Top logistic stocks to keep in the portfolio: Indian logistic industry overview

Indian E-commerce logistics industry 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 increased 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 towards the e-commerce logistic industry. Expansion of fulfillment centers near the end consumers to increase the delivery speed, government push on infrastructures such as digital transformation and the national highway will further boost this 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.

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 the FY 2025-26. India needs a strong infrastructure and logistic sector to reach that milestone by 2026-26. Hence this sector presents a large addressable opportunity that is expected to reach US$365 billion by Fiscal 2026 at a CAGR of 9% from FY2020. 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 lies with the top ten logistic companies. While Indian logistic companies are mostly regional players or vertical-focused, this gives a large opportunity to organized players to expand nationally to capture the market share.

Logistic CompaniesMarket Cap (INR Crs. )Revenue-FY21 (INR Crs.)ROCE (%)ROE (%)Stock PEFace Value (INR)EPS-FY21
Container Corporation of India Ltd.3856564277.754.9946.858.22
Blue Dart Express15,377328824.721.442.61042.91
Allcargo Logistics Ltd8687104989.817.8122.627.04
Aegis Logistics Ltd.7833384316.612.426.316.49
TCI Express Ltd.677485134.326.150226.19
Container Corporation of India Ltd. (CONCOR): 

This is the largest company in the listed logistic space in India in terms of market cap. This is a government undertaking corporation incorporated in March 1988 under the ownership of the Indian railway. The company operates in three segments – a carrier, a terminal operator, and a warehouse operator. The company currently has a network of 61 terminals which are well connected with the major gateway ports across India with 15 container trains. In addition to the core offering of the company inland transport by rail for containers, it also covers the management of Ports, air cargo complexes, and establishing cold-chain.

From the revenue front, the company has been performing flat over the last five years with more than INR 6000 crore. The net profit has declined in 2020 and 2021 due to the Covid pandemic of the earnings per share (EPS) and Return on Equity (RoE). The government of India has the controlling stake in the company with 54.8 percent equity holding while FII and DII hold little over 40 percent of the equity in the company. For the quarter ended in December 2021, the company reported a 24.46 percent rise in consolidated net profit to Rs 276.35 crore. The cabinet of the current government had approved the strategic sale of a 30.8 percent stake, along with management control in Concor in November 2019. Once disinvestment is completed, the government will retain a 24 percent stake without any veto powers in the company.

Blue Dart Express:

Blue Dart is a premier express air and integrated transportation & distribution company in India. Headquartered in Mumbai, the company offers secure and reliable delivery of consignments to over 35,000 locations in India with over 14000 pin codes served. The company is a part of the DPDHL Group that operates in 220 countries across the globe. Being part of the group Blue Dart has the reach to the largest and most comprehensive express and logistics network worldwide. The company offers an entire spectrum of distribution services including air express, freight forwarding, supply chain solutions, and customs clearance to customers across the above countries including India. Blue Dart has completed 241 million shipments including 240 million domestic shipments during the period of April 2019 to March 2021. During the same period, Blue Dart handled 7,67,814 tonnes of the domestic parcel and 1,675 tonnes of international parcels.

Despite the covid pandemic, Blue Dart maintained its revenue during the last five years. The total income has been increasing consistently from INR 2708.69 crores reported on 31 March 2017 to INR 3292.36 crores on 31 March 2021. The net profit of the company has also increased from INR 292.24 crores to INR 389.29 crores during the same period, though the net profit was subdued for two years 2019 and 2020 impacted by pandemic. The company reported 21% revenue growth in the third quarter ended in December 2021 from the same quarter the previous year on a consolidated basis. EBITDA margin for the same period stood at 22.7 percent. Promoters holding in the company remain constant over the past year at 75 percent while FII holdings have increased from 1.81 percent in December 2020 to 3.21 percent in December 2021 and DII holdings declined from 11.71 percent to 9.38 percent during the same time.

Allcargo Logistics Ltd:

Headquarter in Mumbai, India, Allcargo is an end-to-end logistics service provider that operates in 180 countries globally. Allcargo is India’s leading integrated logistics company and the world leader in LCL consolidation. The company started its operation in 1994 as a cargo handling operator in Mumbai port. Allcargo Logistics has achieved many milestones over the last 25 years of operations. The Company operates mainly in four segments such as 1. Multimodal Transport Operations; 2. Freight Stations/Inland Container Depots; 3. Project and Engineering Solutions; and 4. Logistics Park.

The company has created Avvashya CCI Logistics Private Limited in 2016 to enhance the quality of supply chain management and to carry out Contract Logistics business. The company acquire strategic stakes in GATI in the year 2020 and in 2021 the company raised its stake in GATI to 50% to have control over the company. This helps Allcargo to strengthen its Express Logistics business. In the year 2021, the company also acquired a 65% controlling stake in Nordicon, operates in less than container load (LCL), and rail consolidation in the Nordic region offices in Sweden, Norway, Finland, and Denmark. This helps Allcargo logistic to expand its operation in the LCL segment in the Nordic region.

Allcargo reported revenue of INR10498 crores from operations for the year 2020-21, which is 43% over the previous year, due to an increase in revenue from the Multimodal Transport Operations (MTO) division and the addition of Gati Limited which was not there in the previous year. However, the net profit after tax attributable to equity shareholders declined to INR 191.35 crores reported on 31 March 2021 from INR219.75 crores reported on 31 March 2020. Both Basic and diluted EPS also declined to 7.79 reported on 31 March 2021 from 8.94 reported on 31 March 2020. The company reported a quarterly net profit up from INR 12.47 crores in September 2020 to INR 24.07 crores in September 2021 which is almost double. During the same period, the total revenue has increased from INR 401.88 crores to INR 755.46 crores which is a significant jump over this period.

Aegis Logistics Ltd.:

Headquarter in Mumbai, India, Aegis logistic is a leading company in the oil, gas, and chemical logistics segment. Aegis Logistics Ltd. was incorporated in the year 1956 and became a publicly listed company in the year 1978. Aegis logistic is a part of Aegis group which operates in bulk liquid handling terminals, liquefied petroleum gas (LPG) terminals, filling plants, pipelines, and gas stations. Aegis logistics operate in liquid logistics, gas logistics, chemical logistics, EPC Services, Retail LPG, and marine services and is present in Mumbai Port, Kochi Port, and Pipapav Port. The company is also setting up a new facility at Haldia on Eastern Coast.

The company owns and operates a 20,000 MT fully refrigerated LPG import terminal while international operations are handled through its sourcing and trading subsidiaries located in Singapore. On 13, July 2021 the company announced a joint venture with Royal Vopak, a leading independent tank storage company headquartered in Rotterdam, the Netherlands. After this partnership, the company will become one of the largest independent tank storage companies for LPG and chemicals in India.

The Revenue of Aegis logistics was reported to decline by 46.49% to INR 3843 crores in the year 2020-21 from INR 7183 crores in 2019-20 due to lower sourcing volumes. However, the Profit before Tax recorded a growth of over 60% for the year 2020-21 to INR 335.60 crores as against INR 207.56 crores in the previous year. The Profit after Tax during the same period has increased by over 85% for the year 2020-21 stood at INR 249.22 crores as against INR 133.97 crores for the previous year. Except for the year 2020-21, last four years from 2016-17 to 2019-20, the company reported growth in operating revenue from INR 3930 crores to INR 7183 crores respectively. EPS is also jumped from 3.98 in 2017 to 6.49 in 2021 and it is almost double from 2.94 in 2020 to 6.49 in 2021.

TCI Express Ltd.:

Headquartered in Gurugram, Haryana, India, TCIEXPRESS is a leader in the express distribution in India. The company was incorporated in the year 1996, as a part of Transport Corporation of India Limited (TCIL) and demerged to become an independent company TCIEXPRESS listed on NSE and BSE. As the name says, TCIEXPRESS focused on express cargo distribution with higher emphasis on e-commerce business with support from advanced technology and deep domain expertise. The company has 650 owned centers across countries with more than 40000 pickup and delivery locations. TCIEXPRESS is well equipped to offer time-definite solutions to 704 out of 712 districts in India with its wide spectrum of services that comprises surface express, domestic and international air express, e-commerce, priority, reverse express services, C2C express, rail express, and cold chain express. TCIEXPRESS has also established itself as a priority express service provider in the e-commerce B2C deliveries market with a team of over 3500+ professionals.

The Revenue of TCI expresses declined by 21.74% to INR 851 crores in the FY2021 from INR 1036 crores in FY2020 due to lower industrial production for a few key customer industries, such as pharmaceuticals, textile and machinery, and equipment. However, the Profit after Tax recorded a growth of over 11% for the FY 2021 to INR 100.60 crores as against INR 89.08 crores in the previous year. EBITDA margin has also increased by 16.67% in FY2021 as against the previous year. EBITDA has increased to INR 141.97 crores in FY 2021 from INR 125.67 crores the previous year. The company has been maintaining return on capital employed (RoCE) with over 30% during the last five years from FY 2017, though it has slightly declined in FY 2021 to 34.32%. The company also has been maintaining a return on equity (RoE) of over 26% for the same period from FY 2017 to FY 2021. Earnings per share (EPS) increased around 2.5 times over the last five years from 9.79 in FY 2017 to 26.19 in FY 2021. The economy is opening up and the Government of India is focusing on higher Capex with increasing industrial production will further boost EPS of the company in the next financial year.

Leave a Comment

Your email address will not be published.