LEAP India Ltd (LEAPIND) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the LEAP India Limited Q2 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Saumya Chached from Go India Advisors. Thank you, and over to you, ma'am.
Saumya Chached (Go India Advisors): Good day, everyone, and welcome to Q2 and H1 FY27 earnings call of Leap India Limited. We have with us today Mr. Rishi Gandhi, the Chief Growth Officer, and Mr. Raghu Aiyar, the Chief Financial Officer. Please be reminded that discussions on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks pertaining to the business. I now request the management to provide more insight and post that, we will take Q&A. Thank you and over to you.
Sunu Mathew (LEAP India Ltd): Good morning, everyone, and welcome to LEAP India Limited's earning conference call for the second quarter and first half of FY27. I would like to start with the business overview. For those joining us for the first time, LEAP is India's largest on-demand asset pooling company with around 90-92% share of the organized pallet pooling market. We provide pallets, plastic containers, and material handling equipment on a pay-per-use basis. We take full care of the full asset life cycle, which means deployment, tracking, retrieval, repair, and redeployment. Today, we manage a pool of 15.5 million assets valued at over 1,820 crores. We serve roundabout 1,100 plus customers across 11,000 touch points through 27 fulfillment centers. A detailed overview of the business and the industry opportunity is available in our investor presentation. So today, I will focus on what has changed during this quarter, which is the second quarter. So, one of the most important announcement that I would like to make is the acquisition of Wimprotech and TIPS. The most important development this quarter is our agreement to acquire 100% of the business of Wimprotech and TIPS for an equity value of 142 crores. Both are being acquired through slump sales into newly incorporated wholly owned subsidiaries: Wimprotech into Wimprotech Private Limited, which will be our manufacturing arm, and TIPS into Total Integrated Packaging Solution, that means TIPS, Private Limited, which will be our pooling arm. Wimprotech is into plastic manufacturing, providing end-to-end solution and in-house designing, mould making and production of vacuum foaming and injection moulding across its two plants in Puducherry and Tamil Nadu. TIPS is a crate and tray pooling business predominantly very strong in the automotive sector with an asset pool of 0.25 million crates and trays. Together with a robust customer base of 200 plus, they have reported FY26 revenue at 61.7 crores at an EBITDA margin of 28% with revenue growing up to 44% CAGR over the last 3 years. The strategic logic is straightforward. First, it gives as backward integration into plastics, boosting our innovation and building newer capabilities. This will result in reducing our dependence on outside vendors, improving turnaround time, quality control, and cost. Second, it increases our portfolio and leverages our customer base to cross-sell. Third, it adds a strong southern footprint that we can scale through our existing network in the West and North. And you understand that 30% to 40% of the business of automobile is in the south part of the country. On an FY26 pro forma basis, the transaction is accretive to revenue, EBITDA, and PAT, and improves our net debt to EBITDA. We are pleased to announce that we have already signed the BTA on 26th October. The key managerial persons will continue to be associated with us, ensuring leadership continuity and a seamless transition. I understand that there has been a lot of question on GCC expansion. So, we have set up a wholly owned subsidiaries in Saudi Arabia and the UAE. The GCC is a natural extension of our platform. Palletization levels are already high, automation and ASRS adoption are rising, and the movement hire model is very well understood. We continue to take a measured phased approach to this market. We are contemplating certain acquisitions also in the GCC market. A stronger balance sheet is
Sunu Mathew (LEAP India Ltd): point that I want to put forward. From our IPO fresh issue of 480 crores, 360 crores has been used to repay debt. On a post IPO basis, our debt to equity is about 0.5 and our net debt to EBITDA is about 1.9x with around 110 crore held as investment. This gives us the flexibility to pursue value accretive opportunities such as this acquisition while staying disciplined on the leverage. I am very happy to announce that in the month of October, India Ratings and Research, a Fitch Group company, upgraded LEAP's long-term rating from A to A+. And same has happened for Taron business, which is our MHE business, that has also moved from A to A+. This is our third upgrade in about 3.5 years. We now have a leaner balance sheet, a top-tier short-term rating, and a clear runway to fund the next leg of growth including value accretive opportunities such as this acquisition, while staying disciplined on the leverage. Let me come to the certain performance highlights. I would like to tell you that always when you look at this business, you should compare it over last year, so quarter on quarter. We are not a selling company, so you cannot compare it with quarter one to quarter two, because this is a seasonal business. So, as compared to last year's quarter two, we have done 216 crores of turnover. We have grown by 22.5%. We have done 110 crores of EBITDA, which is we have grown by 24.8%. Overall EBITDA for the first half is 52.2. We have given a PAT growth of nearly 18 crores, which is a jump of 62% over the last year. Now, if you remove the break cost, the the money that we have paid to the banks for paying off the debt, if you remove 6.5 crores of that, actually we have grown our PAT by 109%. So, this is a whopping story and this you will be able to see in our future times to come, like quarter three, quarter four. We have put in round about 417, 000 net allot of our pallet. So, the people who are asking this question of whether there is growth since you have 90% of the market, that also comes to rest. We have added 37 new customers. LEAP has added 24 new customers and Taron has added 13 new customers. So, overall in the first half, we have added 85 new customers. If you look at our MHE business, we have grown by 60% on revenue and round about 28% on our EBITDA. If you look at the outlook, our priorities for the rest of the year are very, very clear, which is deepen penetration with existing customers, keep moving customers from static to movement hire, cross-sell across pallets, containers and MHE, open up new industries, integrate Vimprotech and Tips, and build the GCC business in a measured way. We will do this with continued discipline on asset utilization, returns on capital and balance sheet strength. With that, I will hand over to Rishi to take you through the operating and growth updates for the quarter.
Rishi Gandhi (LEAP India Ltd): Thank you, Mr. Mathew. And a very good morning to all the participants. I would like to start with business overview. A quick recap of how our growth works. LEAP grows on three engines. Adding assets to the pool, keeping those assets productive, and moving customers from static hire where asset sits at one location to movement hire, where the asset travel across the supply chain and earns at every leg. Underneath all three is our network of 11,000+ touch points, which lets customers hire anywhere and dehire anywhere. Let me take you through how each of this moved during the quarter. So, in terms of quarter update, asset base and utilization. So, we closed H1 with 15.5 million assets compared with 13.
Rishi Gandhi (LEAP India Ltd): million a year ago, an addition of 1.7 million. pallet utilization stood at 89.3%, in line with Q2 FY '26. Container utilization was at 73.7%, up from 71.7%. and MHE utilization at 82.3%. As I mentioned on our call last year, we aim to take the pallet utilization to 90%-91% range over the coming quarters, and we continue to deploy new assets quickly. In terms of customers and network infrastructure, we now serve 1,100 plus customers, and we are constantly adding that. We have 11,000 plus touch points. We also continue to capture network synergies from CHEP integration, where our fulfillment centers were close to erstwhile CHEP facilities. We consolidated with them closing two facilities and bringing our network to 27 fulfillment centers without any loss of reach. With regard to movement hire, there is a constant improvement in movement hire business and we are converting customers from daily sectors, textile sectors, from static hire to the movement hire and the journey will continue further. In terms of quick background about Vimpro Tech and TIPS, the new acquisition. Mr. Mathew has already covered the strategic rational. So, let me speak to the commercial side. Vimpro Tech gives us in-house design, mould making and plastic manufacturing capability. That means faster development of design and mould, customization of various products, shorter turnaround, and better control over the quality and cost. TIPS strengthens our container pooling position, especially in automotive business. The growth opportunity comes from three places: cross-selling of pallets, crates, containers, and MHE across our 1,100 plus customers and their basically Vimpro Tech and TIPS groups, they have 200 plus customers, taking their strong Southern presence into our Western and Northern network and moving into newer industries such as FMCG, electronics, EVs, and Agri, with integrated offering that supports longer contract and higher wallet share. Integration progress In terms of GCC update, our subsidiaries in Saudi and UAE are well established. We got our licenses. This have been foundation building months. We have got all the approvals and we have been putting our ground infrastructure right from setting up entity, getting all licenses, getting warehouse infrastructure and hiring key people, customer engagement and regulatory approvals also. At the same time, we are engaging with our prospective customers and building our pipeline. Getting the foundation right now will let us scale faster once we go live. In terms of way forward, our priorities are clear: deepen movement hire, cross-sell pallets, container, crates, and MHE across our larger customer base, take pooling into newer industry, and build the GCC into our next growth market. Every asset we pull replaces single-use packaging, so the growth that builds value for our shareholders also make supply chain more sustainable. We have the network, the capability, and the balance sheet to do this and I I'm confident about the road ahead. With that, let me hand over to our CFO, Mr. Radheshyam Malne, to take you through the financial performance. Mr. Radheshyam Malne.
Radheshyam Malne (LEAP India Ltd): Thank you, Rishi, and good afternoon everyone. Before the numbers, a brief word on how our model shows up in the financial. Customers pay for our assets on a per-use basis through allotment fee, per-day rental, and increasingly moment fee at each leg of supply chain.
Moderator: I'm sorry to interrupt, sir. If you can come closer to the mic.
Radheshyam Malne (LEAP India Ltd): Yeah. This gives us a recurring annuity-like income stream on a long-life asset base. Our financial levers are simple, grow the pool, keep the assets productive and let operating leverage flow through to earning and cash. Key financial updates for the quarter. Vimpro Tech and TIPS acquisition. The acquisition of Vimpro Tech and TIPS is valued at an enterprise value of 1,020 million and 400 million respectively and is structured as a slump sale into wholly owned subsidiaries of Leap India. In FY '26, Vimpro Tech and TIPS has revenue of 470 million
Radheshyam Malne (LEAP India Ltd): and 180 million respectively. With respect to IPO proceeds and leverage, of the 4,800 millions fresh issue, 3,596 million has been used to repay debt and rupees 1,200 million unmark for general corporate purposes. On a post-IPO basis, debt-to-equity is about 0.48x and net debt to EBITDA is about 1.9x compared with 4.4x in H1 FY '26. We also hold around 1,100 million as investments, and with India rating further upgrading our rating to A+ from stable A for both Leap and Taron, should additionally optimize our cost of borrowing and give us a clear runway to fund the next leg of growth. With respect to Quarter 2 FY '27 performance: Total income for the quarter was rupees 2,159 million, up 23% year-on-year. With this, asset pulling income was rupees 1,759 million, up 19%, and MHE income was rupees 393 million, up by 52%. With respect to EBITDA, was rupees 1,097 million, up 25%, with EBITDA margin at 50.8%, up 91 basis point year-on-year, supported by higher income, cost optimization, and network synergies. Depreciation was at rupees 576 million. Finance cost was at 215 million, reflecting the benefit of rupees 3,596 million debt repayment from IPO proceeds. With respect to PAT, was rupees 178 million, up by 62%, with PAT margin of 8.2%. And cash pack PAT was rupees 754 million, up by 26%. Now with respect to H1 FY '27 performance: For the first half, total income was rupees 4,294 million, up by 26% year-on-year. EBITDA was rupees 2,239 million, up by 23% at a margin of 52.1%. PAT was rupees 425 million, up by 42%, and cash PAT was 1,566 million, up by 25%. To sum up, our focus remain the same: scale the pool, keep the asset productive, and translate operating growth into stronger capital efficiency, now with a stronger balance sheet and broader platform. With that, I will hand the call back to the moderator for the question-and-answer session. Thank you.
Moderator: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Kripashankar N.J. with Avendus. Please go ahead.
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