NSEI Transportation Industry: A Deep Dive Into JITF Infralogistics Limited (NSE:JITFINFRA)

JITF Infralogistics Limited (NSEI:JITFINFRA), a INR₹1.28B small-cap, operates in the transportation infrastructure industry which has been constrained by the general squeeze on government since the global financial crisis. The shortfall highlights the challenge facing governments in sourcing additional funding and further involvement of the private sector in the provision of infrastructure is inevitable. Transport analysts are forecasting for the whole industry, a fairly unexciting growth rate of 0.39% in the upcoming year , and a single-digit 0.28% growth over the next couple of years. This rate is larger than the growth rate of the Indian stock market as a whole. Should your portfolio be overweight in the transport infrastructure sector at the moment? In this article, I’ll take you through the sector growth expectations, as well as evaluate whether JITF Infralogistics is lagging or leading its competitors in the industry. See our latest analysis for JITF Infralogistics

What’s the catalyst for JITF Infralogistics’s sector growth?

NSEI:JITFINFRA Past Future Earnings Jan 1st 18
NSEI:JITFINFRA Past Future Earnings Jan 1st 18
Recently, investment in technology is seen as a necessity in order to support inter-modality as transport networks get more complex and crowded. This disruption in the transportation industry increases the demand for improved infrastructure nationally. Over the past year, the industry saw growth in the twenties, beating the Indian market growth of 12.84%. JITF Infralogistics lags the pack with its negative growth rate of -4.01% over the past year, which indicates the company will be growing at a slower pace than its transportation infrastructure peers. As the company trails the rest of the industry in terms of growth, JITF Infralogistics may also be a cheaper stock relative to its peers.

Is JITF Infralogistics and the sector relatively cheap?

The transportation infrastructure sector’s PE is currently hovering around 21x, below the broader Indian stock market PE of 28x. This means the industry, on average, is relatively undervalued compared to the wider market – a potential mispricing opportunity here! Though, the industry returned a similar 10.53% on equities compared to the market’s 9.83%. Since JITF Infralogistics’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge JITF Infralogistics’s value is to assume the stock should be relatively in-line with its industry.

What this means for you:

Are you a shareholder? JITF Infralogistics has been a transportation infrastructure industry laggard in the past year. If your initial investment thesis is around the growth prospects of JITF Infralogistics, there are other transportation infrastructure companies that have delivered higher growth, and perhaps trading at a discount to the industry average. Consider how JITF Infralogistics fits into your wider portfolio and the opportunity cost of holding onto the stock.

Are you a potential investor? If JITF Infralogistics has been on your watchlist for a while, now may be a good time to dig deeper into the stock. Although its growth has delivered lower growth relative to its transportation infrastructure peers in the near term, the market may be pessimistic on the stock, leading to a potential undervaluation. Before you make a decision on the stock, I suggest you look at JITF Infralogistics’s future cash flows in order to assess whether the stock is trading at a reasonable price.

For a deeper dive into JITF Infralogistics’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other transportation stocks instead? Use our free playform to see my list of over 100 other transportation companies trading on the market.