Stocks of container logistics companies such as Container Corp. of India Ltd (Concor), Gateway Distriparks Ltd and Allcargo Global Logistics Ltd have underperformed the broader markets since the beginning of this fiscal.

Shares of Concor have dropped by 4% since April, while those of Gateway Distriparks and Allcargo have fallen by 14% and 18%, respectively. In comparison, the BSE-500 index of the Bombay Stock Exchange has risen by 12.8% since April this year.

A downward revision in haulage charges and high competition are some key reasons for this underperformance. Both Concor and Gateway have reported lacklustre financial performance for the half-year ended September. Allcargo, though, has done relatively well in the same period.

In the case of Concor, a major concern is the deterioration in the performance of its export-import (Exim) business, which accounts for about four-fifths of its total revenue. The firm has been losing market share in its Exim segment, and the poor performance of this segment resulted in flattish overall revenue and net profit growth on a year-on-year basis in the first half (H1) of the fiscal. The domestic business has comparatively lower margins. Overall, profit margin fell by three percentage points in the first six months of the year.

Concor has given 12% volume growth guidance for FY11, which looks quite challenging considering that volumes grew by just 5% in H1. Analysts expect higher contribution from the domestic business to keep margins under pressure in coming quarters as well.

Gateway Distriparks, which has a much lower base than Concor, reported a mere 4% consolidated revenue growth in H1 of the fiscal and 2% net profit growth. Lower price realizations led to poor performance from the rail business, which posted losses at the net level and affected overall performance. The container freight station business was hit due to a fire in February and higher competition.

Allcargo has done well compared with the two firms for H1, with net sales growing by 44% and earnings before interest and tax rising by 32%. Revenue of the multimodal transport operation (MTO) business grew at a healthy pace, but its profitability fell sharply. The project and engineering solutions segment delivered an impressive performance, with the segment’s profit more than doubling.

Even as financial performance has been better, investors seem to be worried about the much lower profit margins in the MTO business as well as container freight station operations. Besides, a subdued performance by subsidiary ECU Line has been an overhang on the stock in the past year, though its performance has picked up in recent quarters.

According to analysts, no significant improvement is expected in the near future, and as a result, the share price should remain subdued.

Pallavi Pengonda