Logistics - Q2FY21 Result Preview - ICICI Securities

The lead indicators for Q2 have pointed towards a strong pick-up in the logistics sector. July and August largely saw continued momentum as the economy began to open up although traffic growth remained in the negative territory (-10% levels). However, growth returned to the positive territory in September, indicating a recovery on the ground. India's major ports container traffic volumes for July-September 2020 have de-grown 9% (2% growth in September) while rail Exim container volumes have de-grown YoY by 6% (8% growth in September) for the same period, indicating a gain in market share for rail from road players. Overall rail cargo volumes have grown 5% in July-September 2020 (strong coal, steel and iron ore).

Financial performance expected to remain under pressure

Concor is expected to report a subdued operational performance YoY, due to continued pressure on its margins led by the higher land licensing fee (LLF) expense. TCI and Mahindra Logistics are expected to report a certain recovery in the SCM segment (although still impacted by lower auto) while freight and shipping verticals of TCI may report a better performance. Similarly, TCI Express saw normalised sales in September (festive sales shifted to Q3 - October). Overall, revenues of our logistics coverage universe are expected to de-grow 14% YoY to Rs. 2995 crore owing to lower utilisation of fleet. However, the operational performance is expected to decline 48%, mainly due to LLF issue in Concor. Subsequently, PAT is expected to report a profit of Rs. 126 crore vs. a loss of Rs. 251 crore (exceptional loss of Rs. 861 crore for Concor in Q2FY20).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Logistics_Q2FY21.pdf

Source : Equity Bulls

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