In its December quarter earnings review note on logistics sector, ICICI Securities said volume weakness and margins pressures continued and a recovery in the next 2-3 quarters, especially in the surface express players is unlikely. That said, the recent correction in stock prices is providing deep value in some of the logistics stocks, the brokerage said.
Following the Q3 results, target price cuts were across companies, except in the case of VRL Logistics Ltd and Transport Corp of India (TCI). Companies such as VRL, Gateway Distripark (GDL) and Blue Dart Express saw positive revisions in consensus consensus estimates, while Concor, Mahindra Logistics and TCI Express saw earnings cuts.
"Given the bleak outlook over the next 2–3 quarters, we believe volume recovery shall unfold H2FY26 onwards. Further, price increases (if any) would also play a key role in margin recovery. Separately, stock prices have corrected copiously over the past six months, valuations have come off and stocks are trading below their mean averages. We believe, at current valuations, risk-reward has turned favourable for investors," it said.
Post the Q3FY25 results, the Street has lowered FY26 Ebitda estimates for Concor by 13.2 per cent, and by 2 per cent for Mahindra Logistics. Ebitda estimates have been raised a tad for Blue Dart Express, GDL and VRL logistics, ranging 1–5 per cent. ICICI Securities noted that target prices have been lowered for all the companies by 2–11 per cent with TCI Express receiving the maximum 11 per cent cut.
In the case of ICICI Securities, it has lowered FY26 Ebitda for most of the companies except VRL Logistics and TCI. The earning cut is primarily driven by volumes cut.
"Our Ebitda estimates are lower compared to Street’s in the range of 1.8–20.8 per cent. Further, we have also cut the valuation multiples for CONCOR, TCI Express and Mahindra Logistics given their weaker-than-expected performance and subdued outlook. Our target prices are higher versus Street, except for GDL and Mahindra Logistics. In most of the cases, we have rolled forward our valuations to FY27," ICICI Securities said.
The brokerage retained its 'Buy' ratings on TCI, TCI Express, VRL Logistics, Concor and GDL. It suggested 'Add' on Blue Dart Express and 'Hold' on Mahindra Logistics.
"TCI Express (BUY; target price: Rs 921), TCI (BUY; target: Rs 1,290) and CONCOR (BUY; target: Rs 905) are top-picks in the space as the risk-reward has turned favourable for investors," ICICI Securities said.