Shreyansh Gupta

AVG logistics Limited

History
The Company was originally incorporated as a private limited company, at Delhi, India under the Companies Act, 1956 in the name of AVG Logistics Private
Limited by way of Certificate of Incorporation dated January 25, 2010. Further, pursuant to conversion of the Company to a public limited company, a fresh
certificate of incorporation was issued by Registrar of Companies, Delhi on February 21, 2018.

Major events and milestones

2018
- Launched
2010 2013 2014 2016
2012 2015 transportation services
Incorporation More than 45 Crossed Awwarded as Best 2017
Launched Cold Launched Rail to Bangladesh and
of the vehicles were turnover of Rs. Logistics Company Launched Inter-city
Chain Services Freight Nepal
Company added to the 100 crore of the Year by Cold Chain Services
services - Converted from
existing fleet ASSOCHAM
private to public limited
company

Company Snapshot
Buying strategy:
It’s advisable to have this stock in watch list. As
fundamentals and technicals are uncertain.
CMP is almost 25% less than 52 week and do not
show strong signs of upside. One should wait and
watch the stock closely for buy/sell.

Business:
AVG Logistics Ltd, incorporated in 2010, provides road transportation services, warehousing facilities and Railway transportation
to various domestic and multinational companies. AVG is promoted by Mr Sanjay Gupta, who has experience of more than
three decades of the logistics domain.
Services Offerings:
Transportation: Express Delivery, Refrigerated Transportation, Freight Forwarding, etc
Warehousing: Manpower Handling, Packaging, Multi-User Warehouse facility, etc
Value-Added Services like custom clearance, E2E solution, Multimodal transportation, Reverse logistics, etc.
The Co. also undertakes transportation services to Nepal, Bangladesh and Bhutan
Clients
Some of the major clients of the company are Nestle, Mother Dairy, ITC Ltd, Coca-Cola, MRF, etc.

Management:
From a small shed with just one truck to carry out job work to over 400 owned trucks and 800 rented trucks, the company
has transformed to modern logistics company in watch of Sanjay Gupta. has more than 30 years of experience in multi-
model logistics, warehousing and retail logistics. His knowledge, good management skill, excellent decision making,
controlling and strategic planning have courage to start his own entrepreneur. Even in a short span of time he has achieved
an unexpected growth in the business. He serves as a Director of PCG Logistics Private Limited.
Shreyansh Gupta

Valuation:
In logistics business, importance is given more to sales and profits growth, I’d be using EV/EBITDA to value and compare to
its peers. Industry EV/EBITDA is 16 approx. and AVG logistics have 8. That can be interpreted as undervalued. According to
financial position, AVG have good upside in long term because its effectiveness of using its assets to generate revenue is
very high which will help them grow EBITDA and Enterprise value in long run.

Risk:
Decreasing net cash flow, rising oil/gas prices > increasing cost of freight, disruption of global supply chain.

Investment Rationale
Government support through
Sector P/B, P/E and EV/EBITDA Over the last 5 years,
policies and new National
ratio shows highly undervalued revenue growth has
Logistics policy to support
stock which leads to increase in averaged 18.16%, vs
small and medium logistics
share price of the company in industry avg of 13.53%
companies.
next couple of years.

Over the last 5 years, net profit

margin has been 1.76%, vs
Company with almost NO
industry Avg of -0.65%
promotor pledge

High Promoter Holdings

Co. has started a separate cold storage division in Major clients consist of MRF,
expectation of growth in cold chain logistics. Nestle, Coca-Cola, Mother Dairy
with years of commitments.
Shreyansh Gupta

Business Overview

Segmental Revenue
4%
6%
Freight income
warehousing income
Value added services

90%

Segments Services offered

Transportation Express Delivery,
Refrigerated
Transportation, Freight
Forwarding
Warehousing Manpower Handling,
Packaging, Multi-User
Warehouse facility, Cold
storage facilities
Value-added services custom clearance, E2E
solution, Multimodal
transportation, Reverse
logistics

Annual revenue(crore) Half yearly revenue

500 250
450
400 200
350 150
300
250 100
200 50
150
100 0
50 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22
0
2018 2019 2020 2021 2022 TTM Series 1

Expansions and Value-added business

 Rail cum road model, Where AVG pioneer in door-to-door delivery covering major distances by rail. A market leader
in providing different rail cargo services to customers like full rack metal peace transportation, CONCOR ICDs,
container movement etc.
 India’s first multimodal logistics company and catering to all industries for end-to-end solutions via rail, road, coastal,
air and cold chain solutions. Also building cold storages in southern and eastern states which could cost almost 6 cr.
 With improved logistics policy, company might see a good demand of rail and road model which have their highest
revenues till now. Also, expectations of rail deployment for freight network.
 Meeting customers’ demands and expectations through coordinated measures initiated by branches/Corporate &
warehouses. Setting up of mega warehouses too has helped in achieving timely deliveries. They also adapt to provide
storage space to customers on a temporary basis. Working towards building more freight and storage plants for
Shreyansh Gupta

convenience and can lead to see huge demand in there warehousing and freight revenues which have the highest
earning and targeting to increase warehousing and cold storage plant’s earnings to be 10% of total revenue by 2025.

Financial Analysis
Mar 17 Mar 18 Mar 19 Mar 20 Mar 21 Mar 22
Revenue 195 227 313 322 333 432
Operating profit 17 25 28 24 15 29
Operating margins (%) 9 11 9 8 5 7
Net profit 4 8 10 4 -2 6
Net cash flows -1 1 1 1 0 -1
Cash flow from operations 6 12 -6 21 -4 28

 Over the last 5 years, AVG logistics has shown compounded profit growth of 6% considering two years of covid 19
and compounded sales growth of 17%.
 Company saw top-line of 29% this year, profit growth was 7%. It could have been more but company have invested
heavily on warehouse and freight expansion.
 Did not have good financials as such but looking at asset turnover and debt capacities, co. has healthy revenue
generation on per $ invested on borrowed funds or reserves.
 Net cash flow is was good from 2018-2020 but low or negative cash flows can be blamed to disruption on supply
chains because of covid 19.
 Cash flow from operations is highest this year compared to pre covid years as well, means the expansion is giving good
returns.

FY18 FY19 FY20 FY21 FY22

ROCE (%) 27 21 11 6 12
ROE 29.35 20.47 6.27 -2.32 7.37
Asset turnover ratio 2.16 2.19 1.63 1.50 1.78
EPS 10.47 9.83 4.35 1.49 5.10
Debt to equity 1.37 1.09 0.88 0.87 1.56
Debtor days 76 82 92 92 77
Cash conversion cycle -48 -13 -192 92 77

 Return on capital employed have improved but still lagging compared to pre covid levels, will definitely improve in
future.
 Net profits are low mainly due to increasing employee benefit cost which is now hindering profits but company is
actually working towards value creation on long term and many signs are showing that, decreasing interest cost,
decreasing working cost and increasing employee benefits and strong management and employee teams.
 Increase in vehicle loans can also be attributed and there EMIs (8%-9%) can be included in low profit margins,
increasing sales no. can attributed as efficient use of loans.
 Looking at the asset turnover which increased in FY18 and FY19 but decreased in FY20 and FY21 because of supply
chain disruption and global shocks, trying to increase the asset turnover.
Shreyansh Gupta

FY21 v/s FY22

particulars FY22 FY21 YOY (%)
Total revenue 432 333 29.7
Total expenditure 403 318 26.7
EBITDA margins 6.19% 5.16% 19.98
EBITDA 29.92 17.28 73.18
PAT 6 2 2%
EPS 5.10 1.49 242.2

11-Year performance Update

Financial Ratio updates: 2018-2022

Particulars 2018 2019 2020 2021 2022
Total assets 100 175 208 229 258
Debt/equity 1.56 0.87 0.88 1.09 1.37
Debtor days 76 82 92 92 77
Working capital 60 73 66 98 75
days
Inventory days 3 1 7 6 8
Interest coverage 2.77 2.70 1.68 1.28 2.02
ratio
Shreyansh Gupta

Management Analysis and Shareholding %

ShareHolding %

Promoter
FII
DII
Public

Mr. Sanjay Gupta has been Managing Director & Chief Executive Officer of AVG Logistics Limited since December 26, 2017
and its Director since January 25, 2010 and serves as its chairman. Mr. Gupta has more than 30 years of experience in multi-
model logistics, warehousing and retail logistics. His knowledge, good management skill, excellent decision making,
controlling and strategic planning have courage to start his own entrepreneur.

Even in a short span of time he has achieved an unexpected growth in the business. He serves as a Director of PCG Logistics
Private Limited. He is a Commerce Graduate from Maharashi Dayanand University, Rohtak, Haryana.

With his vision, AVG has gone through a long way and will continue to strive. According to many analysts, AVG logistics have
the perfect business model and working towards it. With a fast expansion and also trying to make shareholders some profits
in long term on capital gains are major moto of the company.

Working with big FMCG companies and tied up with them for logistics will help them in retention rates getting improved.