Global biz reset done, TVS Supply Chain now eyes margin boost
As part of Project One, the company has consolidated businesses in high-cost markets such as Europe and the US and shifted back-end work to India.
MUMBAI : TVS Supply Chain Solutions (SCS), whose wafer-thin margins and weak post-IPO performance have dampened investor sentiment since its 2023 debut, is looking to reset expectations after a major overhaul of its overseas operations.
As part of ‘Project One’, the company has consolidated businesses in high-cost markets such as Europe and the US and shifted back-end work to India. These efforts are expected to save about ₹120 crore annually and lift its profit before tax margin to 4% by FY27, managing director Ravi Viswanathan said in an interview with Mint on Wednesday. The margin was under 1% in the first half of FY26.
The company is also investing in expanding its high-margin integrated supply chain services (ISCS) business in the US and Europe and is hiring more people in its business development teams, Viswanathan said.
However, delivering on its guidance won’t be that easy for the Chennai-based company, given its thin margins that could easily be upset by global trade volatilities in the face of tariffs and conflicts, analysts said.
“While the company continues to make steady progress toward its 4QFY27 profitability goal, several operational and macro-related challenges remain, necessitating a more measured stance," analysts at Ashika Institutional Equity Research noted on 14 November.
The analysts noted the company’s efforts at addressing these headwinds through structural initiatives like the Project One, but said that its sustained underperformance and the ongoing macroeconomic pressures prompted them to remain conservative in their estimates. They maintained a buy rating on the stock, but trimmed their price guidance to ₹150 from ₹175 earlier.
The company's shares closed at ₹116.8 on the BSE on Wednesday, down over 40% from its listing price of ₹197.05 in August 2023. It has a market capitalization of about ₹5,150 crore.
Shoring up margins
To shore up its margins, the company is working on scaling up its ISCS business, which reported an earnings before interest, taxes, depreciation, and amortization (Ebitda) margin of 8.5% during the six months ended September. This business handles clients' logistics requirements end-to-end—procurement, warehousing, and distribution. This helps it earn richer margins compared to the global forwarding services (GFS) business segment, where it only handles freight forwarding. The latter business segment earned only 2.1% Ebitda margin in the first half of this fiscal year, leading to a consolidated Ebitda margin of 6.7%.
TVS SCS is also experimenting with handling basic assembly of components for two of its industrial clients in the US. The company already handles component procurement and warehousing for these clients and now it will do basic assembly of some of these and ship aggregates to the clients. The margins from this business are much richer than from logistics, Viswanathan said. If this business proves feasible at scale, it would be another growth lever for the future, in geographies including India, he said.
However, the company will stay away from the B2C segment, Viswanathan said. Shipping to consumers for e-commerce firms has helped its peer Delhivery achieve a market capitalization of over ₹32,500 crore. The company posted revenues of ₹8,932 crore in FY25 with a profit of ₹162 crore. TVS SCS had posted revenue of ₹9,996 crore and a loss of ₹10 crore for the period.
Since its listing, TVS SCS has reported a low single-digit growth rate in its Ebitda while the PBT margins have remained firmly under half-a-percent. It also reported aggregate losses in FY24 and FY25, leading to investor disappointment.
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