The general commentary, particularly on dedicated freight corridors, has been to encourage volumes and to eventually try and pass on cost efficiency to end customers in tariffs. Instead, a 10% busy-season charge has been levied, according to Jefferies.
Given the rail-coefficient improvement, higher industry volumes should see rail logistics companies like Concor and Gateway Distriparks Ltd. eventually pass on this haulage hike to consumers, it said.
However, it is expected to take one–two months, implying that the potential positive margin surprise resulting from volume growth may become apparent only from the fourth quarter, according to the brokerage.
A shift from road to rail, and market share or margin recovery will likely drive the upward movement in the stock. However, the downside risks for the stock are indefinite delay in the DFCs, and railways bringing up land licence fees, it said