Accumulate Gujarat Pipavav; target of Rs 65: PLilladher

“Gujarat Pipavav Port (GPPL) revenues grew 26% YoY and 8% QoQ to Rs 875 million. EBITDA margins showed a sequential improvement to 43.9% v/s 43.2% in Q3CY10, substantially higher than 28.9% margins reported in the same quarter last year. Consequently, the company has reported a profit for the first time in line with our expectations to the tune of Rs 111 million v/s a loss of Rs 98 million in Q3CY10.”

“Container volumes have witnessed a 30% YoY and 9% QoQ growth to 142,280 TEUs, recording the highest quarterly volume growth so far in this quarter. Addition of eight new shipping lines, coupled with spillover of volumes from Jawaharlal Nehru Port Trust (JNPT), has contributed to this stupendous growth in container volumes. We expect this trend to continue, with a 35% growth in container volumes for CY11 to 0.63 million TEUs. Bulk volumes for the quarter witnessed a fall of 20% YoY on account of shifting of volumes in the iron ore segment to a client’s captive facility. Overall, the volumes have remained flat on a YoY basis for CY10. However, revenues have risen on account of a better cargo mix.”

“Post raising Rs 5 billion through the IPO, the company has repaid Rs 3.1 billion worth of high cost debt, reducing the debt on the books to Rs 7.97 billion from Rs 10.89 billion at the end of CY09. The cost of debt has also reduced from 14% to 11%, reducing the interest burden on the company by ~50%, thereby, helping it turn profitable this quarter. We ‘Accumulate’ Rating on the stock with price target of Rs 65,” says Prabhudas Lilladher research report.

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