Lot of deep value stocks available in this sector post the virus. I think that there is all around value but it is very unpredictable because we do not know when everything will open up. However, eventually things will turn around and with the all around movement increasing, the logistics sector (where some companies got as beat as the hotel industry) will quickly pick up volume. I do not think this sector will see any permanent value destruction.
I specifically find some 3PL players very interesting like TCI and Mahindra logistics.
Conference call takeaways
Freight division revenue declined 9.1%yoy (up +76% qoq) to Rs 2.8bn; Supply Chain
revenue increased by 2.2%yoy (up +134% qoq) to Rs 2.4bn; Seaways revenue grew by
9.2%yoy (up +37%qoq) to Rs 932mn.
EBITDA in freight division grew by 2.2%yoy to Rs 114mn with margin improvement of
50bps to 4.1% in 2QFY21; EBITDA in SCM grew by 3.5%yoy to Rs 254mn and in seaways
increased by 9.3%yoy to Rs 245mn. EBITDA margins in SCM and Seaways remained
stable on yoy basis to 10.3% and 28.1% respectively in 2QFY21.
The company was able to ramp up operations to 85-90% in freight segment with
increased movement of goods, pent up demand and restocking due to festive season.
LTL business is c. 31% of overall freight business supporting the margins.
Growth in SCM was supported by automotive demand revival and growth in Ecommerce & FMCG. SCM margins improved due better revenue realization and cost
optimization measures.
Shipping benefited from high growth in Western sector and one ship addition in
November last year.
JV performance: TCI Concor operating asset light rail operations reported revenue
growth of 69%yoy to Rs 1.5bn in 1HFY21. Transystem focused on automotive logistics
reported revenue decline of 52%yoy to Rs 1.15bn in 1HFY21. TCI Cold chain reported
revenue of Rs 147mn in 1HFY21 compared to Rs 258mn in FY20.
It had capital expenditure of Rs 297mn in 1HFY21 and expect capex of Rs 1.5bn in FY21
compared to Rs 1.1bn in FY20. Capex is mainly for developing hub centers, warehouses
and ship addition. It plans to add one coastal ship in 4QFY21 with capex of c. Rs400mn.
Shares of Snowman Logistics continued their northward journey and hit a 52-week high of Rs 63, up 10 per cent, on the BSE in the intra-day trade on Thursday on favourable demand prospects. In the past eight trading days, the stock of the logistic company has rallied 77 per cent from a level of Rs 35.60 hit on November 9, 2020.
Is anyone invested in TCI? I am looking to increase my holding but want to understand if the economic recovery will be massively beneficial to this multi-modal play.
Disc: Invested in VRL and TCI - looking to add more of TCI and Mahindra Logistics
Is anyone still following this thread? Now that there is a push on infra from gov, I was looking to tap into reasonably valued logistics plays. TCI looks interesting at current valuations. Any takes?
Prepared a detailed video on Gati Ltd.
Covered Express logistics sector, growth outlook as given by the company.
Peers valuation multiple. youtu.be/kPAeFAqiPgE
The policy aims to reduce the cost of logistics from the existing 13 per cent-14 per cent to single digit.
There will be digital integration of different systems of some departments such as road transport, railways, aviation, commerce ministries, and foreign trade.
This National Industrial Corridor Development Corporation Logistics Data Bank Project has been leveraged
Ease of Logistics will enable and ensure the ease of logistics business through transparency and accessibility.
The vision is to develop a technologically enabled, integrated, cost-efficient, resilient, sustainable, and trusted logistics ecosystem for accelerated and inclusive growth.
Set three key targets: First, to reduce cost of logistics in India to be comparable to global benchmarks by 2030. Second, improving the logistics performance index ranking and to be among top 25 countries by the end of the decade and, third, to create data driven decision support mechanism for an efficient logistics ecosystem.
Logistics-sector is a low margin and quite sticky business. Volume buyers (like recently IPO’d giants) are plenty. Then they fall short on delivery. Bajaj Electricals terminated their logistics contract with one such Logistics giant only after 2 years or so of business. Similarly Voltas.
Asset ownership OR light brings their own difficulties. It is advisable to not go by popular-names in this business - as effectiveness matters at the EoD. Delivery is a back end business and customers just need a company which does the job.
Essential metric to focus upon would be preTax ROCE, CFO into hand, management which is willing to forgo volume wrt margin. No point in running the company to ground for Brochure embellishments.
Investors have to be willing to be with the business rather than the stock.
Key Financial Highlights: Company provides important financial data, including a 9.9% growth in income from operations in the second quarter of the financial year 2024 (Q2FY24) compared to the first quarter (Q1FY24). The net profit for Q2FY24 is Rs. 1.34 Cr, a 30% increase from Q1FY24.
Key Operational Highlights: The company also highlights operational information, such as a 7.01% increase in total volume and the launch of a mobile app called FreightPILL, which helps capture operational data.
