsidiary holdings post-merger.

Rationale

• Aims to diversify products and expand business using the transferee's customer base.
• Aims to consolidate group structure, reduce entity count, and lower compliance costs.
• Expected cost savings from standardization and integrated operations.
• Pooling of talent and processes to enhance organizational capability.

Key Terms & Structure

• Nature: amalgamation; transferors merged into transferee; intercompany holdings to be cancelled.
• Appointed Date: 01-04-2023; Effective Date after certification and RoC filing.
• Related parties: yes; 2–5 are wholly owned; no external payoff for them.
• Approvals: NCLT Chennai sanctioned; SPC Bengaluru pending; stock exchanges issued no-objection letters.

Financial Impact

• 3,75,02,140 transferee shares issued to First Transferor's shareholders; corresponding transferee shares cancelled.
• Second to Fifth Transferor holdings in transferee cancelled; no new shares issued to them.
• Assets and liabilities of transferors vest in transferee; accounting under Ind AS 103.
• Tax/indemnity: transferee bears pre‑effective tax liabilities; identified litigations indemnified by foreign shareholder.
• Valuation and fairness: independent valuer and SEBI fairness opinion support exchange ratio.

Stakeholder Impact

• Employees: continuity of service; protection on transfer, with no break.
• Creditors: liabilities transferred to transferee; tax authorities retain remedies post-merger.
• Shareholders: value preserved via share issuance; holding structure simplified.
• Operations: streamlined service offerings; reduction in entity count.

Status & Next Steps

• NCLT Chennai sanctioned the Scheme on 07-Jul-2026.
• SPC International Bengaluru sanction pending; others already sanctioned.
• Certified order to be filed with ROC; Effective Date upon scheme becoming effective.
• Stock exchanges’ no-objection letters obtained: BSE 01-01-2025; NSE 28-02-2025.
• Record date to be fixed in consultation; transferors 2–5 are wholly owned.