Leap India Ltd.: overview

THE PALLET POST  

 

Three numbers, one story

The "other income" everyone keeps deleting is LEAP’s pool doing its job. Here is what Q2FY27 actually said.

Other operating income is mostly the profit LEAP makes when a customer loses a pallet or breaks it beyond repair. The customer pays for the pallet, and LEAP books the net gain on that "sale" of its asset.

Because pooled pallets sit on LEAP’s books as fixed assets, accounting rules put this gain under "other income". But it comes from running the business every day, so in reality it is operating income.

So the right way to read LEAP’s top line is Revenue from Business = Revenue from Operations + Other Operating Income.

Here is how the story flips if you look at it the right way:

On reported numbers, revenue from operations grew 18.2% in Q2 and total income grew 22.5%. That is the picture the market reacted to.

Now let’s open up the other income further:

In H1FY27, ₹99.9 Mn of the ₹147.6 Mn other income (68%) came from lost and broken pallet recoveries forming a part of “other operating income”. Only ₹47.7 Mn was treasury and interest income, matching the ₹48 Mn "Others" in LEAP’s own deck. Similarly, for Q2: only ₹7 Mn of the ₹47 Mn other income built the treasury and interest income.

So, let’s look at the core revenue of the company i.e. Revenue from Business: revenue from operations plus other operating income. Counted this way, LEAP’s revenue from business grew 23.9% in Q2 and 21.3% in H1, ahead of the 18–19% the reported line shows.

Read it right: margins widened, they didn’t shrink

Based on Revenue from Business, EBITDA from the business grew 27.6% in Q2 to ₹1,090 Mn, and its margin widened ~146 bps to 50.7%. Across H1 it grew 24.5%, with margin up ~131 bps to 51.6%. Reported EBITDA tells a smaller story only because it counts treasury income, which fell as IPO cash was used to repay debt.

BOTTOM LINE

LEAP’s pool is doing the work, and the numbers show it once you read them right

Most of LEAP’s "other income" is money earned on its pallets, not interest on cash. Count it as part of the business and the Q2 picture changes completely: business income up 23.9%, EBITDA from the business up 27.6%, and margins wider by ~146 bps instead of narrower.

Link of the Recording Q2 & H1FY27 Investor PPT Disclaimer - Informational only. Not investment advice.
GoIndia Advisors LLP | SEBI Registered Research Analyst | Reg. No. INH000020040 | BSE Enlistment No. - 6518