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‘Sector is a long-term growth story, despite short-term weaknesses’

Our Bureau

Kolkata, July 6 Logistics stocks today witnessed significant profit booking and perked up with marginal gains or ended with losses.

Dealers said that as the benchmark index clocked a new high, a section of investors profit on the market reaching a milestone.

According to Mr Gul Teckchandani, an investment strategist, the sector is clearly a long-term growth story, short-term weaknesses notwithstanding.

Among the counters that closed in the green were Aegis Logistic and Balmer Lawrie.

However, Concor, Gateway Distriparks and Allcargo Global Logistics finished in the red.

According to Mr Anirudh Rajan and Ms Sanika Shendye of Emkay Share & Stock Brokers, buoyant export-import trade, increasing acceptance of containerisation in port logistics and the huge potential of containers in domestic railway haulage have set the stage for a sustained upsurge in container traffic as also for the sector players.

“Logistics companies, which facilitate container handling and transportation, are likely to be key beneficiaries of the uptrend in container traffic.”

Containerisation has grown at 15 per cent CAGR from 2002 to 2007, primarily driven by export growth of textiles, auto ancillaries and engineering products.

Container handling capacity at all the ports in the country is expected to increase from 5.5 million TEUs to 20 million TEUs by 2014.

Analysts expect Concor to maintain its leadership position despite the entry of private players.

“There is room for every existing player and more,” said an industry expert.

With a strong infrastructure network, any threat from new players is not foreseen in the next few years.

Gateway Distripark, through its CFS near the key ports, will be another beneficiary of the boom witnessed in container traffic, experts said.

To further expand its services and become an end-to-end logistics service provider, the company has entered into Railway container movement as well.

Balmer Lawrie, a Government enterprise, is a diversified conglomerate with presence in logistics, industrial packaging, grease and lubricants and tours and travels.

The logistics segment contributes 60 per cent of profit before tax, with CFS garnering a lion’s share.

The company is mulling expansion at two of its CFS points and is also on the look-out for acquisitions. BEL is considered the cheapest stock in the sector.

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