Top 5 Logistics Stocks in India
Created on 21 Jun 2022
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Updated on 07 Oct 2022
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The stock markets across the world are going through a massive crash. Nifty 50 Index, for instance, has experienced over a 12% decline since the start of 2022.
While the sentiment is negative, it’s a good time for investors to start securing long-term positions in selected sectors and stocks.
I am referring to the logistics industry, which acts as the wheels of any manufacturing industry as it transports raw materials and consumer goods to their respective consumers.
The logistics industry was one of those industries that were looking very promising, but of course, before the pandemic. How’s it doing now? Well, check out the following discussion!
Understanding logistics industry
Logistics is an indispensable element of the economic growth of any country as it connects manufacturers to consumers. The second-largest population in the world with a vast geographical presence offers both opportunities and challenges to the industry.
The McKinsey Global Institute (MGI) predicted in 2019 that India’s logistics sector would grow from $200 billion in early 2020 to at least $320 billion in 2025, a 60% growth in 5 years. However, first, the COVID-19 wave and then the global crisis crushed the growth prospects of every sector, with logistics among the ones that bore the maximum brunt.
Now the biggest question is if the sector still offers opportunities. Of course, it does, provided you invest in the right stock at the right time.
Top Logistics Stocks
Here are the five best logistics stocks in India that you should keep an eye on.
1. TCI Express
Established in 1996, TCI Express is among the leading logistics company in India. The company primarily focuses on the e-commerce business, with an expansive network of over 3500+ professionals and 40,000 pickup and delivery locations.
TCI Express is a low-debt company with a consistently growing net cash flow. The company boasts a quarterly profit and revenue increase for the past three quarters. Also, the logistics giant is known for its solid cash-generating ability from its core business.
The company’s annual net profits and book value per share have also improved over the last 2 years.
However, the falling profit margins (YoY) reflected in a quarterly net profit decline is a spot of trouble for the management. Also, a significant decline in net profits (YoY), as seen in the recent results, is concerning the promoters.
Overall, TCI Express looks to be the favourite logistics stock for analysts who see at least a 20% upside in the next 3-6 months.
2. Aegis Logistics Ltd.
Aegis Logistics Ltd. started its operation in 1956. The company listed its shares on the Bombay Stock Exchange in 1978 and later on the National Stock Exchange.
Aegis Logistics Limited is among the leading logistics company in India, dealing in oil, gas, and chemicals.
Talking about the strengths, the company's cash from operating activity and net cash flow has increased. Also, the company has registered high TTM and solid annual EPS growth.
The return on capital employed (RoCE) and return on equity (ROE) have also improved over the last 2 years. Also, it’s a low debt with annual net profits and book value per share registering improvement in the last 2 years.
However, the decline in net profit due to the declining Profit Margin (QoQ) is hurting shareholders’ sentiments.
Having said this, it’s also a street favourite logistics stock that has seen increased shareholding from FII/FPI. While the stock has declined 43.6% in the past year, it is down by only 1% in the last 3 months amid the falling market.
The analysts see at least a 20% upside in Aegis Logistics on a short to medium-term basis.
3. Allcargo Logistics Ltd.
Touted as India’s largest integrated logistics solutions provider, Allcargo Logistics offers Inland Container Depot facilities and Container Freight Station services.
The company boasts of a global network of over 300 offices in over 160 countries.
The recent quarterly results were also good, registering good growth in operating margins (YoY) and operating profit.
However, the profit margins have fallen on a QoQ basis, and the company is struggling to generate net cash. Overall, the stock is trading on the bearish side. At the moment, it is down by 13.37% against NIFTY 50’s 5.94% decline in the last 1 month
The risk-reward may not favour the stock right now amid rising inflation and the Russia-Ukraine conflict. But, a 98% growth in the last year asks you to keep this good stock on the radar.
Blue Dart Express
Incepted in 1983, Blue Dart is listed in Forbes India's Super 50 Companies and Fortune 500’s India's Largest Corporations. The company ships to over 35,000 locations in India and has a presence in 220 countries and territories.
Blue Dart is credited with a high TTM EPS growth. The recently announced quarterly results were good. And the RoCE, ROE, and ROA have also improved in the last 2 years.
The company has also shown strong cash-generating ability from its core business. The increased FII/FPI or institutional shareholding in recent times is also a plus for the company.
Like most other stocks, Blue Dart has shown a negative movement and breached its first major support, thanks to the global crisis. But, the company is still 17% more profitable than its levels from last year.
Container Corporation Of India Ltd.
Incorporated in March 1988 under the Companies Act, Container Corporation Of India (CONCOR) calls it an undisputed market leader, with a network of 61 ICDs/CFSs in India (59 terminals and 2 strategic tie-ups).
While rail is the major vehicle for the company, road services are also used at a comparatively smaller scale to cater to the need for door-to-door services. CONCOR enjoys strong financials with high TTM EPS Growth.
It’s another Low Debt company, with revenues growing every quarter for the past 3 quarters. The company knows how to generate net cash well, that’s why they have been able to improve net cash flow for the last 2 years
The best part is the company has increased operating margins (YoY) in recent results. However, a decline in net profit alongside a depreciating profit margin (QoQ) is bothering the management.
Its price is trading below its short, medium, and long-term averages too. And, the stock is appearing among the top losers with high volume.
While the stock boasts of strong fundamentals, it’s a victim of the rising global crisis. So, it’s better to wait for a fresh break out as the positivity returns to the market for taking fresh positions. And, if you are a long-term investor, you can start with periodic purchases.
The Bottom Line
So, these were the 5 best stocks from a progressive sector. However, TCI Express and Aegis Logistics look strong on the charts and technical analysis.
Keep a watch on the oil prices and wait for the market to get stable. The right stock at the right time can make a big difference.
That’s all about the logistics sector. For more such useful information, we have for you INVESTING KA SEARCH ENGINE, Ticker by Finology, where we give you tools based on Stock Analysis, Peer Comparision, Stock Bundles, and many more.
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*Disclaimer the stocks discussed above are here to make you understand the concept and are not the recommendations of Finology.
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