The movement of goods and services has been ongoing since time immemorial. Modes of transport-ships, planes, rail and road transport are being modernized so is the nature and pace of logistics with focus on technology, efficiency & sustainability. In the last few years, Indian logistic companies have seen an unprecedented growth due to thriving inter dependencies on e-commerce and other industries.
Logistic sector is estimated to to grow at a CAGR of 12.17% by 2020 as against the current 8%. Engaging ~16.7 million employees today, the demand for skilled workforce in logistics is estimated to reach 28.4 million by 2020, gaining momentum as the Indian economy grows at an exponential rate.
Recently in July 2016, The World Bank in its report on Logistics Performance Index (LPI) ranked India at 35th position out of 160 countries, a sparkling long jump by 19 places from 54th in 2014.
As a result in 2015-16 many institutional investors placed their bets on large logistic companies of India and were rewarded with sizable returns. Nexensus Explores these investments and companies that have outperformed.
The Logistic Giants
Nexensus identified 20 large, listed companies operating in the logistic sector including aviation, road transportation, railways, shipping, warehousing and supply chain. Stock prices for most of these have increased consistently and for some stock prices rose by 600% in just 2 years.
|Listed Logistics Players||Headquarters||Focus|
|ABC India||Kolkata||Freight Forwarding through Air and Sea
|Aegis Logistics Ltd||Mumbai||Logistics services for oil, gas, and chemical industry|
|Allcargo Logistics Ltd||Mumbai||Less-than-container load (LCL) consolidation player with global multi-modal transport, container freight station, inland container depot and project engineering solutions|
|Arshiya International Ltd||Mumbai||Free Trade Warehousing Zones, Rail, 3PL, 4PL, Warehousing, Supply chain|
|Asis Logistics Ltd||Mumbai||Transport, Custom Clearance (CHA), Warehousing, Freight Management|
|Blue Dart Express Ltd||Chennai, Tamil Nadu||Integrated air express carrier and premium logistics-services|
|Balurghat Technologies Ltd||Kolkata||Commercial Air Transport and logistics|
|Central Provinces Railways Company Ltd||Mumbai||Transportation services through railways
|Chartered Logistics Ltd||Ahmedabad||Transportation and logistics
|Container Corporation of India||New Delhi||Multi modal transport,container port, air cargo complex, air freight station, warehousing, logistics park and supply-chain management.|
|Corporate Courier & Cargo Ltd||Mumbai||Value-added logistics services|
|Gateway Distriparks Ltd||Mumbai||Container Freight Station (CFS) / Inland Container Depot (ICD) services|
|Gati Ltd||Delhi||Express Distribution and Supply Chain Solutions|
|North Eastern Carrying Corporation Ltd||Delhi||Transportation and Freight Management
|Patel Integrated Logistics Ltd||Mumbai||Cargo and Vendor Management|
|Sical Logistics Ltd||Chennai||End to End logistics solutions for bulk and containerized cargo, custom house agency, stevedoring, dredging|
|Snowman Logistics Ltd||Bangalore||Integrated logistics service provider with cold storage|
|Tiger Logistics (India) Ltd||Delhi||End-to-End supply chain solutions|
|Transport Corporation of India Ltd||Gurugram , Haryana||Cargo transportation (surface)
|VRL logistics Ltd||Mumbai||Transport, 3PL warehousing|
2 Year & 5 Year Performance
Better known companies like Blue Dart Express, Tiger Logistics Ltd, Aegis Logistics Ltd, Central Provinces Railways Ltd, Allcargo Logistics Ltd that are much tracked, grew positively. Surprise came from the lesser know logistic companies like Patel Integrated Logistics Ltd , Chartered Logistics Ltd and Sical Logistics Ltd whose price rose by 113%, 68.16% and 25.53% respectively over the last 2 years.
The top gainers in the short term (2 years) were Tiger Logistics (India) Ltd, Aegis Logistics Ltd and Patel Integrated Logistics Ltd that gained 658%, 297% and 113.55% respectively. Price drop was capped at -50% with North Eastern Carrying Corporation Ltd reporting the highest fall in prices over 2 years. Albeit North Eastern Carrying Corporation reported a drop in short term yet over a period of 5 year its stock prices have increased by 178.62%.
Overall the sector average price gain over 2 years is reported at 57% for 20 companies between 2014-2016.
The sector stood through the test of time and yielded positive returns to long term investors. An analysis of price gain reveals that 9 out of 11 companies stock prices soared by over 100% during the last 5 years between 2011-2016. The top performers being Aegis Logistics, Blue Dart Express and North Eastern Carrying Corporation whose stock price increased by 681%, 228% and 179% respectively. The only 2 companies to report a drop in stock price by 34% & 8.3% were ABC India Ltd and Balurghat Technologies Ltd.
Institutional Investors in Indian Logistic Sector
The opportunity that Logistics provides has not been hidden from many seasoned investors and funds. Over 25 large global institutional investors and banks have over 1% holdings in logistic companies depicting a positive sentiment . These include international investors like Government Of Singapore and T.Rowe Price Emerging Markets Stock Fund.
|Institutional Investors||Logistics Players (% Shareholding)|
|Idfc Premier Equity Fund||Blue Dart Express (1.56 %)
, Gati Ltd (3.63%)
|Matthews India Fund, Matthews Pacific Tiger fund||Blue Dart Express (1.46 %) ,Container Corporation Of India (2.81%)|
|Bright Star Investments Pvt Ltd||Blue Dart Express
|Macquarie Bank Limited||Gati Ltd (5.69%)|
|Icici Prudential Value Discovery Fund||Gateway Distriparks Ltd (4.87%)|
|Blackstone Gpv Capital Partners||Central Provinces Railways Company Ltd (10.04 %), Allcargo Logistics Ltd (4.44%)|
|Aberdeen Global Indian Equity Limited||Allcargo Logistics Ltd
|Government Of Singapore and Monetary Authority Of Singapore||Allcargo Logistics Ltd
|Acacia Partners||Central Provinces Railways Company Ltd (6.19 %)|
|Life Insurance Corporation Of India||Central Provinces Railways Company Ltd (14.97 %)|
|Goldman Sachs India Fund Limited||VRL Logistics Ltd (2.27%)
|Morgan Stanley Sicav (Mauritius) Limited||Tiger Logistics (India) Ltd (4.37)
Many individual investors like Amal N Parikh, Praveen K Manivannan, Vivek Kapoor, Sharad Kanaiyalal Shah, Nisha Kanubhai Makwana have also been much ahead of the curve to identify and en-cash on this trend.
Apart form large listed companies ,we observe that there are over 28000 companies operating in this space. 70% (~19000) of these are situated in the top metro cities of India including Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad and Ahmedabad. Some of the large ones include Coldex Logistics, Tulsidas Khimji and Liladhar Pasoo. This sector being highly fragmented is likely to undergo major consolidation and is likely to buzz with activity in coming years as a lot of scope for Merger, Acquisitions and Strategic Partnerships exists. A few Unlisted Companies with stronghold in this arena are –
In a Nutshell
Logistic sector in India still continues to grapple with many challenges including lack of skilled workforce, fragmented nature of industry, slow infrastructure development, complex regulatory clearances and shortage of capital investment. There is a wide gap between Logistics network and facilities available -in developed countries where logistics is organised versus India where ~80% of the sector continues to be unorganized. In India, this directly impacts ease & cost of doing business where the annual spend on logistics is ~13-15 % of GDP as compared to 9% in developed countries.
It is especially noteworthy countries like Germany, U.S, Australia, Sweden, Japan, Netherlands etc. have tapped the fifth fuel- Internet. Implementing “Internet of Things” to improve logistical inefficiencies has lead to saving 1.5 billion tons of oil in 2011, approximately worth ~ $743 billion. Cost savings and lowering Carbon footprint going hand in hand.
Focusing on India- Implementing GST, Modernizing of ports, Cold Storage and new road development projects are positive efforts by the Indian Government that may help reducing this gap furthur. Private Players too are playing their part of revolutionizing logistics space with innovation and Technology.
In conclusion, for those who have missed the boat earlier, we anticipate for this sector to continue attracting investments and reap positive returns in the near future.
To know more about Nexensus
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