Ritco Logistics Stock Soars 2750% in 4 Years: Is This Multibagger Set for More Gains?

Ritco Logistics, a company involved in transportation services, has seen its stock price grow significantly over the past few months. The share price has consistently reached new highs, showing strong recovery even after small dips. This has led to impressive returns for investors.

In the last eight months, Ritco Logistics’ share price rose from ₹189 to ₹400, giving a return of 111%. Over 20 months, the stock climbed from ₹125 to its current price, marking a 220% increase. Even more impressive, over the past four years, the stock surged by 2,750%.

This strong growth can be credited to Ritco’s strategic expansion into various sectors like automobiles, FMCG, cement, solar, and steel. The company has reduced its dependence on the petrochemical sector, cutting its revenue contribution from 59% in FY21 to 48% in FY24. Its clients include major companies such as Tata Steel, Jindal Steel & Power, ACC, Ambuja Cement, and Dalmia Bharat Limited.

Originally, Ritco Logistics focused on contract logistics, managing a fleet of owned and rented vehicles. Now, it is evolving into a tech-driven supply chain solution provider, operating across three key areas: contract logistics, fleet management, and 3PL logistics (third-party logistics).

Can the stock continue to rise?

According to Monarch Networth Capital, a brokerage firm, Ritco Logistics could still have room for growth. In a recent report, the firm gave Ritco a ‘buy’ rating with a target price of ₹760 per share, which suggests a potential 90% gain.

Monarch is optimistic about Ritco’s future due to its unique business model, its growth in Full Truck Load (FTL) logistics, entry into multimodal logistics, and the development of its tech platform called TrucksUp. This platform addresses issues like inefficient use of trucks and helps small fleet owners with services like GPS tracking, fuel cards, and vehicle financing.

By August 2024, TrucksUp had 1.7 lakh downloads, and it is projected to reach 8 lakh downloads by FY27, making it a key growth driver. Monarch believes TrucksUp could transform the trucking industry by helping fleet operators manage their resources better, which could be a game-changer for Ritco by FY26-27.

Ritco’s focus on an asset-light business model, its expected low debt (0.5x debt-to-equity ratio by FY27), and its strong relationships with big clients give it an edge in a fragmented industry where fleet management can be inefficient.

Monarch also expects Ritco’s revenue and profits to grow rapidly, especially due to its expansion in FTL logistics and multimodal transport, as well as the increasing contribution from TrucksUp. They forecast that Ritco’s return on equity (ROE) and return on capital employed (ROCE) will comfortably reach 20% by FY27, with further improvements possible.

Despite strong financial performance, Ritco is currently trading at a 40-50% discount compared to its competitors. Monarch believes this discount will reduce as the company continues to grow and improve its profitability. Increased investor confidence in the success of TrucksUp could also help boost Ritco’s valuation.

Monarch has valued Ritco at 20 times its estimated FY27 price-to-earnings ratio, which is higher than its past valuations but still lower than its bigger peers, to arrive at a target price of ₹760 per share.