Ashapura Logistics Hits Upper Circuit on New Contracts
Ashapura Logistics: Shares of Ashapura Logistics Ltd (formerly Ashapura Forwarders Limited), a microcap logistics firm, hit a 5% upper circuit at ₹89.80 on the stock exchange after announcing two significant transportation contracts, including one from Hindustan Coca-Cola Beverages Private Limited.
The stock, which has a market capitalization of ₹121 Cr, has been on a rollercoaster ride since its listing on August 6, 2024. Initially debuting at ₹185 per share—28% above its IPO price of ₹144—the stock has since witnessed a decline of 51% from its listing price. However, the recent contracts have sparked renewed investor interest.
Major Orders Secured
Ashapura Logistics has strengthened its business prospects with two key 1-year transportation contracts:
- Hindustan Coca-Cola Beverages Private Limited Contract
- Value: ₹7.34 Cr
- Scope: Logistics services for transporting goods from Ahmedabad, Gujarat, to Bhopal, Madhya Pradesh.
- Impact: This deal boosts the company’s revenue visibility and establishes it as a preferred logistics partner for major FMCG brands.
- Tycoons Industries Private Limited Contract
- Value: ₹49 Cr
- Scope: Logistics services for coal transportation from Magadh Sanghmitra Coal Project to Phulbasiya Siding at Ramgarh, Jharkhand.
- Impact: The coal transportation segment is lucrative, and this contract significantly enhances Ashapura’s exposure to the energy and infrastructure sectors.
These orders not only enhance revenue prospects but also position Ashapura Logistics as a growing player in India’s expanding logistics sector.
Stock Price Movement & Market Performance
Following the announcement of the contracts, the stock of Ashapura Logistics surged to its upper circuit limit of ₹89.80. Here’s a quick snapshot of its market performance:
- Market Capitalization: ₹121 Cr
- 52-Week High/Low: ₹194 / ₹84.4
- Current Price: ₹89.80
- Stock P/E Ratio: 9.90 (compared to Industry P/E of 26.5)
- Book Value: ₹91.9
- Dividend Yield: 0.00%
This price movement reflects renewed optimism among investors, especially given the stock’s significant decline post-listing.
Financial Performance & Ratios
Q2FY25 Financial Results
Ashapura Logistics has posted a steady financial performance in its latest quarterly results:
- Revenue: ₹93.55 Cr (Up 2% YoY from ₹91.48 Cr in H2FY23)
- Net Profit: ₹6.51 Cr (Up 10% YoY from ₹5.92 Cr)
- Debt-to-Equity Ratio: 0.28 (Improved from 0.63 last year)
Key Financial Ratios
- ROCE (Return on Capital Employed): 21.2%
- ROE (Return on Equity): 21.7%
- Debt: ₹36.0 Cr
A low debt-to-equity ratio of 0.28 indicates the company has reduced its leverage, making it a relatively safer bet in a capital-intensive industry.
Why This Matters for Investors?
1. Strengthening Business Prospects
The Hindustan Coca-Cola contract adds credibility to Ashapura’s logistics expertise in the FMCG sector, while the Tycoons Industries deal strengthens its presence in bulk transportation.
2. Improving Financial Health
With steady revenue growth, higher profit margins, and reducing debt, Ashapura Logistics is improving its financial position, making it an attractive value stock.
3. Undervalued Stock Potential
The company’s P/E ratio of 9.90 is significantly lower than the industry P/E of 26.5, indicating that the stock is currently undervalued compared to its peers.
About Ashapura Logistics Ltd
Founded in Ahmedabad, Gujarat, Ashapura Logistics Ltd is a multi-modal logistics company offering a diversified range of cargo transportation and supply chain solutions across seven continents.
Its service portfolio includes:
- Ocean Freight & Air Freight
- Custom Clearance & Warehousing
- Domestic and Surface Transportation
The company’s global network and diversified portfolio make it a key player in India’s logistics industry.
Final Thoughts
The 5% upper circuit in Ashapura Logistics’ stock highlights investor confidence in its growing business opportunities. With a strong order book, improving financials, and an undervalued stock price, this microcap company has the potential for long-term growth in India’s booming logistics sector.
While the stock remains volatile, long-term investors may find this a compelling buying opportunity, especially given its strong return on equity (21.7%) and improving debt levels.
As India’s logistics industry continues to expand, Ashapura Logistics could be a hidden gem under ₹100 for value investors looking for growth in the transport and logistics sector.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.