Newly-listed Shadowfax Tech, a logistics player, is in focus following a favourable initiation from Morgan Stanley, which sees 50% upside for the stock due to various factors, including strong industry structure and improving profitability.
In its latest note, the brokerage firm has initiated coverage on the counter with an 'overweight' rating and a target price of Rs 180, which suggests 50% upside from the last closing price of Rs 120. The stock has given returns of around 10% since getting listed at the end of January.
Morgan Stanley has backed its views on Shadowfax, citing its execution and ability to take advantage of an increasingly supportive industry structure. The firm, in fact, has grown more bullish on the logistics space as a whole, notably increasing the target price of Delhivery as well.
Morgan Stanley also cited Shadowfax's focus on niche segments, which has driven improvement in profitability. The firm adds that the company's business is less capital-intensive compared to peers while also yielding cash flow conversion.
Shadowfax Tech got listed on January 28 at Rs 112.6, listing at a discount of 8% to its issue price. The company plans to use the proceeds from the fresh issue to expand network infrastructure, fund lease payments for new first-mile, last-mile and sort centres, and strengthen operational capacity.
A portion of the funds will also be allocated to branding, marketing and communication initiatives, potential inorganic acquisitions, and general corporate purposes.
ALSO READ: Delhivery's Equal-Weight Rating Retained By MS, Target Price Hiked On Improving Industry Outlook
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