Bonus Shares Alert: This Smallcap Logistics Stock to Issue Bonus Shares Soon

In today's world, having a full-time job is not enough everyone needs to go the extra mile to earn a little extra income.

And what if you could add to your income without having to go that extra mile? Isn't that the sweet spot we all desire?

We have a special fondness for freebies. Whether it's snagging an extra pack of cookies with a "Buy one, Get one" deal or eagerly anticipating the Diwali bonus at work, the joy of getting more without paying extra is universal.

In stock market terms, they are called bonus shares.

Bonus shares are free shares that shareholders receive against shares they currently hold.

For investors seeking such perks, Allcargo Logistic is set to trade ex-bonus shortly.

Here's all you need to know.

• Allcargo Logistics announced bonus shares on 10 November 2023.
• The company will issue bonus shares in a ratio of 3:1. This means three bonus shares for every one existing fully paid-up equity share they own.
• The company will issue 737.1 m equity shares not exceeding Rs 1.5 billion (bn).
• The record date for the same is 2 January 2024.

This is the second time the company has issued bonus shares. Before this, in 2015, the company declared a 1:1 bonus issue.

The decision is aimed at improving the liquidity and allowing for broader base participation of shareholders in the company. This shall also facilitate the strategic restructuring plans.

The company has built significant reserves over the years, and the issuance of bonus shares will use less than 15% of the available reserves.

Post the bonus issue, the paid-up share capital, which now stands at Rs 1.9 bn, will be around Rs 491.3 m.

A Close Look at the Financials

For the September 2023 quarter, the company reported a 37.6% YoY decline in revenue at Rs 33.1 bn, against Rs 53 bn in the year ago quarter.

It also reported an 89.7% YoY decline in net profit at Rs 218.4 m from Rs 2 bn.

However, going forward, the company expect Q3 to be better due to the festive season.

For FY23, the company recorded a total revenue of Rs 181.1 bn, down 5.2% YoY from the previous year. Between FY19 and FY23, the company posted a CAGR growth of 19.7% in its revenue.

The profit has followed a similar trend, declining 26% in FY2023. But overall, its profit has increased from Rs 0.9 bn in FY21 to Rs 6.5 bn in FY23, at a CAGR of 93%.

This growth was on the back of rising logistic demand over the years.

Allcargo Logistics Financial Snapshot (2021-23)

Particulars	31-Mar-21	31-Mar-22	31-Mar-23
Total Revenue (Rs in bn)	105.5	190.9	181.1
Revenue Growth (%)	-	80.9	-5.1
Net profit (Rs in bn)	0.9	8.2	6.5
Net profit margin (%)	0.9	4.3	3.6

Source: Equitymaster

Going forward, the company plans to employ an asset-light strategy, resulting in no substantial capital expenditures in the first half of the year.

The only additions, apart from routine maintenance and IT expenses, stem from the contract logistics merger. Their capital expenditures are focused on maintaining and acquiring new laptops or servers, with minimal investment in refurbishing select premises.

Restructuring Plan

Allcargo Logistics' plan to reorganise into separate companies running domestic and international businesses will not only simplify operations but will also increase efficiency, give better visibility to investors, and offer them more targeted investment opportunities.

Global logistics major Allcargo Group will demerge the International Supply Chain (ISC) business into a separate entity called Allcargo ECU. It will include the India part of the international supply chain business along with the international subsidiaries held under the ECU Worldwide NV.

On the other hand, the Express business and Contract Logistics business would now come under Allcargo Logistics. Post the demerger, Allcargo Group will have four business undertakings: Allcargo ECU Limited and Allcargo Logistics. Allcargo Terminals Limited and TransIndia Real Estate.

The scheme will be implemented in the next 10-12 months post regulatory filings and approvals from the Stock Exchange, shareholders, and NCLT.

Allcargo Logistics completed its acquisition of GATI in the year 2000 for around Rs 4.2 bn as a means to enter the express logistics space.

Allcargo provides logistics services across the spectrum in domestic and international markets. Earlier this year, Allcargo Group completed the demerger of Allcargo Logistics and TransIndia Real Estate.

As per the approved swap ratio, shareholders of Allcargo Gati will get 63 shares in the resulting Allcargo Logistics entity (post ISC demerger) for every 10 shares held in Allcargo Gati.

Shareholders of Allcargo will get 1:1 shares in the demerged Allcargo ECU and continue to hold their shares in Allcargo Logistics, which will now be the resulting entity holding Express and Contract Logistics business directly. This takes into account the 3:1 bonus.

What Next?

Separately, the board of Allcargo Gati has approved fundraising of up to Rs 5 billion as growth capital for expansion, capex, working capital, etc.

Going forward, the company plans to focus on high-growth markets like Japan, Brazil, China, the US, and Germany.

It also plans to implement a transformational strategy involving AI/ML to optimise operations and offer real-time visibility.

It also plans to strengthen its position as a leading express and contract logistics provider in the Indian market.

How Allcargo Logistics Shares have Performed Recently

Allcargo Logistics shares have zoomed by more than 18% in past month. Over the past six months, the company's shares have gained 10%.

On a YTD basis, the shares of the company are trading 22% lower.

Allcargo Logistics touched its 52-week high of Rs 332 on 26 December 2023 while it touched a 52-week low of Rs 245.7 on 26 October 2023.

About Allcargo Logistics

Allcargo Global Logistics is one of the global leaders in logistics.

The company operates mainly into three segments that is multimodal transport operations, container freight stations/ inland container depots, and project and engineering solutions.

The company is carrying out contract logistics business through its joint venture viz. Avvashya CCI Logistics.

It is among the leading players in the global LCL consolidation market, with a strong network across 160+ countries and 300+ offices covering over 4,000 port pairs across the world.

Allcargo Logistics operates India's widest and strongest network of Container Freight Stations (CFS) and Inland Container Depots (ICD).

These operations cater to the handling import and export, cargo customs, clearance warehousing, and other ancillary logistics services.

Allcargo is also one of the pioneers and leaders in project and engineering services offering integrated end-to-end logistics services, including transportation of over-dimensional and over-weight cargo on-site lifting and shifting equipment leasing and coastal shipping.

For more details about the company, you can have a look at Allcargo Logistics company fact sheet and quarterly results on our website.

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