Allcargo Logistics Limited — Credit Ratings, 10-12-2024: Credit Rating

Allcargo Logistics Limited's recent performance demonstrates significant challenges amidst a volatile global environment. Consolidated financials for FY24 show total operating income declining 26.9% year-over-year to ₹13,190 crore, with EBITDA plummeting 54.4% to ₹554 crore and an EBITDA margin of 4.20%, down sharply from 6.73% in FY23. Profitability has been severely impacted due to geopolitical tensions affecting the International Supply Chain (ISC) segment, which saw a 31% reduction in revenue.

Despite these pressures, operational efficiencies and a strong liquidity position remain critical strengths. The company’s working capital management will be pivotal as gross debt escalated to ₹1,846 crore by March 2024, leading to a concerning overall gearing ratio of 1.86x from 0.66x in FY23.

Looking ahead, the company has announced a board meeting to discuss strategies for cost control and potential recovery in demand. While the ISC segment will undergo a demerger, separating its operations, the focus will remain on enhancing market share and improving margins.

Given the current financial performance and outlook, consider a hold position as Allcargo navigates through these operational challenges while working on recovering its profitability and managing debt effectively.