Motilal Oswal Bullish On 3 Large & Small Cap Logistics Stocks, Recommends Buy For 20-34% Upside

Motilal Oswal in its December 2022 Result Preview report has rated "Buy" three stocks from the Logistics sector. These three stocks are Container Corporation of India, Transport Corporation of India, and VRL Logistics Limited. According to the brokerage with the given target price, the stock is likely to give robust returns.

Logistics activity picked up in 3QFY23, with the daily e-way bill generation increasing by ~17% YoY in Oct-Nov'22 to ~2.6m, driven by broad-based demand improvement across sectors, according to the brokerage firm.

1. Container Corporation of India Limited

Motilal Oswal has a buy on Container Corporation of India with a target price of Rs 860/share. The purchase of stock at the current market price is likely to give a return up to 21%. It is a midcap logistics company with a market capitalisation of Rs 43,445.73 crore.

The stock's current market price is Rs 713.05/share on NSE. The stock recorded its 52 week high on 9 Nov' 2022 at Rs 828.75/share, while its 52 week low on 20 May 2022 at Rs 554/share.

The stock has given 6.45% positive return in the last 1 year. It has given 26.92% in the last 3 years. It gave 24.46% positive returns in the last 5 years.

According to the brokerage, Expect volumes to increase by ~10% YoY. Expect EXIM/domestic volumes to grow by 8%/20% YoY. Expect EBITDA margin to remain stable YoY at 23.7%. Progress on commissioning of the DFC in key areas to watch out for. Expect Adj PAT to increase to INR 3.4b (+19% YoY) on higher volumes and realization.

2. Transport Corporation of India Ltd.

The brokerage has placed a buy Transport Corporation of India with a target price of Rs 810/share. If you purchase the stock at the current market price, it would give a return up to 33%. This is a small logistics company with a market capitalisation of Rs 4,723.77 crore.

On NSE, the stock last traded at Rs 609.35/share. Its 52 week low is Rs 527/share as on 09 Mar' 2022 and its 52 week high is Rs 858.60/share as on 17 Jan' 2022, respectively.

It has given negative returns in the last years, around 27.19%. However, in 3 year it gave 123.82% positive returns and in 5 years it gave 110.74%, respectively.

According to the brokerage, Expect revenue to rise by 16% YoY to INR9.7b, led by growth in Freight/Supply chain/Seaways segments. Expect EBITDA at INR1.0b (-5.7% YoY) and a flat operating margin QoQ. Expect adjusted PAT at INR720m (-12% YoY). Purchase of a new ship is a key monitorable.

3. VRL Logistics Limited

Motilal Oswal has assigned a buy on VRL Logistics with a target price of Rs 730/share. According to the brokerage's given target price, if you buy the stock at the current market it could give return up to 34%. With a market capitalisation of Rs 4,282.41 crore, this is a small-cap logistics sector company.

The stock on NSE last traded at Rs 546.55/share. The stock recorded its 52 week high on 20 Jul' 2022 at Rs 720/share and its 52 week low on 7 Mar' 2022 at Rs 398.20/share, respectively.

In the last 1 year, it gave 13.39% positive returns. It gave maximum returns in 3 years, around 104.17%. In the last 5 years, it gave 25.56% positive returns.

According to the brokerage, Expect revenue to increase by 11% YoY to INR7.5b, with a focus in the Goods Transport segment. Expect EBITDA at INR1.1b; Expect margin to increase by 130bp QoQ on higher utilization and lower fuel prices. Expect adjusted PAT to decline to INR449m (-26% YoY). Progress on branch additions and capex on fleet additions to be key monitorables.

Disclaimer

The stocks have been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.