Accumulate Gateway Distriparks; tgt of Rs 168: PLilladher

“Gateway Distriparks, Standalone revenues for the quarter declined 12% sequentially on account of a 3% sequential decline in CFS volumes to 76992 TEUs and a 6% drop in realizations led by a drop in port volumes which had set in since November 2011. Dwell time reduced to 10 days as against 12 days in Q3FY12. Correspondingly, margins witnessed a sharp drop to 49.9% as against 57.1% in Q3FY12. PAT declined by 20% to Rs164.5m.”

“Rail business performed exceeding well during the quarter, witnessing a 30% increase in volumes to 55560 TEUs and 65% increase in revenues Rs1.65bn on the back of commencement of operations at two new locations: Sanand & Jodhpur. Further, besides operating the 21 rakes owned by it, the company has also taken three more rakes on lease. With the company’s focus on increasing utilizations and bridging the exportimport mismatch, margins took a hit at 13.5% as against 16.8% in Q3FY12. Profits for the segment grew 49% QoQ to Rs77.1m.”

“CFS Port volumes have started witnessing some revival since April 2012 onwards which is likely to be positive for the company’s CFS business. The company expects to start partial operations at Kochi by September 2012 and complete operations by end of the year. Further, it is close to finalizing a piece of land for its second CFS at Chennai. Capex in this segment over the next couple of years is expected to be in the range of Rs1bn. Reconstruction at its Punjab Conware facility at JNPT is going well and partial operations are expected to commence in 3-4 months. During the year, the company plans to add some rakes; some on outright purchase and some on lease. Faridabad’s rail link is likely to be ready in a few months which shall also spur volumes in the segment. We continue to value CFS and the cold chain business at PER of13x FY13 which gives us a value of Rs138/share. Further, we are valuing the rail business at P/B of 1.25, with a 10% holding company discount. Our SOTP-based target price works out to Rs168. We maintain ‘Accumulate’ on the stock,” says Prabhudas Lilladher research report. 

Public holding more than 90% in Indian cos

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