Why is Allcargo Logist. falling/rising?

Persistent Downtrend and Market Underperformance

Allcargo Logistics has been on a downward trajectory for the past week, with its stock losing over 21% in that period alone. This decline starkly contrasts with the Sensex, which recorded a modest gain of 0.10% over the same timeframe. The stock’s underperformance extends well beyond the short term; year-to-date returns reveal a staggering loss of 75.7%, while the Sensex has appreciated by 9.7%. Over the last one year, the stock has plummeted by 77.07%, whereas the benchmark index rose by 6.84%. Even over a five-year horizon, Allcargo Logistics has declined by more than 50%, while the Sensex surged by over 94%. These figures underscore a consistent failure to keep pace with broader market gains.

Adding to the bearish sentiment, the stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical weakness signals a lack of buying interest and sustained selling pressure. Notably, investor participation has increased sharply, with delivery volumes on 26 Nov rising by nearly 629% compared to the five-day average, indicating heightened trading activity amid the sell-off.

Financial Struggles and Profitability Concerns

Fundamental weaknesses have compounded the stock’s woes. The company’s operating profit has contracted at an alarming annual rate of 39.45% over the past five years, reflecting poor long-term growth prospects. The latest half-year results reveal a net loss after tax (PAT) of ₹-3.00 crores, which has deteriorated by 75.79%. Quarterly net sales have also plunged by 76.1% compared to the previous four-quarter average, falling to ₹537 crores. Cash and cash equivalents have dwindled to ₹138 crores, the lowest level recorded in recent periods, raising concerns about liquidity and operational resilience.

Despite these challenges, the company maintains a relatively low Debt to EBITDA ratio of 1.50 times, suggesting a manageable debt servicing capacity. Additionally, its return on capital employed (ROCE) stands at 1.5, and the enterprise value to capital employed ratio is 1.2, indicating an attractive valuation relative to peers. However, these positives have not been sufficient to offset the negative sentiment driven by poor earnings performance and sustained market underperformance.

Consistent Underperformance Against Benchmarks

Allcargo Logistics has consistently lagged behind not only the Sensex but also the broader BSE500 index over the last three years. The stock’s inability to generate positive returns in any of the past three annual periods highlights structural issues within the company and a lack of investor confidence. Promoter holdings remain the majority stake, but this has not translated into improved market performance or operational turnaround.

Conclusion: Why the Stock Is Falling

The sharp decline in Allcargo Logistics’ share price on 27-Nov is a reflection of deep-rooted financial and operational challenges. The company’s poor profitability, significant contraction in sales, and negative earnings growth have eroded investor confidence. This is compounded by the stock’s persistent underperformance relative to key market indices and technical indicators signalling weakness. Although the company’s debt levels and valuation metrics offer some respite, they have not been enough to stem the tide of selling pressure. Investors are likely reacting to the combination of disappointing recent results and a bleak long-term growth outlook, resulting in the stock’s continued fall.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →