Allcargo Logistics shares jump over 9% after boards approve restructuring plans

Allcargo Logistics share price jumped 9.5% on Friday’s session after Allcargo Logistics Ltd and Allcargo Gati boards approved business restructuring on Thursday, as per the company’s exchange filing. Allcargo Logistics share price today opened at ₹299.55 apiece on BSE today. Allcargo Logistics stock price touched an intraday high of ₹312.05 and an intraday low of ₹299.40.

Analysts believe that the long-term structure of the Allcargo Logistics stock price is favourable. The main support level is at ₹280; higher levels of ₹340 are gradually anticipated.

“From the technical glance, broader structure for stock remained bullish. From past 1 year stock is consolidating in the range of ₹250 to ₹315 level. At this point, stock is trading at upper band of consolidation. Moving above ₹315 level will indicated resumption of bullish trend as stock will be considered as double bottom breakout. Very short term resistance will be at 350 level and potential upside can be upto ₹380 level,” said Kapil Shah, Technical Analyst, Emkay Global and Technical Trainer, Finlearn Academy.

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The International Supply Chain (ISC) business will be merged into a new company called Allcargo ECU Limited, the company stated in its exchange filing. Together with the foreign subsidiaries owned by ECU Worldwide NV, this would also include the International Supply Chain business’s portion pertaining to India.

Following the ISC demerger, the express and contract logistics businesses would merge to form Allcargo Logistics, which would gain from the combined synergies. Direct shareholding would be granted to the shareholders of Allcargo and Allcargo Gati, doing away with the need for an ineffectively complicated corporate structure.

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“This is a momentous occasion in the history of the Allcargo Group. With the merger of Allcargo Supply Chain and Gati Express business, the scheme will create a strong P&L, balance sheet and cash flows to drive synergistic growth & expansion in the fast growing domestic logistics market to create an unmatched powerhouse in the domestic supply chain business.

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A simple structure and sharp business focus under independent management team/board of directors will enable the Allcargo group to continue to drive its track record of growth, having demonstrated near 18% CAGR over last 20 years,” said Shashi Kiran Shetty, Founder and Chairman, Allcargo Group. He continued by saying that the team is dedicated to producing enormous value for each and every stakeholder.

After taking into account regulatory filings, stock exchange approval, shareholder approval, NCLT approval, and ROC filings, the scheme is anticipated to be implemented in ten to twelve months.

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There will be four listed strategic business endeavours for Allcargo Group eventually. In addition to Allcargo Terminals Limited and TransIndia Real Estate Limited, which were established by a previous scheme of arrangement, Allcargo ECU Limited and Allcargo Logistics were established following the demerger of ISC business.

As per trendlyne data, Allcargo Logistics shares have fallen 27.83% and underperformed its sector by 77.56% in the past year.

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