Post buyback Allcargo Logistics' stock may be under pressure

MUMBAI: Allcargo Logistics' stock may be under pressure in the coming months as it recently completed its buyback offer. This is because the company's performance over the past few quarters has been impacted due to slowdown in the economy.

From the buyback process, the Company has purchased an aggregate of 41,36,449 Equity Shares, which is nearly 79% of the total buy-back offer quantity. As a result, the promoter holding of the company increased from 69.81% as of June 2012 to 72%.

Allcargo operates in three major segments - Container Freight Stations (CFS), Multimodal Transport Operations (MTO) and Project and Engineering Solutions (P&E). While earnings from CFS and MTO segments have remained flat, its P & E division has taken a major hit due to slowdown in capex cycle. In the quarter ending December 2012, the P&E reported an operating loss of Rs 15 crore as against a profit of Rs 17 crore last year. Overall, its profits declined by 28% to Rs 37 crore.

At present, the company's order book in P&E segment stands at Rs 240 crore, which are nearly half the revenues from this segment in the last twelve months. As a result, its P & E segment will remain a drag to its financials in the coming quarters. A lot would depend on the revival of the economy for any improvement in the company's earnings.