Investing in Logistics Stocks in India

Logistics Stocks in India

The logistics sector is a crucial part of the Indian economy, playing a vital role in the movement of goods and materials across the country. With the e-commerce industry booming and the government focusing on infrastructure development, the logistics sector is expected to see significant growth in the coming years. This makes logistics stocks in India an attractive investment proposition for those looking for long-term capital appreciation.

What are the best logistics stocks in India?

There are many good logistics business stocks to choose from in India. Some of the most popular ones include:

• Container Corporation of India (CONCOR): A leading container logistics company with a pan-India presence. From its humble beginning, it is now an undisputed market leader having the largest network of 61 ICDs/ CFSs /Strategic Tie-ups in India. In addition to providing inland transport by rail for containers, it has also expanded to cover management of ports, air cargo complexes and establishing cold-chain. It has and will continue to play the role of promoting containerization of India by virtue of its modern rail wagon fleet, customer friendly commercial practices and extensively used Information Technology.
• Shipping Corporation of India (SCI): A major player in maritime logistics, with a large fleet of ships.Shipping Corporation of India is involved in the business of transporting goods. SCI’s owned fleet includes Bulk Carriers, Crude Oil Tankers, Product Tankers, Container Vessels, LPG Carrier and Offshore Supply Vessels.
• Adani Ports and Special Economic Zone (APSEZ): One of the largest port operators in India, with a growing presence in logistics infrastructure. Adani Ports and Special Economic Zone Limited (APSEZ) is the largest commercial port operator in India accounting for nearly one-fourth of the cargo movement in the country. Its presence across 13 domestic ports in seven maritime states of Gujarat, Maharashtra, Goa, Kerala, Andhra Pradesh, Tamil Nadu, and Odisha presents the most widespread national footprint with deepened hinterland connectivity. The port facilities are equipped with the latest cargo-handling infrastructure which is not only best-in-class but also capable of handling the largest vessels calling at Indian shores. Our ports are equipped to handle diverse cargo, from dry cargo, liquid cargo, and crude to containers.
• Delhivery: A leading logistics company in the e-commerce space, known for its innovative technology solutions. It is India’s largest fully integrated logistics provider. We aim to build the operating system for commerce, through a combination of world-class infrastructure, logistics operations of the highest quality, and cutting-edge engineering and technology capabilities. They have built a nationwide network with a presence in every state, servicing over 18,600 pin codes. 24 automated sort centers, 94 gateways, and 2880 direct delivery centers.
• Blue Dart Express: A well-established courier and express delivery company with a strong network across India. Blue Dart Express is South Asia’s premier express air, integrated transportation & distribution company, offering secure and reliable delivery of consignments to over 55,400+ locations in India. Blue Dart is a provider of choice for its stakeholders due to its customer-centric approach and aims to further strengthen this partnership. As part of DHL Group’s DHL eCommerce division, Blue Dart accesses the largest and most comprehensive express and logistics network worldwide, covering over 220 countries and territories, and offers an entire spectrum of distribution services including air express, freight forwarding, supply chain solutions, customs clearance, etc

These are just a few examples, and there are many other best logistics stocks in India to choose from. It is important to do your own research before investing in any stock.

Top Logistics Companies in India Listed in Stock Market

Here is a list of the top logistics companies listed in the Indian stock market, along with their market capitalizations as of January 4, 2024:

Company	Market Capitalization (crore INR)
Container Corporation of India (CONCOR)	25,000
Shipping Corporation of India (SCI)	18,000
Adani Ports and Special Economic Zone (APSEZ)	15,000
Delhivery	12,000
Blue Dart Express	10,000
Mahindra Logistics	8,000
TCI Express	7,000
Gateway Distriparks	6,000
Allcargo Logistics	5,000

 

Points to watch out before investing in logistics stocks

Recently, the Government has launched a National Logistics Policy (NLP) 2022, aiming to achieve ‘quick last-mile delivery’, end transport-related challenges. The policy focuses on key areas such as process re-engineering, digitisation, and multi-modal transport. It is a crucial move as high logistics cost impacts the competitiveness of domestic goods in the international market. The need for a national logistics policy was felt since the logistics cost in India is high as compared to other developed economies.

• Goals include: Logistics costs have to be cut by half to be near global benchmarks by 2030 by reducing the cost of logistics from 14-18% of GDP to global best practices of 8%. The policy’s target is to ensure that logistical issues are minimised, exports grow manifold, and small industries and the people working in them benefit significantly.

Before investing in logistics stocks, it is important to consider the following factors:

• The overall health of the logistics sector: The performance of the best logistics stocks in India is closely linked to the performance of the overall economy. If the economy is doing well, logistics stocks are likely to do well. Conversely, if the economy is doing poorly, logistics stocks are likely to suffer.
• The company’s financial health: It is important to carefully review the financial statements of any logistics company you are considering investing in. Make sure the company is profitable and has a healthy balance sheet.
• The company’s competitive position: The logistics sector is a competitive one. Make sure the company you are investing in has a strong competitive advantage.
• The company’s management team: The quality of the management team is an important factor to consider when investing in any company. Make sure the management team has a proven track record of success.

How should you value logistics companies?

There are number of different ways to value logistics companies. Some common methods include:

• Price-to-earnings (P/E) ratio: This ratio compares a company’s stock price to its earnings per share. A lower P/E ratio is generally considered to be more attractive.
• Price-to-book (P/B) ratio: This ratio compares a company’s stock price to its book value per share. A lower P/B ratio is generally considered to be more attractive.
• Discounted cash flow (DCF) analysis: This method involves estimating the future cash flows of a company and then discounting them back to the present value.

How to invest in the logistics sector?

There are a number of ways to invest in the logistics sector. You can buy individual stocks of logistics companies, or you can invest in a mutual fund or ETF that focuses on the logistics sector.

FAQs

What is the difference between transportation and logistics stocks in India?

Transportation stocks are stocks of companies directly involved in the physical movement of goods, such as airlines, trucking companies, and railroads. They focus on one specific mode of transportation.

Logistics stocks in India, on the other hand, are stocks of companies involved in the broader planning and coordination of the movement of goods. This includes activities like warehousing, inventory management, order fulfillment, and supply chain optimization. Logistics companies might not own any transportation assets themselves, but they partner with various transportation providers to execute the movement of goods.

What are some examples of well-known logistics companies?

Examples of well-known logistics companies were already mentioned in the previous response, which you can include:

• Global Leaders: FedEx, UPS, DHL, Deutsche Post DHL Group
• Regional Stars: SF Holding (China), Kuehne + Nagel (Switzerland), A.P. Moller – Maersk (Denmark), DB Schenker (Germany)

Feel free to choose the ones that fit your article’s context and audience.

Why is the logistics sector important?

The logistics sector plays a crucial role in the smooth functioning of the global economy for several reasons:

• Economic Backbone: Efficient logistics infrastructure keeps goods and materials flowing smoothly throughout the supply chain, supporting various industries and contributing to overall economic growth.
• E-commerce Enabler: The rise of e-commerce relies heavily on robust logistics to ensure on-time and reliable delivery of products to customers, driving the e-commerce boom.
• Global Trade Facilitator: Efficient logistics facilitates international trade by connecting producers and consumers across borders, fostering global economic activity.
• Job Creation: The logistics sector generates numerous jobs across various segments, including warehousing, transportation, technology, and management, contributing to employment and economic development.

You may also look like: Top Dividend-Paying Stocks in India