Logistics firms set for strong Q1 revenue growth despite margin pressure

ET Intelligence Group: The logistics sector is expected to post a healthy revenue growth in the June quarter, driven by sustained demand from e-commerce and quick-commerce channels, rising supply-chain outsourcing, and improving freight activity across segments. Volume growth, network expansion and customer additions are likely to support top line performance for most companies.

However, elevated fuel costs, pricing pressure in select segments and integration-related expenses are expected to weigh on profitability, resulting in a mixed margin outlook across the sector.

Container Corporation of India (CONCOR) is expected to deliver healthy quarter led by 8% growth in import-export volumes and 15% growth in domestic volumes. It could face realisation pressure and domestic bottlenecks, although gradual traction in dedicated freight corridor (DFC) supports efficiency gains. While operating margin before depreciation and amortisation (Ebitda margin) is expected to improve driven by recovery in domestic business, its extent may be limited given the weakness on pricing front.

Delhivery’s revenue is expected to rise in double digits led by volume growth, consolidation of Ecom Express, continued expansion in express parcel and PTL businesses. However, realisation per shipment may decline in express parcel due to rising lower valued orders in the mix. Integration expenses, higher fuel costs and employee expenses may weigh on margins in the near term. Net profit is expected to decline due to cost pressure and added integration costs.For Blue Dart Express, revenue is likely to grow in mid-single digit supported by volume growth across both air and surface express segments. Analysts expect Ebitda margins to improve aided by pricing discipline, network optimisation and better realisations. Diesel and aviation turbine fuel (ATF) prices will be key factors influencing profitability and margins.

TCI’s revenue may rise in double digits led by the supply chain and freight segments. Over the medium term, the company expects supply chain revenue to grow 13-15%, supported by a healthy contract pipeline and continued demand for warehousing services. Key monitorables include the pace of freight volume recovery, the ability to pass on higher fuel costs to customers and margin performance in the seaways business amid elevated bunker fuel prices.