127% Gain In 3 Yrs: Tata Mutual Fund-Backed Stock Declares 3:1 Bonus Shares

A small-cap company in the transport services industry is Allcargo Logistics. Top logistics provider in India, Allcargo Logistics offers supply chain management solutions in more than 180 countries and is a one-stop shop for logistics services. The firm capitalised a maximum of 147.41 Cr of the amount remaining to the credit of the company's free reserves in order to declare bonus shares in a 3:1 ratio.

The Board of Directors of the company at its meeting held on November 10, 2023, has considered and approved "The issue of bonus shares by capitalizing a sum not exceeding 147,41,73,144/- (Rupees One Hundred Forty Seven Crores Forty One Lakhs Seventy Three Thousand One Hundred Forty Four only) out of the sum standing to the credit of Free Reserves of the Company, as per the audited financial statements of the Company for the financial year ended March 31, 2023 and that the said amount be transferred to the Share Capital Account and be applied for issue and allotment of equity shares not exceeding 73,70,86,572 (Seventy Three Crores Seventy Lakhs Eighty Six Thousand Five Hundred Seventy Two) equity shares of 2/-(Two) each as fully paid up bonus shares, to the eligible members of the Company holding equity shares of 2/- (Two) each, whose names appear in the Register of Members/Beneficial Owners' position of the Company on such date ("Record Date") fixed by the Company, in the proportion of 3:1 i.e. 3 (Three) new equity shares of 2/- (Two) each for every 1 (One) existing equity share of 2/(Two) each held as on the Record Date and that the new bonus shares so issued and allotted shall be treated for all purposes as an increase in the nominal amount of the equity share capital of the Company held by each of such member(s)," said Allcargo Logistics in a stock exchange filing.

"The Company has always made best effort basis to help reward the shareholders. Hope that the shareholders will stand to benefit from the bonus issue," said the Board of Directors of Allcargo Logistics in a stock exchange filing.
"The Board has approved issuance of three bonus shares for each share held by the shareholders. The decision is aimed at improving the liquidity and allowing for broader base participation of shareholders in the Company. This shall also facilitate the strategic restructuring plans.

The Company has built significant reserves over the years and the issuance of bonus shares will use less than 15% of the available reserves. The Company recently demerged two businesses which got listed on 10th August 2023 and the board considered it appropriate to issue bonus shares post the completion of demerger," informed Allcargo Logistics to the stock exchanges.

Allcargo Logistics said in a BSE filing that "The Company has exhibited strong performance over the last several years and taken significant initiatives to deleverage the balance sheet, which has resulted in very low net debt as of September 30th. This is remarkable considering that the recent acquisition of balance shares from minority shareholders in Gati Express Supply Chain as well as Allcargo Supply Chain and increased shareholding in Nordicon to 90%. This has been enabled by strong internal accruals."

"The Company has demerged strategic business undertakings and exited non-core businesses successfully. The business is now driven by asset light approach with digital strategy being the fundamental pivot for future growth. While the current macroeconomic environment has unexpectedly led to significantly lower performance in recent quarters, the Company is hopeful that the prudent approach by the company over the years, that led to a very strong balance sheet, will provide a strong base for future growth.

The Company's flagship subsidiary ECU Worldwide continues to strengthen its global market leadership in the LCL consolidation business due to significant efforts & investment in acquisitions, acqui-hiring & transformation of the business on an ongoing basis, despite challenges and headwinds," said Allcargo Logistics in a statement.

Commenting on the future growth outlook, Allcargo Logistics informed stock exchanges that "Our strategy is to focus on market share and volume growth amidst higher competitive intensity. Most leading international forwarders have reported a volume decline ranging from -4% to flat YoY in Q2FY24, this was accompanied by a decline in yields ranging from -25% to-38%. Our LCL volumes are down 3% YoY and FCL volumes have remained flat YoY."

On Friday, the shares of Allcargo Logistics closed on the BSE at Rs 272.05 apiece. The stock has generated a multibagger return of 150% in the last 5 years and 128% in the last 3 years. In the last 1 year, the stock has fallen 35% and on a YTD basis, the stock has dropped 33.03% so far in 2023.

During Q2FY24, the company reported promoters' shareholding of 69.91%, FIIs stake of 10.87%, DIIs stake of 2.97% and public stake of 16.24%. As per the shareholding pattern of Allcargo Logistics for the July to September 2023 quarter, Tata Mutual Fund - Tata Small Cap Fund held 42,78,242 shares or 1.74% stake whereas Mukul Mahavir Agrawal owned 33,00,000 shares or 1.34% stake in the company.