Why is Allcargo Logistics Ltd falling/rising?

Recent Price Movement and Market Context

Allcargo Logistics Ltd’s stock price increase on 02-Jan reflects a short-term rebound after a period of significant underperformance. The stock has gained 7.76% over the past week and 13.39% year-to-date, substantially outpacing the Sensex’s respective gains of 0.85% and 0.64%. This recent momentum follows two consecutive days of gains, signalling renewed investor interest despite the company’s longer-term struggles.

However, the stock’s one-month return remains negative at -11.52%, and it has suffered steep declines over the past year and beyond, with a 77.05% drop in the last 12 months and an 85.42% fall over three years. These figures starkly contrast with the Sensex’s robust gains of 7.28% and 40.21% over the same periods, underscoring the company’s persistent underperformance relative to the broader market.

Technical Indicators and Trading Activity

From a technical standpoint, the stock is trading above its five-day moving average but remains below its 20-day, 50-day, 100-day, and 200-day averages. This suggests a short-term positive trend amid a longer-term bearish backdrop. Liquidity remains adequate, with the stock able to support trades of approximately ₹0.1 crore based on recent average traded values. However, investor participation has slightly declined, as delivery volumes on 01 Jan fell by 0.62% compared to the five-day average, indicating cautious trading behaviour despite the price uptick.

Financial Health and Valuation Metrics

Allcargo Logistics Ltd maintains a relatively strong debt servicing capacity, with a low Debt to EBITDA ratio of 1.50 times, which is favourable in the logistics sector. The company’s return on capital employed (ROCE) stands at 1.5, and it boasts an attractive valuation with an enterprise value to capital employed ratio of 1.2. These metrics suggest that the stock is trading at a discount compared to its peers’ historical valuations, potentially enticing value-oriented investors despite recent profit declines.

Nevertheless, the company’s profitability has deteriorated significantly, with profits falling by 59.5% over the past year. This decline is reflected in the negative net sales and profit after tax (PAT) figures reported in the September 2025 quarter, where net sales dropped by 76.1% compared to the previous four-quarter average, and PAT for the nine months ended was negative ₹15.59 crore, down 34.41%. Additionally, cash and cash equivalents reached a low of ₹138 crore at half-year, raising concerns about liquidity and operational resilience.

Long-Term Performance Challenges

Over the last five years, Allcargo Logistics has experienced poor long-term growth, with operating profit shrinking at an annualised rate of 39.45%. This sustained decline has contributed to the stock’s consistent underperformance against benchmarks such as the BSE500, where it has lagged in each of the past three annual periods. The steep 56.46% drop over five years further highlights the company’s struggles to regain investor confidence and market share.

Investor Takeaway

In summary, the recent rise in Allcargo Logistics Ltd’s share price on 02-Jan appears to be a short-term rebound driven by attractive valuation metrics and a modest improvement in trading momentum. The stock’s ability to outperform its sector and the broader market in the immediate term has caught investor attention, despite falling delivery volumes signalling some caution.

However, the company’s fundamental challenges remain significant. Declining sales, negative profitability, and poor long-term growth trends weigh heavily on its outlook. Investors should weigh the stock’s current discount against its peers against the backdrop of persistent operational and financial headwinds before making investment decisions.

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