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Top Port Stocks in India: Keep on Your Watchlist as Cargo Traffic Surges by 3.3%

23 February 20244 mins read by Angel One
is article delves into the recent surge in port traffic and its implications for the sector, with implications for major players and investors alike.
Top Port Stocks in India: Keep on Your Watchlist as Cargo Traffic Surges by 3.3%
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In January 2024, Indian ports experienced a notable uptick in cargo traffic, marking a 3.3% increase compared to the previous year. This surge, as reported by the Indian Ports Association, highlights significant developments within the maritime sector, with implications for major players and investors alike.

Port Traffic Growth

According to data released by the Ministry of Ports, Shipping, and Waterways, along with the Centre for Monitoring Indian Economy (CMIE), a total of 72.5 million tonnes of cargo were handled by Indian ports in January 2024. This figure represents the highest volume of goods moved since February 2019, showcasing a robust recovery from pandemic lows experienced in May 2020, when cargo volumes stood at 45.45 million tonnes.

Cargo Composition and Performance

Of particular note is the unprecedented growth in petroleum, oil, and lubricants (POL) cargo, which reached an all-time high of 21.5 million tonnes, reflecting a substantial increase of 7.7% year-on-year. This surge underscores the resilience of India’s energy sector and its strategic importance in driving port traffic. Furthermore, while major ports recorded a 3.2% year-on-year growth in cargo handling, non-major ports outperformed with an 11.1% increase, indicating shifting dynamics within the maritime landscape.

Sector Analysis and Key Players

Against this backdrop, key companies operating in the ports sector are poised to benefit from the surge in traffic. Adani Ports has demonstrated impressive financial performance, boasting a 1-year return of 137.56% and robust sales and profit growth over the past three years. Similarly, JSW Infrastructure exhibits strong profitability metrics, including a remarkable 3-year profit growth of 60.23%.

S.No. Name CMP Rs. Mar Cap (Rs crore) 1Yr return % Sales Growth 3Yrs % Profit Growth 3Yrs % Debt / Eq ROE % ROCE %
1 Adani Ports 1,303.35 2,81,541.71 137.56 20.65 18.08 1.03 14.42 9.53
2 Dredging Corpn. 770.05 2,156.14 133.76 15.82 31.61 0.27 0.89 2.51
3 Guj Pipavav Port 210.85 10,193.34 98.85 7.63 2.98 0.04 15.54 20.65
4 JSW Infrastructure 246.35 51,733.54 77.94 40.86 60.23 0.63 20.41 16.71

Challenges and Opportunities

Despite the overall growth in port traffic, challenges persist, particularly concerning the slowdown in cargo handling growth rate for major ports. While major players like Adani Ports continue to demonstrate resilience and profitability, the sector faces increasing competition and evolving market dynamics. Additionally, the role of non-major ports, controlled by state governments or private entities, is becoming increasingly prominent, posing both challenges and opportunities for industry stakeholders.

Conclusion

The surge in port traffic in January 2024 underscores the resilience of India’s maritime sector amidst challenging economic conditions. As the country continues its path towards economic recovery, the ports sector remains a vital component of India’s infrastructure landscape. Key players like Adani Ports and JSW Infrastructure are well-positioned to capitalize on the opportunities presented by increasing cargo volumes, while ongoing sectoral reforms and competition will shape the future trajectory of the industry.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.

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