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GST hopes lift logistics firms, but experts not bullish on them

Though the logistics space has a larger number of unorganised players and the rolling out of the GST would reduce the time taken for delivery, Octroi and the overall cost of carrying the goods, the sector would stand to benefit only post a year of GST implementation, said analysts.

, ET Bureau|
Updated: Jan 18, 2017, 08.08 AM IST
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Though stocks have corrected post demonetisation, they are not compelling enough to be bullish on, said brokers.
Though stocks have corrected post demonetisation, they are not compelling enough to be bullish on, said brokers.
Mumbai: Shares of logistics companies firmed up in a tepid market on Tuesday on optimism Goods and Services Tax (GST) will be rolled out on July 1 with the Centre and State governments sorting out their differences. Logistics companies would be among the biggest beneficiaries of the GST, said analysts.But, they are not bullish about the immediate prospects of the sector.

Snowman Logistics rose 3.5%, Patel Integrated Logistics gained 0.9%, Allcargo and Blue Dart advanced 0.5% each. These stocks, however, closed off their intra-day highs.

Though the logistics space has a larger number of unorganised players and the rolling out of the GST would reduce the time taken for delivery, Octroi and the overall cost of carrying the goods, the sector would stand to benefit only post a year of GST implementation, said analysts.

“Even if GST is rolled out in July , the impact on earnings would be back ended. Further, earnings would likely take a hit owing to some impact of demonetisation,“ said Prateek Kumar , analyst at Antique Stock Broking. There could be a hit on earnings in the third quarter of up to 40%, said analysts.

“Customers of logistics firms would rejig their supply chain to make it more logistically efficient on the back of GST. When this happens, organised road logistics companies will benefit,“ said Mukesh Saraf, analyst at Spark Capital.

Though stocks have corrected post demonetisation, they are not compelling enough to be bullish on, said brokers. “There doesn't seem to be a clear vision for this sector and one wouldn't want to bet on it only based on a one-off event like GST,“ said Yogesh Nagaonkar, fund manager PMS, Bonanza Portfolio.
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