Logistics stocks rally in trade, Snowman Logistics hits 52-week high

Shares of logistic companies were trading higher for the second straight day on Friday, on reports that Allcargo Logistics was mulling acquiring stake in rival Gati and Sical Logistics. The report further suggested that Centre could also sell logistic firm Container Corporation of India (Concor) before the end of the current financial year 2019-20.

Individually, Snowman Logistics, Allcargo Logistics, Aegis Logistics, VRL Logistics, Gateway Distriparks and Gati rallied up to 9 per cent on the BSE in intra-day trade today. In comparison, the S&P BSE Sensex was down 0.20 per cent at 38,912 points at 10:07 am. The stock of Concor hit a 52-week high of Rs 633 on Thursday, having rallied 17 per cent in the past six trading days. 

"Allcargo and TVS Supply Chain Solutions are in initial discussions to acquire the supply-chain business of Sical Logistics, the offshore and multimodal logistics services firm owned by the Coffee Day Group," a report by The Economic Times said.

Meanwhile Bloomberg, on Thursday, reported that Allcargo was in discussions to acquire Gati at an equity valuation of about Rs 1,300 crore. Foreign brokerage firm Goldman Sachs Group Inc. owns 6 per cent stake in the latter.

From Blackstone Group to Warburg Pincus, India’s logistics and warehousing industry has been garnering international attention as they seek to tap into a sector that, Gati forecasts, will be worth $217 billion by 2020. The prospects look robust as demand from e-commerce firms such as Amazon.com and Walmart’s India unit is supported by last-mile connectivity into cities as well as remote hinterlands across one of the world’s largest landmass, added report. CLICK HERE TO READ FULL REPORT

"There has been a growing demand for single-point end-to-end cold chain service providers by large multinational companies. This has led to the emergence of organised private players such as Snowman Logistics... The company could benefit from increasing presence of quick service restaurants and demand for newer avenues such as pharma and healthcare sector," according to India Ratings and Research (Ind-Ra). 

There is an increasing demand for temperature-controlled services by the food industry due to increasing urbanisation and changing consumer consumption patterns, they added.

Snowman Logistics hit a 52-week high of Rs 41.75, up 9 per cent on the BSE, today. It has zoomed 44 per cent during the week, as compared to a 2 per cent rise in the S&P BSE Sensex.

While near-term pressures for logistic sector could continue, analysts at Elara Capital pin hopes on the festival season and increased economic activity post a good Monsoon to trigger demand.

COMPANY	LATEST	1-WK BEFORE	GAIN(%)
SNOWMAN LOGISTIC	39.90	29.05	37.4
ALLCARGO LOGIST.	113.35	100.65	12.6
CONTAINER CORPN.	610.40	549.25	11.1
MAHINDRA LOGIS.	377.10	339.55	11.1
GATI	57.80	52.30	10.5
TRANSPORT CORP.	296.50	273.05	8.6
GATEWAY DISTR.	112.35	104.70	7.3
VRL LOGISTICS	281.00	266.60	5.4
SENSEX	38910.72	38014.62	2.4
Latest price on BSE in Rs at 10:35 am