The Great Indian Logistics Boom and 5 Stocks to Play the Multi-Decade Trend

A couple of days ago, the Asian Development Bank (ADB) approved a US$ 350 million policy-based loan to support India's logistics sector.

The loan will finance initiatives under the Indian government's Gati Shakti National Master Plan (PMGS-NMP) and the National Logistics Policy (NLP).

These programs aim to reduce logistics costs, boost employment opportunities, and drive sustainable economic growth, making India's manufacturing and export industries more competitive on a global scale.

This is a big development for India's booming logistics sector, which has sailed through centuries of change, evolving from ancient maritime trade routes to becoming one of the world's largest and fastest-growing fleets.

Along with regulatory reforms, infrastructure development (Bharatmala, Sagarmala, highways, port facilities) are making the road smoother for organised players in the logistics sector.

With multiple actions on the policy front - the sector is at an inflection point. All these factors could set the stage for many companies in the logistics sector to get re-rated.

Keeping that in mind, we'll take a look at 5 logistics stocks in India that could capitalise on this trend.

#1 Mahindra Logistics

First on the list is Mahindra group company.

Mahindra Logistics is an integrated logistics & mobility solutions provider. The company offers supply chain expertise to diverse industry sectors such as automotive, engineering, consumer goods, etc.

The company is a subsidiary of Mahindra & Mahindra (M&M) and enjoys strong business linkages with the Mahindra group.

One of its notable initiatives involves planning for regional expansion under the "Go East" strategy, adding multi-client warehouses and delivery stations. The company has also introduced EDEL-EAR, a digital platform for monitoring emissions, enhancing green logistics offerings.

Even though a loss-making entity, Mahindra Logistics gives comfort to its shareholders as it derives over 50% of its revenues from the Mahindra Group. This is expected to continue in the future as well, given its tied with the group.

Coming to its financials, Mahindra Logistics' revenue from operations during the second quarter of FY25 stood at Rs 15.2 bn, compared to Rs 13.6 bn posted in the year ago period.

The company brought down its losses during the quarter as infrastructure developments accelerated and the company was able to get more business. Mahindra Logistics targets to become a Rs 100 bn logistics service provider by FY26.

The company's management remains cautiously optimistic about the upcoming quarters, anticipating volume recovery and improved performance driven by seasonal demand.

For more details, check out Mahindra Logistics financial factsheet.

#2 Delhivery

Delhivery is the largest and fastest-growing fully integrated logistics company in India by revenue in financial year 2024.

It provides a full range of logistics services, including delivery of express parcels and heavy goods, PTL freight, TL freight, warehousing, supply chain solutions, etc.

The company operates asset-light by avoiding ownership of large physical assets like warehouses or fleets. Instead, it collaborates with a network of partners, including fleet owners, franchisees, and delivery agents.

Coming to financials, in the second quarter of FY25, the company reported revenues of Rs 21.9 bn, a growth of 13% YoY. Its customer base increased to 38,000, up from 30,000 YoY, indicating a growth of nearly 30%.

In the past, in-sourcing by major players like Flipkart and Amazon has affected third-party logistics. But Delhivery is getting future ready by launching a third-party quick commerce network.

For more information, check out Delhivery's financial factsheet.

#3 Blue Dart Express

Blue Dart Express is a leading logistics and express delivery services provider in South Asia.

Established in 1983, the company has become synonymous with reliable and efficient logistics solutions, specialising in time-sensitive air and ground express services.

As a subsidiary of DHL Express, Blue Dart benefits from global expertise while maintaining a strong domestic presence in India.

Its services include domestic priority day-definite and time-definite services; industry-specific services; and critical express.

As far as financials are concerned, for the September 2024 quarter, Blue Dart posted a 9.4% YoY increase in revenue on account of a 11% YoY increase in volumes.

However, the company's operating profit fell 2.1% YoY as expenses rose. The company's net profit fell 14% YoY on the back of higher depreciation and tax expenses.

Talking about aircraft utilisation, Blue Dart's current levels of new aircraft are around 82% to 83%, with an ideal target of 90% to 92%.

In its latest conference call, the management said that it is cautiously optimistic about future performance, emphasising the importance of service quality and operational improvements in navigating market challenges.

It anticipates a stronger Q3 due to the festive season, with expectations for tonnage growth. However, it refrained from providing forward-looking statements.

For more details, check out Blue Dart's financial factsheet.

#4 Aegis Logistics

Next on this list is Aegis Logistics.

The company imports, stores, and distributes liquified petroleum gas (LPG), chemical products, and vegetable oils. It also makes marine products and provides bunker fuels to ships.

The company's stock price is having a great run on the bourses following better-than-expected earnings for the first half of FY25.

One of its achievements worth highlighting is the sustained growth in volumes at Kandla terminal and expansion in liquid business with high utilisation of new tanks.

Aegis Logistics plans to build more ammonia terminals as the business matures, aiming for vertical integration similar to the LPG business.

The company's management also remain optimistic about achieving a 25% CAGR over the next three years. One of its big expansion plans is set to be completed in FY25, which will increase its storage capacity.

For more details, check out Aegis Logistics financial factsheet.

#5 Container Corporation of India

Container Corporation of India is a public sector undertaking managed by the Indian Ministry of Railways. It was set up in 1966 to containerise cargo transport in the country.

Its core businesses include cargo carriers, terminal operators, warehouse operators & MMLP operations.

The company's dominance stems from its enviable first-mover advantage. Until 2006, it operated as the sole player in the industry, building a vast and efficient network that remains unmatched by any competitor.

Since 2006, other players have entered this industry, but none of them have been able to replicate the network and infrastructure of Concor.

Between 2020-2024, Concor's sales and net profit have grown at a CAGR of 4.4% and 0.6%, respectively.

The company has been ramping up its infrastructure lately. It has also expanded container capacity with 2,500 new containers, bringing the total to 47,000.

Going forward, the company will haul fast-moving consumer goods (FMCG) cargo as the Navratna company seeks to boost its domestic market share by weaning away a portion of the consumer durables business, moving mainly by road.

For more information, check out Container Corp's financial factsheet.

Snapshot of Top Logistics Stocks on Equitymaster's Stock Screener

Here's a table showing the above companies on various important parameters.

Conclusion

With the strong contribution of logistics players in India's economic maturity, these companies are firmly poised to benefit from the tailwinds that the logistics sector has to offer over long term.

As key players in logistics, shipping, and infrastructure, they are well-positioned to capitalise.

However, readers must keep a close eye on their operational performance, ability to scale, and strategic execution in this evolving landscape.

Conduct thorough research and due diligence as various factors, including economic conditions, regulatory changes, and potential litigations could impact the performance of logistics companies. Moreover, always consider corporate governance as one of your criteria.

For more, check the financial profile of India's top logistics stocks on Equitymaster Screener.

Happy investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...