Top 5 companies set to gain from India’s container capacity expansion

Leading this push is the Jawaharlal Nehru Port Authority (JNPA), which aims to boost its capacity from 6.6 million to 10 million TEUs. Sonowal also highlighted key projects such as the development of Vadhvan Port and the designation of Galathea Bay as a major port, underscoring their strategic importance in bolstering India's maritime infrastructure.

Beyond port expansion, the government is investing in shipbuilding and repair clusters in states including Maharashtra, Kerala, Andhra Pradesh, Odisha, and Gujarat. Further, 3,900 acres have been allocated in Kandla and VOC Port for hydrogen manufacturing hubs, positioning India as a significant player in clean energy.

With major ports reporting a 4.87% increase in traffic in 2024, India's maritime sector is on track for unprecedented growth, paving the way for economic expansion and job creation.

Here are the five stock to watch out for in this space:

Container Corp of India

First on the list is Container Corp. of India (Concor), the country's largest railway logistics company, commanding a dominant 75% market share in containerized rail transport. 

Concor’s market leadership is largely attributed to its first-mover advantage—until 2006, it was the only player in the industry, building an extensive and efficient network that remains unmatched by new entrants. This robust infrastructure, coupled with economies of scale, provides Concor with significant pricing power and cost efficiencies.

From 2020 to 2024, the company reported a compound annual growth rate (CAGR) of 4.4% in sales and 0.6% in net profit. Its five-year average Return on Equity (RoE) and Return on Capital Employed (RoCE) stand at 8% and 11%, respectively. The company has been actively ramping up its operations, adding one high-speed rake to its fleet, which now stands at 378 rakes. It has also increased its container capacity by adding 2,500 new containers, bringing the total to 47,000.

Concor's capital expenditure plan is on track, with ₹1.5 billion already spent out of a ₹6.1 billion budget for the fiscal year. The company is also expanding its eco-friendly logistics solutions, with 100 LNG trucks in operation and plans to add 200 more, offering a sustainable first-mile and last-mile delivery option.

Looking ahead, Concor remains optimistic about meeting its growth targets. Key growth levers include expanding bulk cement and tank container services, a long-term partnership with shipping lines, and double-stack operations at Nhava Sheva. The company is also tapping into the direct port delivery (DPD) segment and is in advanced talks with major corporations like Vedanta, Jindal, and Tata to provide comprehensive logistics solutions.

Garden Reach Shipbuilders & Engineers

Garden Reach Shipbuilders & Engineers Ltd (GRSE), a prominent shipbuilding company under the Ministry of Defence, plays a crucial role in meeting the shipbuilding needs of the Indian Navy and the Indian Coast Guard. With a legacy of delivering high-quality naval vessels, GRSE is at the forefront of boosting India's self-reliance in shipbuilding.

In a strategic partnership with Medha Servo Drives, GRSE is working to develop advanced electrical systems for both naval and commercial vessels, combining its shipbuilding expertise with Medha’s technical prowess in control systems and electric propulsion. This collaboration aims to enhance India’s capabilities in cutting-edge shipbuilding technologies.

GRSE's growing capabilities are further underscored by its recent ₹8.4 billion contract with the National Centre for Polar and Ocean Research (NCPOR) to build an ocean research vessel. Additionally, the company secured a $54 million contract with a German shipping company to construct four multi-purpose vessels, each with a deadweight tonnage (DWT) of 7,500, marking a significant step in its international expansion. This contract also includes an option for four additional vessels, signalling GRSE's increasing presence in the global market.

As India gears up to double its container handling capacity, GRSE is well-positioned to benefit from the rising demand for shipping infrastructure and vessel construction. Its expanding portfolio of large international contracts and supportive government policies positions GRSE as a promising force in the defence shipbuilding sector.

Over the past five years, GRSE has delivered strong financial performance, with sales and net profit growing at a CAGR of 20.4% and 26.6%, respectively. The company’s RoCE and RoE have averaged 22.7% and 17.2% over the same period. As of 30 June, GRSE’s order book stood at an impressive ₹252.31 billion, reflecting its robust growth trajectory and expanding market reach.

Gateway Distriparks

Gateway Distriparks, an integrated inter-modal logistics provider, offers a comprehensive range of services, including general and bonded warehousing, rail and road transportation, and container handling. As India aims to double its container capacity, Gateway Distriparks is well-positioned to capitalize on the growing demand for logistics solutions, especially in rail and container handling, which are central to its core operations.

In FY24, the company reported 7.2% revenue growth, with net income increasing by 4%. However, rail throughput was affected by the Red Sea crisis, resulting in higher freight rates and reduced bookings of low-value commodities. While management expects the worst of the crisis to be over, lingering effects may continue to impact performance in the near term.

Between 2020 and 2024, Gateway Distriparks recorded a compound annual growth rate (CAGR) of 12% in sales and 15.9% in net profit. The company’s returns have remained steady, with a five-year average RoCE of 13.3% and RoE of 15.2%.

Expansion is a key focus for the company, with plans to add new Inland Container Depots (ICDs). However, progress has been hampered by challenges in securing suitable locations. Additionally, Gateway Distriparks has plans to build two new terminals, though the timeline for these projects remains undecided. For FY25, the company has earmarked ₹200 million for maintenance capital expenditure.

Despite recent setbacks, Gateway Distriparks remains optimistic about its growth prospects. The company is targeting double-digit growth in its rail business, leveraging favourable market trends and operational improvements to drive future expansion.

JSW Infrastructure

JSW Infrastructure, a key entity within the JSW Group, provides a broad range of maritime services, including cargo handling, storage solutions, and logistics. The company develops and operates ports and terminals under port concessions, playing a critical role in India's expanding maritime sector.

Handling diverse cargo such as dry bulk, break bulk, liquid bulk, gases, and containers, JSW Infrastructure is well-positioned to capitalize on India’s plan to double container capacity. This expansion is expected to drive logistical efficiency, opening up new revenue opportunities in both domestic and international markets, further strengthening its competitive position.

Between 2020 and 2024, JSW Infrastructure reported strong financial performance, with a 5-year compound annual growth rate (CAGR) of 27.8% in sales and 33.6% in net profit. Its operational efficiency is underscored by an average RoCE of 13.6% and RoE of 14.2%.

A notable strategic move is JSW’s acquisition of a majority stake in Navkar Corp., enhancing its logistics network in the Mumbai metropolitan area and Gujarat. Valued at ₹16.4 billion, the acquisition, expected to close by Q3 2025, bolsters its foothold in the sector.

Looking ahead, the company aims to boost its cargo handling capacity to 400 million tons by FY30, focusing on both greenfield and brownfield projects, particularly at non-major ports. With a net cash position of ₹1.9 billion and a strong balance sheet, JSW Infrastructure is well-equipped to drive future growth and seize emerging opportunities.

Jupiter Wagons

Jupiter Wagons is a comprehensive railway engineering company specializing in freight wagons and passenger coach components for Indian Railways. The company offers a diverse range of products, including open, covered, flat, hopper, container, and special-purpose wagons, along with essential accessories such as alloy steel cast bogies, high-tensile center buffer couplers, and high-capacity draft gear. Expanding its portfolio, Jupiter Wagons is also set to manufacture battery-operated light commercial vehicles under the JEM TEZ brand.

With India's plans to double its container capacity, Jupiter Wagons is well-positioned to capitalize on the increased demand for efficient freight solutions, further solidifying its role in enhancing the nation’s logistics infrastructure.

The company has experienced robust growth, with revenue and net profit multiplying by 3.7 times and 6.2 times, respectively, between 2021 and 2024. The company's 5-year average RoE and RoCE stand at 19.7% and 14.9%, respectively. As of March 31, 2024, Jupiter Wagons' order book stands at an impressive ₹71 billion.

Looking ahead, the company expects to maintain its growth momentum, driven by increasing demand for specialized wagons in the steel, cement, and automotive sectors. These industry-leading designs are expected to improve margins. Jupiter Wagons is also set to benefit from the expanding mobility sector, with a focus on sustainable transport solutions. Upcoming electric vehicle production and energy-efficient rail components will further bolster its market position, while a new forging line for wheel axles is slated to meet domestic demand and support international expansion by 2027.s ou

Conclusion

The expected doubling of container capacity in India presents a substantial growth opportunity for these five companies, all of which play critical roles in logistics, shipping, and infrastructure. Their strong market positions and diverse capabilities make them well-suited to capitalize on this expansion.

However, investors must remain vigilant, closely monitoring each company's operational performance, scalability, and strategic execution in this rapidly evolving landscape. By staying informed and proactive, investors can unlock potential gains while effectively managing the risks associated with this industry transformation.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com