Buy Allcargo Global; target of Rs 226: SKP Securities

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Buy Allcargo Global; target of Rs 226: SKP Securities

SKP Securities is bullish on Allcargo Global and has recommended buy rating on the stock with a target of Rs 226 in its March 18, 2011 research report.

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SKP Securities is bullish on Allcargo Global and has recommended buy rating on the stock with a target of Rs 226 in its March 18, 2011 research report.

"Allcargo Global Logistics (AGL) is one of the leading logistics service provider involved in multimodal transport operations (MTO), NVOCC, CFS and ICD facilities and project cargo handling. After acquiring the Belgium based ECU Hold NV company in year 2006, company positioned itself as a second largest LCL consolidator in the world. AGL operates container freight station in strategic locations such as JNPT, Chennai, Mundra and a ICD located at Pithampur, Indore."

"Allcargo through its acquisition of Belgium based ECU Line in 2006, is one of the leading global players in the Less Than Container Load (LCL) segment, with a presence in over 59 countries. AGL's MTO segment looks fairly optimistic on the back of elevated international trade. ECU line volume will be benefited with bright macro economic signal and we expect ECU line volume to grow at a moderate CAGR of 12% from CY10 to CY12E. AGL is one of the key players in CFS business with a total capacity of 3,41,000 TEUs and a ICD at Pithampur with a capacity of 36000 TEUs. Allcargo Global Logistics enjoys 8-9% market share at JNPT Mumbai, 9-10% market share at Chennai and 6-7% market share at Mundra port. It is expected to double its CFS capacity at JNPT port and is also exploring other locations. AGL has entered into joint venture with Concor to share ICD at Dadri and also identified 4-5 new location for ICDs. AGL has positioned itself as an industry leader in this industry."

"We believe that Infrastructure led growth, especially in sectors such as oil & gas, steel, cement and power is expected to increase the demand for such specialized transport solutions, and will benefit Allcargo. AGL is incessantly spending to increase its fleet size to capture the escalating growth in this industry. Currently this segment has an order book of Rs. 175 crore to be executed over next 12 months. We expect revenue from P&E segment to grow at a CAGR of 17% over CY10- CY12E."

"At current market price of Rs 161/-, AGL is trading at P/E of 9.2x and 7.1x of CY11E and CY12E earnings of Rs 17.4 and 22.6 respectively. We recommend BUY rating on the stock with a target price of Rs 226/- (40% upside) in 15 months at the P/E of 10x on CY12 earnings," says SKP Securities research report. 

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To read the full report click on the attachment