Chartered Logistics Reports Q2 FY24-25 Profit Growth Amid Long-Term Challenges

Chartered Logistics, a microcap player in the logistics industry, has recently undergone an adjustment in evaluation, reflecting a nuanced view of its financial standing. The company has reported positive financial performance for the second quarter of FY24-25, with a notable increase in profit after tax, reaching Rs 1.61 crore. This marks a continuation of positive results over the last three consecutive quarters.
However, underlying trends indicate challenges in long-term fundamental strength, highlighted by a compound annual growth rate (CAGR) of -6.73% in operating profits over the past five years. Additionally, the company's ability to service its debt is a concern, as evidenced by a high debt-to-EBITDA ratio of 6.98 times. The average return on equity stands at a modest 0.84%, suggesting limited profitability relative to shareholders' funds.

Despite these challenges, the stock has demonstrated a market-beating performance, generating a return of 38.20% over the past year, significantly outpacing the BSE 500's return of 7.37%. The stock is currently trading at a discount compared to its historical valuations, with a fair valuation indicated by a return on capital employed (ROCE) of 2.5 and an enterprise value to capital employed ratio of 2.1.

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