Transportation share price target

Q3FY23 was a challenging quarter for logistics companies under our coverage. Key highlights: 1) Festive season was bleaker than expected with lower than expected commerce volume; 2) lower EXIM volumes owing to adverse global macros impacted earnings of container companies; 3) margins got impacted due to higher cost.

We expect Q3FY23 results to be a mixed bag for the logistics companies under our coverage. On one hand, volume growth is likely to stay muted and, on the other, the product mix shift and cost efficiencies are likely to shore up the margins.

Q4 has been a mixed quarter. For Exim containers (on both ports, rail front) January saw growth at 4-7% range (MMT, YoY) while February reported a flattish performance (on a high base). March, on the other hand, reported 010% de-growth in volumes (higher end-de-growth for port sector). Overall, Exim container volumes saw a flattish performance both on the port and rail front (YoY). However, domestic containers, on the other hand, reported 25% volume growth, led by newer initiatives taken by Concor. However, leading the march was the surface sector, which grew 9% (E-Way bills) and showed secular growth during the quarter. Air cargo segment continues to remain a...

Order inflow at higher margin: RVNL has won orders of Rs15bn on competitive bidding in Q2FY22. We understand this is positive as lack of order inflow was one of the concerns for future growth with the company. Order inflow is won at improved margin vs current EBITDA margin at 5-6%. H1FY22 Order book at Rs650bn vs Rs750bn in FY21. RVNL has also commenced bidding for orders in international market, this could improve order inflow traction for the company. Introduce FY24E financials: RVNL current order book is at 3.5x FY22E revenue. We expect revenue to increase by 18-19% pa over FY22E-24E. EBITDA margin to improve...