Top 5 logistic stocks
National Logistic Policy
Top 5 logistic stocks I would suggest keeping in portfolio. The government of India launched a new “National Logistic Policy” in September 2022. The aim is to reduce the cost of logistics in the country, improve efficiency, reduce the time of transit, etc. Government of India is aiming to reduce the logistic cost to below 10% of GDP by FY 2030 from 13% – 14% of GDP now.
As per Ministry of Road Transport and highways, India’s logistics cost as a % of GDP is at 13-14% compared to 10-11% for BRIC countries and 8-9% for developed countries. The logistic market in India including – road transport, rail transport, warehousing, cold chain, and rail freight terminals – is expected to grow at a CAGR of ~10% to reach ~ INR15 trillion by fiscal 2026.
Government of India cleared its intention to make India one of the top destinations in terms of the logistics industry. The reduction of logistic costs will help to improve exports and reduce domestic costs of products. Keeping future Indian economic growth in mind, I would discuss top 5 logistic stocks here and in my subsequent post to keep in long-term portfolio. Our aim is to discuss the top 5 logistic stocks that will benefit from this policy.
Before announcing the national logistic policy, the government initiated various steps to increase efficiency in the sector. For instance, e-sanchit has been enabling paperless export-import trade processes, and faceless assessment in customs has been rolled out. Similarly, e-way bills and FASTag are also implemented on highways to improve efficiency. To strengthen the infrastructure government launched various plans such as GatiShakti national master plan, Sagarmala, Bharatmala, and Dedicated Freight Corridor to improve connectivity.
India is setting big export targets and is also fulfilling them. India is emerging as a manufacturing hub for the world. The total capacity of Indian ports has increased significantly. The average turn-around time of container vessels has come down from 44 hours to 26 hours. Unified Logistics Interface Platform ULIP will bring all the digital services related to the transportation sector into a single portal, freeing the exporters from a host of very long and cumbersome processes.
Along with the national logistic policy update, the above factors will reduce logistics costs and increase logistic efficiencies in India. Eventually, this will help the economy across sectors in multiple ways to be a global manufacturing powerhouse. To understand top 5 logistic stocks in India, we need to understand the logistic market particularly e-commerce logistic market in India. Our intention is to discuss logistic stocks that we can invest in for the long term.
E-Commerce Logistic Market in India
Indian E-commerce logistics market is expected to reach INR 500 billion by 2025 with around 24% CAGR from 2021 driven by increased demand from tier II cities and the use of technology in supply chain management. Changing the pattern of shopping and increasing internet penetration will further enhance the growth of the e-commerce logistics industry in the next five years.
The use of technology such as Artificial Intelligence (AI), blockchain, and big data analytics have changed the consumer experience in the e-commerce logistic industry. The government of India allocated INR 20,000 crores for 2022-23 for Gati Shakti’s national plan to spur the logistic infrastructure. Government focus on integrated logistics and multimodal connectivity will accelerate the progress of the highly fragmented logistics industry in India.
|Total Logistic spend as % of GDP||~8||~15||~14|
|Per-capita logistic spend||~ US$ 4860||~ US$ 1540||~ US$ 280|
|Estimated share of top ten organized players||~15||~ 7-10||~1.5|
|Average size of Warehouse (Sq Ft.)||100 – 200 K||20-50 K||8-12 K|
|Average Size of Truck (ft.)||48||45||24-32|
|Average daily distance travelled by Trucks (Kms)||500+||423||325|
As per Economic Survey for 2021-22, the Indian economy is expected to grow by 8 to 8.5 percent over the next fiscal 2022-23. India needs to grow at 8% CAGR to be a $5 trillion economy by FY 2025-26. To achieve this growth, India needs a strong infrastructure and logistic sector by 2026.
Per capita GDP spent on the logistic sector is lowest in India as against China and USA. India’s logistic sector is highly unorganized with only 1.5 % of the market share among the top ten logistic companies. While Indian logistic companies are mostly regional players or vertical-focused, this gives a large opportunity for organized players to expand nationally to capture the market share. There are logistic companies in India both in listed and unlisted space. We will focus on the top 5 logistic stocks below which are listed in both the exchanges (BSE and NSE) in India.
National Logistic Policy – Top 5 logistic stocks to keep on track
|Top 5 Logistic Stocks (Companies)||Market Cap (INR Cr. )||Revenue-FY22 (INR Cr.)||ROCE (%)||ROE (%)||Stock PE||Face Value (INR)||EPS FY22||Debt to Equity|
|Container Corporation of India Ltd. (Concor)||45009||7652||13||10||41.3||5||17.27||0.01|
|Blue Dart Express||20207||4410||31||55.2||40.8||10||161.08||0.23|
|Allcargo Logistics Ltd||9806||20072||26.4||32.1||9.5||2||37.68||0.59|
|Aegis Logistics Ltd.||9891||4630||17.4||17.4||25.1||1||10.19||0.18|
|TCI Express Ltd.||7252||1081||35.5||26.6||53.3||2||33.48||0|
These top 5 logistic stocks or companies are financially stable. Revenue of all the above top 5 logistic stocks has gone up over the years. Though the ROCE and ROE of Delhivery are negative now, it is expected that, with a growing economy like India, there are a lot of opportunities to catch up. India is still under-penetrated in terms of the supply chain and warehousing. Delhivery is expanding in this direction. Market sentiment is positive toward logistic companies now after the announcement of the National logistic policy.
We will discuss in detail each one of these top 5 logistic stocks separately such as fundamental analysis, leadership etc. in separate post and keep you posted. However, out of these top 5 logistic stocks, if I invested, I would invest in Container Corporation of India Ltd. (Concor) and Allcargo Logistics Ltd.