Allcargo Logistics Investors’ Presentation + Research Report Of Choice India

Indian logistics industry is moving towards a phase of major transformation Government’s plans to cut logistics costs from the current 14-15% of GDP to 9- 10%,through a modal shift towards water and railway and efficiency improvement, the sector is all set to experience a positive growth trajectory. Government also announced Sagarmala project for port modernization and augmentation, development of multimodal logistics parks, smart cities project and dedicated freight corridors. Successful and timely completion of these proposed projects will ensure cost effectiveness and operational efficiencies in the transport and logistics sector. With the effect of GST, instead of maintaining smaller warehouses in each and every state ACLL will be able to set up fewer and bigger warehouses. And follow hub and spoke model for freight movement from warehouses to manufacturing plants, distributors and retailers. Hence, a bigger opportunity awaits the company this help company to manage bigger routes and deliver accurately and efficiently. GST provides with ample opportunities to expand the contract logistics business in India. The Company’s Expansion plans of setting up rail linked park logistic park in jhajjar (Haryana) and new CFS set up in Kolkata which will be soon in operation will help to take the business to next level of growth With a strong order book, we are hoping for revival in private capex along with the already increasing public capex, driving business growth for the company. Strong cash flows generated in the years to come, will be used to bring down the existing debt on the balance sheet. At a CMP of Rs. 168.9 ACLL is trading at a TTM P/E multiple of 17.7x, which is at a discount to the peer average of 36.2x on the EV/EBITDA front too the Company is trading at a TTM of 9.9x which is at discount to the peer average of 16.6x. We expect the company to have a strong position in the Industry and it also has huge growth potential, thus we assign “Buy” rating on this stock.