Afcom FY26: Scale-up year powered by fleet and dry-lease shift

/n# Afcom closes FY26 with sharp scale-up in revenue and profitability/n/nAfcom Holdings Ltd ended Q4 and FY26 with a step change in scale. Total income for FY26 came in at INR 587.73 crore, up 143.86 percent year on year. EBITDA rose to INR 238.14 crore, up 211.72 percent, while profit after tax increased to INR 121.90 crore, up 230.05 percent. The company also reported a meaningful expansion in profitability ratios, with FY26 EBITDA margin at 40.52 percent and PAT margin at 20.74 percent./n/nThe quarterly trajectory stayed positive through the year. Total income in Q4 FY26 increased to INR 191.89 crore from INR 102.18 crore in Q4 FY25. EBITDA for the quarter rose to INR 74.09 crore and PAT to INR 44.66 crore. While Q4 EBITDA margin declined year on year to 38.61 percent from 47.86 percent, full-year margins improved sharply, indicating that the operating model transition and scale effects played out more strongly across the full year than in a single quarter./n/n## The operating model shift shows up in costs and unit metrics/n/nAfcom attributes the performance to its transition from wet-lease to dry-lease operations. That shift is visible in the expense mix. In FY26, wet lease fee reduced to INR 33.5 crore from INR 106.0 crore in FY25, while aircraft fuel rose to INR 116.6 crore from INR 11.4 crore. Trip support expenses increased to INR 44.6 crore from INR 1.7 crore, supplementary rentals rose to INR 51.9 crore from INR 4.7 crore, and depreciation increased to INR 53.3 crore from INR 14.2 crore. Finance costs also increased to INR 31.8 crore from INR 10.6 crore./n/nThe company supplemented the financial view with operating statistics for dry-lease operations. In Q4 FY26, it reported revenue of INR 160.49 crore, volume handled of 6,480.12 tonnes, 602 trips, and an average yield of 2.72 USD per kg with an average cost of 1.84 USD per kg. For 12M FY26, it reported revenue of INR 528.71 crore, volume handled of 24,353.42 tonnes, 1,923 trips, and an average yield of 2.54 USD per kg with average cost of 1.58 USD per kg. These disclosures provide a unit-economic lens alongside the reported profit and loss statement./n/n| Metric | Q4 FY26 | FY26 | FY25/n|---|---:|---:|---:/n| Total income (INR crore) | 191.89 | 587.73 | 241.01/n| EBITDA (INR crore) | 74.09 | 238.14 | 76.40/n| EBITDA margin percent | 38.61 | 40.52 | 31.70/n| PAT (INR crore) | 44.66 | 121.90 | 36.94/n| PAT margin percent | 23.27 | 20.74 | 15.33/n/n## Capacity expansion and capital actions underpin the growth plan/n/nA major corporate update during the period was a Qualified Institutions Placement that raised INR 199.85 crore. The company allotted 26,30,520 equity shares at INR 759.72 per share and stated that the proceeds will support fleet expansion. The timing ties into operational scaling, as Afcom also reported receiving the DGCA certificate of registration for its third aircraft and successfully inducting it into operations. The company added additional flights through transshipment hubs, positioning this as a response to capacity shortages and as a way to support cargo movement./n/nAnother structural change highlighted was the recognition of Afcom as a Designated Indian Carrier by the Ministry of Finance. The presentation states that this makes the company eligible for statutory benefits on export-related operations and provides an exemption from VAT on ATF purchases in Tamil Nadu. Afcom quantifies the expected impact as a 5 to 7 percent reduction in overall operating costs, which can be material in a business where fuel is a significant line item./n/nFrom a balance sheet and funding perspective, the Ind AS 116 disclosure is central to understanding the capital structure. Afcom reported right-of-use assets of INR 306 crore, representing 33 percent of total assets, and total lease liability of INR 338 crore, up 41 percent year on year. Lease finance cost was INR 16.1 crore, stated as 51 percent of total finance cost, and current lease dues within 12 months were INR 49 crore. This disclosure makes it clear that the fleet expansion and operating model shift come with meaningful lease-linked obligations./n/n## Network context and performance indicators around Chennai and flying activity/n/nAfcom also anchored its operating story around cargo trends at Chennai airport. It cited estimated full-year international cargo of about 3.26 lakh metric tonnes in FY26, with estimated year-on-year growth of about 12.5 percent. It positioned this as outperformance versus the all-India international cargo growth of 5.4 percent, citing Chennai at roughly 2.3 times the national average. The company also presented cumulative international freight growth at Chennai of 12.8 percent for April to January and 12.9 percent for April to February compared with the same period in FY25./n/nOn its own operating indicators, Afcom showed a steady rise in quarterly trips and revenue through FY26. Revenue increased from INR 111 crore in Q1 to INR 160 crore in Q4. Trips rose from 372 in Q1 to 602 in Q4. Flying hours increased from 773 in Q1 to 1,103 in Q2 and 1,624 in Q3 before moderating to 1,490 in Q4. Cargo tonne-kilometres rose from 6.5 million in Q1 to 12.0 million in Q3 and then dipped to 11.3 million in Q4, which the company framed as a seasonal movement./n/nThe company also included yield discussions, contrasting charter yields with weight yields and referencing an IATA benchmark of INR 222 per kg across quarters. It stated that overall yield of INR 210.88 per kg was 5 percent below the IATA benchmark, pointing to a possible pricing upside if service quality and network positioning support it. It also stated that weight flights yield is materially higher than charter, and presented the idea that weight business is the margin engine./n/n## What stands out for investors from FY26 disclosures/n/nAfcom’s FY26 presentation combines rapid growth with greater disclosure on the operating model and lease accounting. The reported financials show a large jump in scale and a sharp improvement in full-year margins. Operating cash flow also turned positive at INR 36 crore in FY26 compared with negative INR 45 crore in FY25. At the same time, the company’s balance sheet reflects the lease-heavy nature of a cargo airline business. The Ind AS 116 lease liability of INR 338 crore and current lease dues of INR 49 crore underline fixed obligations that investors typically track alongside profitability./n/nThe strategic actions disclosed are clear and measurable in places. The QIP amount and pricing are explicit, and the intended use for fleet expansion is stated. The Designated Indian Carrier status includes an expected cost reduction range of 5 to 7 percent, offering a quantified efficiency lever. The third aircraft induction provides a straightforward capacity addition narrative, consistent with the increase in trips and revenue during FY26./n/nOverall, the FY26 communication points to a company scaling its freighter operations, moving into new geographies such as the UAE and the Australia and Pacific region, and pursuing cost advantages linked to regulatory status. The key question for the next phase will be how consistently the company can sustain unit economics, manage lease-linked fixed costs, and convert accounting profits into cash while expanding fleet capacity./n