Personal opinion on Q4FY24/FY24 results: …Unit economics of the incremental revenue improves but stock price goes South.

• Promising Q3 results pushed the price above 450. This confirmed Cup & Handle pattern, attracting interest from the technical practitioners. Weekly close above 450 till Q4 results attracted more short term positions. However, Q4 results were not as promising as Q3 results, triggering the ongoing sell-off.
• Per management’s communication in the conference call, the network has sufficient capacity to service the growth for the next year. Incremental GM remains b/w 45~50%. Expect growth of 15~20% in the express parcel vertical, 30% in PTL. No pricing pressure exists in the market. I feel that the overall revenue growth would be in the range of 15~20%.

Considering the incremental operating profit on the incremental revenue in FY24, I feel that FY25 will be the 1st year when business would become not only EBITDA but also PAT positive. Profitability drivers will be: operating leverage in the incremental revenue, management’s focus to improve the profitability of the SCS vertical, lower ESOP costs, and SAAS revenue.

Disc: Hold an old position. Not an advice and not a SEBI registered IA/RA. Might sell or buy more without informing the forum in a timely manner.