Infrastructure status: Logistics sector stocks gain over 4% on BSE Sensex

Key Highlights:

• Finance Ministry granted infrastructure status to logistics sector on Monday.
• Shares of logistic companies gained over 4% on BSE Sensex in early trade.
• Logistics sector is expected to extend gains on equity indices today as well.

Stocks in the logistics sector were in the limelight on Tuesday as the Finance Ministry of India recognised the sector as a sub-sector of Infrastructure in India.

Shares of companies like Aegis Logistics, VRL Logistics and Snowman Logistics gained between 1-4% during the early trade session on BSE Sensex.

After opening on a high note, shares of L&T Infrastructure Finance fell on Nifty 50 by 0.92% or 9 points to trade at Rs 971 apiece at 1057 hours.

Shares of PVR Ltd were trading up 0.97% or 13.25 points at 1392.60 each on BSE Sensex.

Logistics sector is expected to extend gains on equity indices today as well.

Markets opened in green today with the 30-scrip Sensitive Index (Sensex) that was trading 116.34 points or 0.35 per cent higher during the early session.

The wider 51-scrip Nifty of the National Stock Exchange (NSE) was also trading 34.70 points or 0.34 per cent higher at 10,333.45 points.

The move by the government to include logistics infrastructure included in the master list of infrastructure sub-sectors would provide a breather to these companies.

Logistics companies can now avail infrastructure lending at easier terms with enhanced limits, access to larger amounts of funds as External Commercial Borrowings, longer tenor funds from insurance companies and pension funds, and also be eligible to borrow from India’s IIFCL, the ministry said.

According to the government notification, multimodal logistics parks comprising inland container depot (ICD) with a minimum investment of Rs 50 crore and minimum area of 10 acre come under logistics infrastructure.

Industry players have said that the move will help them raise funds at a lower cost and reduce overall transportation cost as well.

The industry expects the move to lead to a 50 bps gain for logistics players in terms of cost, a report by PTI said on Monday.

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