Logistics companies have experienced positive growth in the first five months of 2023, with stabilized oil prices and customers adjusting to higher transportation costs. This has established a new normal for pricing in the logistics industry. However, there are potential challenges on the horizon, such as the delayed monsoon and its potential impact on demand. Despite these challenges, analysts remain optimistic about select stocks in the sector.
Logistics companies are benefiting from two main factors. The first is overall economic growth, which is supporting the industry as a whole. The second factor is the increasing share of e-commerce companies in trade and commerce, which is driving specific growth within the logistics sector.
A new tailwind has recently emerged in the form of state elections. The first election in Karnataka has already taken place, and there will be more elections in the next two quarters. During election periods, there is typically an increase in money supply and economic activity. Inflation numbers have also seen sporadic spikes during these times.
Many logistics companies have made adjustments to meet the challenges posed by new-age logistics platform companies in recent years. Some have demerged their e-commerce businesses, while others have focused on their core large-scale logistics operations. This has led to an improvement in margins for these companies, making them more attractive to analysts.
A list of logistics companies with a target upside potential of 33 percent has been compiled from the latest Stock Reports Plus report as of June 23rd, 2023. The list includes companies with an overall rating of “Strong Buy” or “Buy” and has been sorted to highlight the stocks with the highest potential at the top.