Can National Logistics Policy Trigger a Fresh Round of Rally in Logistics Stocks?

A number of logistics stocks that had rallied recently ahead of the launch of National Logistics Policy 2022 last Saturday continued to gain on Monday but rose only up to 2 per cent.

"Not much action was seen today because most of it is already priced in given the rally that we saw in anticipation of the launch of the policy. The policy, which is like an advanced version of PM GatiShakti plan, will help infra companies in the long run and remove many bottlenecks in the logistics business," said equity strategist Kranthi Bathini of Wealth Mills.

However, when it comes to the immediate impact on the earnings of some of the logistics players, Bathini said we need to wait and watch. "It will improve the ease of doing business and will be overall positive for the infrastructure of the economy," Bathini added.

Shares of TCI Express, VRL Logistics, Bluedart Express, Allcargo Logistic, Container Corporation, Gateway Distriparks and Aegis Logistic were up about 1-2 per cent each today (19 Sept.). On the other hand, GATI, Mahindra Logistics and Snowman were down 1-2 per cent each.

With a number of initiatives like a Unified Logistics Interface Platform (ULIP) and Ease of Logistics Services (E-Logs), the new logistics policy launched by PM Narendra Modi aims at reducing logistics costs and bringing it to global standards.

"The logistics cost in India is far higher than global standards (at 8-10 per cent of GDP) and the National Logistics Policy is targeting to achieve that. This would be aimed through the massive infra development, which is happening under programs such as Sagarmala, Bharatmala and DFCs as well as excessive use of technology to augment the speed of transportation and reduce costs," domestic brokerage Motilal Oswal said.

It stated that organised players in the space will benefit as the policy is focused towards the development of support infrastructure, reduction of system inefficiencies and high usage of technology to cut costs.

"With better tracking and digitization, the industry would move faster towards being more organized. The successful and timely implementation of the policy, however, would be the key," it said.

The brokerage has buy ratings on four logistics stocks and sees them advancing up to 34 per cent. It sees Concor rallying up to Rs 870, TC Express to Rs 2,100, Transport Corporation to Rs 860 and VRL Logistics to Rs 860.

Independent market expert Sandip Sabharwal said the policy is more to do with public infrastructure, how the speed of movement improves and how the bureaucracy is reduced. “It will take a long time. So, I think it is more of a directional thing. It takes a 5 to 10-year kind of view and to that extent, short-term moves (in the stocks) might not sustain beyond a few days,” he said.