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Brokerage firm Prabhudas Lilladher has initiated the coverage on logistics sector with a positive view, adding that the industry is poised for a huge growth led by rising GDP & online retail penetration, increasing complexity in supply chains and distribution model, improvement in road infrastructure, and greater adoption of technology.
The brokerage firm has assigned ‘buy’ rating TCI Express with a target price of ₹1430 and ‘Accumulate’ rating on Mahindra Logistics and Delhivery with a target price of ₹500 and ₹510.
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“The logistics sector is mainly dominated by the movement of goods via roads (~71% of volumes and ~65-70% of transportation revenues). Overall, est. logistics gross spends (~US$435bn) form 13% of GDP, of which direct spend is 51% of the pie,” the firm said in a report.
TCI Express is building its capacities for the next decade and an uptick in volumes on expanded asset base (automation of existing assets) will likely maintain return ratios at attractive levels.
It posted a decline in revenue by 0.81 per cent in Q3 FY24 compared to the same period last year. However, the profit showed a slight increase of 0.53 per cent YoY. The company also witnessed a decline in revenue by 2.54 per cent and a drop in profit by 9.53 per cent compared to the previous quarter.
Meanwhile, Mahindra Logistics has been steadily making inroads with several corporates and making efforts to outsource their logistical requirements. Its endeavour is being helped by changing customer behaviour, regulatory environment and rising competition with rapidly scalable brands, it said.
It disclosed a loss for the quarter ended on December 31, 2023 for the fourth consecutive quarter, attributed to increasing expenses and continual downturn in its express cargo segment due to intense competition. The company reported a consolidated net loss after tax amounting to ₹174.1 million ($2.1 million), a significant contrast to the profit of ₹13.9 million recorded in the same period last year.
On the other hand, The brokerage firm Prabhudas Lilladher expects Delhivery to grow at 18% CAGR over FY24-26E, led by focus on cost control, unique shared infra model (B2B+B2C), higher investments in automation, and superior tech stack.
It reported a net profit of ₹11.7 crore in the October- December 2023 quarter. The company’s consolidated net revenue increased by 13% QoQ to ₹2,194 crore against ₹1,941 crore in the previous quarter. Its net consolidated revenue increased 20.32% YoY against ₹1,823 crore in the year-ago period.
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Published: 16 Apr 2024, 08:37 PM IST
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