Gati Ltd Faces Market Downturn Amidst Financial Losses

Gati Ltd Faces Market Downturn Amidst Financial Losses

VoM News Desk | November 6, 2023 | 07:53 PM IST | Breaking News | Follow on Google News

Gati Ltd Faces Market Downturn Amidst Financial Losses

Gati Ltd Faces Market Downturn Amidst Financial Losses

Gati Ltd experienced a notable drop in its share prices by 6.4% during Monday’s intraday trading, eventually closing down by 5.54% at ₹138.50. The decline in investor sentiment was triggered by the company’s reported consolidated net loss of ₹1.9 crore for the quarter ending in September, marking a significant downturn from a net profit of ₹5.9 crore in the corresponding quarter of the previous year. Despite a marginal 1% year-over-year increase in consolidated revenue, the company’s EBITDA (Earnings before Interest, Tax, Depreciation, and Amortisation) fell by 26%.

Express Business Shows Volume Growth Amidst Yield Challenges

The express division under Gati Express and Supply Chain Pvt. Ltd. (GESCPL) recorded revenues of ₹385 crore, indicating a growth of 4% year-on-year and 5% sequentially. Notably, the volume growth was robust, with a sequential increase of 14% and an 18% rise compared to last year. However, a decline in yields and some one-off provisioning significantly impacted EBITDA performance.

Strategic Measures and Future Outlook

Gati’s CFO, Anish Mathews, remains optimistic about the company’s volume growth momentum, bolstered by festive demand and the operational launch of the Bengaluru super hub. Efforts to improve yields through product and cost initiatives are underway, with an expectation of gradual improvement. Looking ahead, Gati aims for a gross margin target of 30-32% and EBITDA margins around 12-13% by FY26. The recent quarter saw gross margins at approximately 25.5%, a decrease from 28.8% year-over-year and 27.73% from the preceding quarter. The company is also on a trajectory to reach a revenue goal of ₹3,000 crore by FY26 and plans to monetize some non-core assets to support the costs associated with hubs and IT investments. Gati’s net borrowing stood at ₹41 crore at the close of Q2.

VoM News Desk

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