IGI Logo

Healthy domestic volume growth

Domestic growth favourable vs International and EXIM

B2C Ecommerce festive related volume growth expected to continue in mid teens led by sale period by platform while growth of D2C brands continues to be faster. Pricing remains competitive as companies pass on gains of economies of scale to customers. In B2B/PTL segment, expect growth to continue to be healthy despite lesser number of working days due to festivals. Shift from unorganised to organised sector continues as GST collections up 13% and E-way bill generation up 19% in 3QFYTD. Diesel prices remain stable QoQ. Domestic air cargo volumes as per DGCA is up just 1.8% FYTD and share of freighters is at 17%. Crude and ATF prices are down 7% and 8% YoY respectively. BDE pricing is benchmarked to crude prices. International air and ocean freight prices continue to be unfavourable due to slow demand and rising capacity thereby impacting cross border services revenues. Major ports volume for FY24YTD is up 5.5% led by iron ore and fertilizer growth and container growth stood at 9%. However private ports continue to witness faster growth. Trade imbalance continues leading to lower EXIM volumes and higher empty running.

Revenue growth driven by volumes, pricing muted

For ports, ADSEZ Q3 volume was up 44% YoY to 108.4mn mt. The attacks in the red sea might result in delayed vessel arrival but not impacting the overall volumes. Expect port revenue growth of 37% YoY with port EBITDA margins at 70%. Adani logistics, we expect revenue growth of 5% YoY on the back of healthy volumes, with margins of 30%. ADSEZ consolidated revenue expected to improve by 47% YoY with EBITDA margins at 57.7%. For CCRI, blended originating volume growth expected at 8.5% YoY and realization up 3% YoY leading to revenue growth of 12% YoY and EBITDA margins at 24%. We expect EXIM volumes growth to be slower than domestic segment. In the 3PL space, expect MAHLOG revenues growth of 5% YoY aided by mixed growth both from M&M and Non-M&M, consolidated EBITDA margin are expected to witness a dip at 4.4%. The key thing to watch will be integration and ramp up of Rivigo acquisition. In express logistics, expect BDE tonnage up 6% YoY while realization decline due to shift from air to surface leading to muted revenues with EBITDA margins at 10%. For Allcargo Gati, expect revenue de-growth of 7% YoY and margins muted at 4%. The restructuring plan announced is expected to have operational impact on integration efforts. In surface logistics, expect revenue growth of 10% YoY in VRLL led by volume growth and EBITDA margin at 14.5% on stable diesel prices. For Delhivery, expect revenue growth of 12% YoY due to better performance in PTL & Express segment and to turn EBITDA positive vs loss YoY

Our preferred pick in the logistics space is VRL Logistics.

Above views are of the author and not of the website kindly read disclaimer