Exim Routes Ltd| Q4 FY 2026 Earnings Conference Call

BULLISH SENTIMENT

⬤12th Jun 26

Summary : EXIM Routes leverages its ERIS platform and global network to drive significant revenue growth in the recycling industry, aiming for capital-efficient expansion despite short-term working capital pressures.

Management Perspective positive : We are grateful to all our shareholders and the entire EXIM Routes team. We are building a stronger global footprint. We have ample headroom to take on more debt to grow. All controllable levers are moving the right way. We are in a strong position for FY27.

Concall Report Analysis & Insights

Business Overview

EXIM Routes is a technology-enabled recycling infrastructure company.
Connects worldwide recyclable sources to the Indian recycling industry.
Sources raw materials from over 25 countries for 30+ Indian paper mills.
ERIS platform provides inventory visibility, logistics, and analytics.
Acts as a procurement and risk management partner for industries.

Future Growth Prospects

Targeting 30-50% revenue growth for FY27, aiming for 300 crores.
Plans to expand invoice financing limits to 15 crores this year.
Expanding global footprint to European and African mills.
Long-term vision to be a top three global player, targeting Rs. 1,000 crore revenue by FY30/31.
ERIS platform to onboard more shipping partners and other recyclable products.

Management Insights

EXIM Routes is a technology-enabled recycling infrastructure company, not just a trading company.
FY26 revenue grew 72% to Rs. 207 crores, EBITDA increased 38% to Rs. 14.1 crores.
Underlying trading margin improved from 19.4% to 22.4% in FY26.
Company is net cash positive with a strong balance sheet post-IPO.
ERIS is an intelligence and execution ecosystem, not merely a software product.

Signs of Skepticism

Operating cash flow was negative in FY26 (minus 19 crores) due to growth-funded working capital.
EBITDA margin compressed from 8.5% to 6.8% due to higher logistics costs and working capital model.
Working capital cycle widened, with debtor days increasing slightly from 99 to 103 days.
AI capabilities are currently in pilot stage for internal use, not yet externally deployed.
No formal hedging policy for foreign exchange risk is currently in place.

Risk Factors

Global disruptions, like war-like situations, can impact supply chains.
Elevated oil prices globally push freight and service costs higher.
Working capital build-up due to onboarding new suppliers with tighter terms.
Geopolitical situation and logistics changes may impact FY27 targets.
Customer concentration risk with top five customers contributing 50% of revenue.

Good To Know

India imports 6 million tons (600 crore kgs) of recyclable paper annually, valued at $1.5-2 billion.
EXIM Routes handles approximately 20,000 kgs of recyclable material every hour.
ERIS has visibility of nearly 1 million tons of inventory, worth around $300 million annually.
IPO raised Rs. 43.7 crores, with Rs. 37.2 crores net of expenses.
The business is structurally seasonal, with the second half typically stronger.

Key Drivers

ERIS platform drives efficiency.
Invoice financing improves cash flow.
Global expansion to new markets.
Strong revenue growth targets.

Key Analyst Discussions

Competitive Environment

Analysts asked about EXIM Routes' unique advantages against global traders and digital marketplaces.
Management highlighted data power, end-to-end supply chain management, and trust-based model.
Stated that traditional digital marketplaces fail due to inability to solve core issues like quality and service.
Emphasized that their ERIS system integrates all aspects, solving problems for both mills and suppliers.
Mentioned that no other trader has the extensive data and global presence they possess.

Financial Highlights

Analysts questioned negative operating cash flow despite revenue growth.
Management explained working capital build-up is growth-funded, not a profitability issue.
Discussed the impact of IPO proceeds on returns on capital employed and equity.
Addressed the compression in EBITDA margin due to sourcing mix and working capital model.
Clarified that revenue growth is primarily driven by volume expansion, not commodity price movements.

Product Composition

Analysts inquired about customer concentration risk, with top five customers contributing 50% of revenue.
Management stated customer concentration ratios have not materially changed from FY25 to FY26.
Focus is on building sustainable business by selecting mills that pay higher margins.
Prioritizes high-margin grades and mills with better paying capacity.
Will continue to select mills strategically to grow in a disciplined manner.

Strategic Considerations

Questions on the performance and contribution of international subsidiaries.
Discussed steps to improve institutional ownership and analyst coverage.
Inquired about foreign exchange risk hedging policies.
Asked about AI capabilities deployed for price forecasting, quality grading, and logistics.
Addressed the company's competitive benchmarking and blockchain integration plans.