# 1. Financial Performance ## A. Key Figures * Consolidated Revenue: ₹5,254.9 Cr H1 FY'26 (+4%) · ₹2,662.6 Cr Q2 FY'26 (+2.7% QoQ, +6% YoY) * Adjusted EBITDA: ₹178.5 Cr Q2 FY'26 (6.7% margin) · ₹176.7 Cr Q2 FY'25 (7% margin) * PBT: ₹23.3 Cr Q2 FY'26 (+30.8%) · ₹31 Cr H1 FY'26 (+8%) * PAT: ₹16.31 Cr Q2 FY'26 (+54%) · ₹87.5 Cr H1 FY'26 (+382%) * **Cash from Operations (post lease):** ₹105 Cr H1 FY'26 * Net Debt: ₹285.7 Cr as of Sep-25 (from ₹232.2 Cr as of Mar-25) ## B. Revenue Growth * **Resilient Top-Line Momentum:** Consolidated revenue growth sustained across H1 and Q2, driven by **strong performance in the ISCS segment**, particularly in Europe. * **Sequential Improvement:** Q2 revenue up **7% QoQ**, indicating accelerating demand and effective execution despite prior-year high base. * **Segment Leadership:** ISCS remains the primary growth engine, delivering **6% revenue growth in H1**, outpacing overall company performance. ## C. Profitability Trends * **Sharp Earnings Acceleration:** PBT and PAT surged in Q2, with PAT up **54% YoY**, reflecting **operational discipline and structural cost improvements**. * **Margin Expansion:** Adjusted PBT margin improved to **9% in Q2** from **7% YoY**, signaling successful execution of strategic initiatives. * **Sustained Recovery:** Second consecutive profitable quarter confirms **bottom-line turnaround**, with H1 PAT up **344%** on a low prior-year base. * **Management Confidence:** Leadership highlights PBT margins have moved from **2–3% last year to ~10%**, underscoring meaningful operational transformation. ## D. Cash Flow * **High-Quality Earnings:** Strong cash flow generation with **₹105 Cr from operations post lease** in H1, reflecting improved working capital and earnings quality. ## E. Balance Sheet * **Strategic Leverage Increase:** Net debt rose to **₹77 Cr** due to **capex for SCS North America project**, indicating targeted investment in growth infrastructure. --- # 2. Segment Performance ## A. Key Figures * ISCS Revenue: ₹1,993.0 Cr (+8.4% YoY, flat QoQ) * ISCS EBITDA Margin: 8.7% (+50 bps YoY, +40 bps QoQ) * ISCS Adjusted EBITDA: ₹173.8 Cr (vs. ₹150 Cr prior year, ₹164.1 Cr prior quarter) * GFS Revenue: ₹669.6 Cr (-0.7% YoY, +9.9% QoQ) · H1 FY26: ₹1,279 Cr (-2% YoY) * GFS EBITDA Margin: 2.2% (down from 4.2% YoY, +10 bps QoQ) * GFS Adjusted EBITDA: ₹14.7 Cr (vs. ₹28.2 Cr prior year) * GFS India Revenue: ₹228.3 Cr (+YoY, +QoQ) ## B. ISCS Performance & Turnaround * **Sharp Margin Recovery:** ISCS delivered dramatic EBITDA margin expansion, reflecting successful execution of **Project One**, cost optimization, and improved performance in Europe and North America. * **Sustained Improvement Ahead:** Margins expected to rise sequentially in H2 driven by **annualized savings of INR100–120 crores** from transformation initiatives. * **New Wins to Fuel Growth:** Recent India-led client wins to boost ISCS revenue starting **Q3**, supporting continued top-line momentum. ## C. GFS Segment Trends & Stabilization * **Volume-Driven Sequential Rebound:** GFS showed early stabilization with higher volumes and improved margins QoQ, despite **persistent pricing pressure** weighing on YoY performance. * **Structural Margin Challenge:** Revenue decline primarily price-led; management remains cautious, targeting **4–5% EBITDA margin recovery** contingent on macro conditions. * **Client Expansion Signals Confidence:** Addition of major global clients across automotive, industrial, and packaging sectors reinforces strategic positioning. ## D. Regional Growth & Strategic Targets * **North America Scaling Ambition:** Management affirmed **$500 million revenue aspiration**, backed by strong pipeline and recent large contract wins; near-term target of **$150–200 million** next year. * **India Outperformance:** GFS India posted strong growth, outpacing global trends and partially offsetting rest-of-world weakness. --- # 3. Order Book & Demand ## A. Key Figures * New Business Wins: **₹204 Cr** (8.1% of Q2 FY25 revenue) * New Business Growth: **8% YoY** * **Order Pipeline:** **₹6,200 Cr** total · **~₹2,067 Cr** (India ISCS share) * New Business Target: ₹300–350 Cr per quarter as suggested by Saumil Shah ## B. New Business Wins * **Diversified Client Expansion:** Wins span global and domestic leaders across building tech, automotive, agriculture, IT services, and energy, reflecting broad-based demand and solution credibility. * **Growth Below Target:** New business growth showed positive momentum but remained below the 10–12% annual target range, indicating room for acceleration. * **Revenue Resilience in India:** Portfolio rebalancing through replacement of low-margin programs with new wins, supported by volume uplift from recent **GST changes**, underpins near-term stability. ## C. Pipeline Value * **Strong Revenue Visibility:** Robust pipeline equates to multiple quarters of forward revenue, with **one-third** concentrated in the high-potential India ISCS segment. * **Growth Trajectory Supported:** Sustained execution toward **₹300–350 Cr** in quarterly new wins is critical to achieving mid-teens revenue growth ambitions. --- # 4. Cost & Efficiency Initiatives ## A. Key Figures * **Project One Savings:** **INR110–120 Cr** annualized · **INR50–60 Cr** in-year * Material Costs: INR446.3 Cr Q2 FY'26 (↓ QoQ) · Stable YoY * Employee Costs: INR644.4 Cr Q2 FY'26 (↑ YoY, ↑ QoQ) · INR1,263.3 Cr H1 FY'26 (↑ YoY) * **Other Expenses:** **INR298.1 Cr** Q2 FY'26 (↑ YoY, ↑ QoQ) * Lease-Related Charges: INR95.8 Cr depreciation (↓ YoY) · INR14.6 Cr lease interest (↓ YoY) ## B. Project One Savings * **On-Track Transformation:** Project One in UK and Europe progressing well, with early synergies realized and integration advancing across functions. * **Near-Term Impact:** Cost benefits expected to flow from **Q3 FY'27**, supporting a targeted **4% PBT by Q4 FY'27**. ## C. Cost Discipline * **Favorable Mix Impact:** Freight and handling costs declined YoY due to **business mix shift in ISCS**, despite sequential stability aligned with GFS revenue. * **Cost Volatility:** Material costs fell QoQ on lower volumes; employee costs rose on inflation and new projects; other expenses increased due to **higher rental and maintenance outlays in UK/Europe**. ## D. Lease Optimization * **Lease Restructuring Gains:** Lower depreciation and stable lease interest reflect successful shift toward **shorter-term rental agreements**, optimizing lease liabilities. ## E. Sub-contracting Costs * **Stable Outsourcing Spend:** Sub-contracting expenses normalized QoQ after a spike, remaining broadly stable year-on-year despite fluctuations. --- # 5. Geography & Mix ## A. Key Figures * **B. S. Revenue Share:** **10% to 11%** of total revenue ## B. Europe Performance * **Global Footprint:** Operates across four continents—Asia, Europe, North America, and Oceania—delivering bespoke 3PL and selective 4PL solutions. ## C. India Volume Uptick * **Pre-Tariff Surge:** India GFS saw strong volume growth in Q2 driven by elevated pre-tariff deadline shipments, followed by a sharp normalization post-deadline. * **H2 Growth Confidence:** Business environment in India remains robust, with nearly **one-third** of the company’s deal pipeline originating domestically, including multiple large expected wins. --- # 6. Risks & Macro Factors ## A. Key Figures * H1 FY26 Adjusted EBITDA: INR351.8 Cr (–2.8% YoY) ## B. Freight Rate Pressure * **Profitability Under Pressure:** GFS segment profitability declined YoY due to sustained freight rate headwinds, prompting calibrated pricing, cost, and efficiency actions to restore margins. * **Segment-Specific Challenge:** Macroeconomic stress in GFS—not tariffs—is the primary driver of earnings pressure, consistent with industry-wide trends among global forwarding peers. ## C. Pricing Volatility * **Industry-Wide Stress:** Global Forwarding Services face persistent pricing volatility and soft demand across rest-of-world operations, weighing on near-term performance. ## D. Tariff Impacts & Demand Outlook * **Limited Tariff Exposure:** Tariff effects are confined to a negligible portion of India GFS; overall business performance remains unaffected despite short-term volume fluctuations. * **India Business Resilience:** Domestic operations remain healthy with **flattish revenue** (due to exit of low-margin programs) and a **strong pipeline**, while **India export operations** warrant monitoring for potential risks. * **Growth Catalyst on Horizon:** Lower GST rates expected to stimulate consumption, boosting volumes for **FMCD and consumer durable partners**, providing a tailwind to supply chain demand. --- # 7. Guidance & Outlook ## A. Key Figures * **PBT Target:** **INR125 Cr** by FY27 Q4 (from current **INR20–25 Cr**) * **Revenue Growth Guidance:** **Mid-teens** full-year growth across all segments * **PBT Margin Target:** **4%** by FY27 Q4 ## B. Profitability Roadmap * **Clear Path to Margin Expansion:** Confidence in achieving 4% PBT by FY27 Q4 underpinned by **cost discipline**, **improving business mix**, and **segment-level operating leverage**, particularly in ISCS. * **Profitability Levers:** Current low PBT reflects structural factors beyond OpEx; targeted savings and operational focus expected to drive **step-change improvement** in earnings quality. ## C. H2 & Forward Momentum * **Sustained Growth Trajectory:** Management expects **4% to 5% QoQ linear growth** in the India business, supported by strong order pipeline conversion and ISCS momentum. * **Segment Focus:** Prioritizing **margin stabilization in GFS** while maintaining **revenue and margin growth in ISCS**, with broader recovery anticipated by fiscal year-end. ## D. Strategic Execution & Expansion * **Organic Growth Commitment:** $500 Mn revenue goal to be achieved organically; no M&A dependency signaled. * **GFS Restructuring Progress:** **Project One** (UK/Europe), **rightsizing**, and **right shoring** on track, expected to deliver previously guided benefits amid cautious macro outlook.