After NLP launch, ICICI Direct bullish on logistics space, lists 4 top picks

In the backdrop of the recently unveiled National Logistics Policy (NLP) that aims at coordinated logistics development across sectors, employing data and infra generated through the PM Gati Shakti plan, ICICI Direct is bullish on the logistics space. The brokerage sees the sector to largely outperform the broader markets given the continued strong e-way bill generation. Another trigger enabling logistics space is the normalization of container trade across the globe and higher commodity volumes.

So, as the NLP looks to reduce logistics cost from the current 13-14% to sub 10% and there are seen multiple benefits unfolding from the regime in due time, ICICI Direct has listed its top 4 picks from the space.

Adani Ports

The brokerage has provided a target price of Rs 1,150, which offers a potential upside of over 23 per cent from the last traded price of Rs 933.1. ICICI Direct in respect of the scrip maintains that the NLP shall help in resolving Exim cargo movement related issues. “Faster approvals and removal of roadblocks for logistics infra development (ICDs, DFC & MMLPs) would also be positive for the company to enhance its footprint and improve operational efficiency”, added the brokerage.

TCI Express

On the small cap logistics firm, the brokerage has given a target of Rs 2,250, which at the last traded price of Rs 1,949 offers potential gains of over 15%. ICICI Direct believes that express companies like TCI Express shall benefit from single window logistics interface, which would ensure quicker deliveries with optimum asset utilisation (owing to advance planning and efficient execution), thereby saving fuel costs and also enhancing customer stickiness.

TCI

On Transport Corporation of India (TCI), the domestic brokerage has provided a target price of Rs 890, which compared to the current price of around Rs 793, means an upside potential of over 12%. “TCI being a multi-modal logistics player with presence in road, rail and shipping would be able to lower overall transportation costs for its customers through modal shift of cargo from road to rail and ship, which could lead to sustained growth in cargo volumes”, noted the brokerage.

Concor

For Container Corporation of India, the brokerage has provided a target price of Rs 890, which considering the current market price of Rs 733, offers a potential upside of over 21 per cent. On the scrip brokerage maintained, “The policy aims at enhancing the modal freight share of railways, which is more cost efficient and less polluting than road transport. Concor being the leader in rail transportation with an unmatched infrastructure would be the key beneficiary of the expected shift of freight from road to rail”, notes the brokerage.

Besides these top picks from the space, ICICI Direct has given a buy call on Gateway Distriparks for a target price of Rs 85, Gujarat Pipavav for Rs 110 target price and Mahindra Logistics for Rs 610 target price.

Key risks highlighted by the brokerage for the sector are global disruption in Exim cargo movement such as container unavailability and higher port turnaround time, and lower than expected GDP.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)