I took a position in AVG Logistics.
It provides following services:
Transportation: Express Delivery, Refrigerated Transportation, Freight Forwarding, etc
Warehousing: Manpower Handling, Packaging, Multi-User Warehouse facility, etc
Value-Added Services like custom clearance, E2E solution, Multimodal transportation, Reverse logistics, etc.
Key points:
- They are investing in cold chain logistics which will become a big industry going forwards.
- Dedicated freight corridors by the government should benefit this company. This is from their website, “We are a market leader in providing different rail cargo services to our customers, such as Full rack and peace meal transportation, container movement & terminal management across all CONCOR ICDs.”
- The company is promoted by Mr. Sanjay Gupta, who is hailed as a veteran in the logistics sector and possesses strong leadership experience in multi-modal logistics management.
- They have Improved margins by controlling operating expenses.
- They are raising funds which should reduce the debt to equity ratio in the future thereby increasing the financial strength.
Risks:
- The Indian logistic industry is highly fragmented with stiff competition. Intense competition restricts the bargaining power and affects the profit margins to an extent.
- Any slowdown in domestic and global manufacturing/industrial activities, due to weak economic conditions or restrictive trade policies, can have a negative impact on the company’s revenues and its cash flows.
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