Buy Arshiya Inter; target of Rs 196: Sunidhi Securities

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Buy Arshiya Inter; target of Rs 196: Sunidhi Securities

Sunidhi Securities is bullish on Arshiya International and has recommended buy rating on the stock with a target of Rs 196 in its November 23, 2011 research report.

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Sunidhi Securities is bullish on Arshiya International and has recommended buy rating on the stock with a target of Rs 196 in its November 23, 2011 research report.

"Incorporated in 1981, Arshiya International (AIL) is an integrated supply chain and logistics infrastructure solutions provider headquartered in India. It has multinational operations in the logistics and supply chain management space and is currently involved in the phased investment of approximately USD 1.6 billion towards creating and pioneering logistics infrastructure within India. Arshiya's strategically integrated logistics verticals are: Free Trade and Warehousing Zones (FTWZ), Rail Infrastructure, Domestic Distriparks, Logistics, Supply Chain Management, Transport & Handling and Information Technology. These verticals enable unparalleled operational expertise & solution capability across the entire supply chain spectrum. Arshiya has been accorded the status of- Star Export House in accordance with the provisions of the Foreign Trade Policy."

" During FY11, consolidated sales advanced buy 56.0 per cent to Rs 821.5 crore but net profit fell by 16.1 per cent to Rs 82.2 crore. Consolidated EPS stood at Rs 13.9. OP and NP margin stood at 19.5% and 10.0% against 24.3% and 18.6% respectively in the corresponding period last year.
AIL's FY11 consolidated debts were Rs 1442 crore, which gives DER of 1.9:1. Cash and bank balances were Rs 152 crore. The value of the consolidated gross block was Rs 1932 crore. (GB Rs 676 crore +WIP Rs 1256 crore).
During Q2FY12, consolidated sales rose 25.8% to Rs 245.4 crore and net profit by 73.3% to Rs 31.9 crore. OPM and NPM stood at 27.5% and 13.0% compared to 17.1% and 9.4% respectively in the corresponding period last year. Q2FY12 consolidated EPS stands at Rs 5.4."

"With operations started in the beginning of 2009, Arshiya Rail Infrastructure currently has 15 rail rakes operational and the company has plans to take it to 25-30 rakes by FY13E. Arshiya Rail Infra intends to become the most profitable private container rail operator in India. AIL is also in the process of building rail terminals at strategic locations, across India, with modern equipment to increase speed of loading, unloading, etc.  AIL has regular stream of other income. One is the rental income which the company receives from renting out space within the FTWZ. In addition, the company provides value added services to clients like labeling, packaging, assembling, repackaging, quality control, etc.  AIL plans to enter the road transportation business by either acquiring a company or buying trucks and trailers. The primary reason behind this foray is to have control on the entire supply chain of cargo movement."

"Road transport accounts for about 65% of all freight transport in India while railways have about 30% market share. Considering the potentials of this business, AIL had planned to have trucks and trailers, which would be meant for short hauls to nearby ports, rail sidings or warehouses from FTWZ would also increase efficiencies and lower dependencies for AIL.  Currently, apart from FTWZ, AIL has a presence in container train operations, freight forwarding and IT for logistics management; road transportation service is the missing link in the supply chain. The road transportation business would help AIL offer last-mile connectivity in delivering goods door-to-door and to diversify to other sectors.  AIL is expected to post consolidated EPS of Rs 19.7 in FY12 and Rs 27 in FY13. At the CMP of Rs 140, the share is trading at a P/E of 7.1x on FY12E and 5.2x on FY13E. We recommend BUY with a target price of Rs 196 in the medium-to-long term," says Sunidhi Securities research report. 

Institutional holding more than 40% in Indian cos

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To read the full report click on the attachment