Transports and Logistics Sector Update : Volume growth to continue in the slow lane By Elara Capital
We expect overall volume growth across the sector to slow, led by disruption in global trade, demand weakness across auto, FMCG, apparels, footwear, & sugar industries and downward reset in growth rates in the eCommerce sector (platforms as well as direct to consumer [(D2C]). With Skymet predictions of a normal Monsoon and expected pickup in consumption, we remain hopeful of better volume pickup in FY26. At ports, clarity on tariffs and global supply chain would drive volume. For Q4, we expect JSW Infrastructure to outperform on earnings. We prefer Delhivery and Adani Ports in the logistics space.
Container volume drive port volume: Major ports volume picked up in March 2025, taking total growth for the quarter to 9.0% and 4.3% for FY25. Growth is led by containers and fertilizers while coal imports and iron ore exports volume remains muted. Amid ongoing tariffs by the US across nations, we believe the impact on India’s port volume to be neutral as reduction in exports to the US could be offset by the shift of trade from Asian countries to India due to lower tariff on India. Adani Ports & SEZ reported Q4 volume growth at 9% YoY, and we expect revenue growth of 19% YoY to INR 82bn, led by consolidation of the Astro Marine business, ports and logistics segment growth. We expect consolidated EBITDA margin at 59%, led by domestic port margin at 71%, logistics at 24% and international at 17%. JSW Infrastructure may post volume growth of 5% with revenue growth of 14%, aided by Navkar acquisition, and we expect EBITDA margin at 49%. We expect tax benefits from the Navkar acquisition to continue to lead to higher profitability.
B2C and B2B demand in the slow lane: The slowdown in eCommerce volume growth across platforms and increased insourcing by Meesho through Valmo of up to 50%, is likely to keep B2C volumes for Delhivery muted. We expect volume growth of 2% YoY
Our demand checks indicate volume slowdown across industries, and the SME sector dragging due to credit crunch and a marginal uptick in air cargo volume, which is likely to keep B2B logistics volume under check. We expect a YoY volume decline in VRL Logistics, Mahindra Logistics and Allcargo Gati while growth in Blude Dart Express and Delhivery led by competitive edge on service quality & network. With diesel prices remaining stable, we expect EBITDA margin impact to be marginal, owing to price hikes and line haul utilization.
In the 3PL space, we expect Mahindra Logistics supply chain revenue growth of 10% YoY, aided by new order intake and higher wallet share from existing customers. We expect net loss to continue albeit at a lower rate YoY.
Rail volume growing slower than port volume: Indian Railways freight for Q4FY25 was down 1% YoY to 431mn tonne vs major port volume growth at 9% YoY in India, indicating a decline in rail coefficient and the shift of EXIM cargo to road due to emergence of industrial cluster & SEZ near ports. For Container Corporation of India, we expect blended originating volume to grow 4% YoY, led by domestic at 8% and EXIM at 3% with pricing largely flat. Consolidated revenue may grow 3% in Q4, with an EBITDA margin at 23.8%. We expect Adani Logistics revenue to grow at the higher rate at 16%, led by market share gains, continued growth in rail volume. EBITDA margin expected to be stable at 24%. JNPT is likely to get connected to the western dedicated freight corridor (DFC) by December 2025.
Our preferred picks are Delhivery and Adani Ports: We prefer Delhivery in the logistics sector due to stronger growth potential than peers based on its diversified business and recent acquisition of Ecom Express. In the ports sector, we prefer Adani Ports, due to favorable valuation and growth, led by expansion of capacity in domestic and international geographies.
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