"Arshiya International (AIL) is on its way to becoming a full fledged logistics services provider by setting up its FTWZs at JNPT, Khurja & Nagpur and ramping up its railway haulage services. After firmly establishing itself as a preferred player in the highly unorganized freight forwarding business, we believe its FTWZ foray will provide it a clear first mover advantage. The company is also aggressively expanding its railway haulage segment, with 30 rakes expected to be operational by March 2011. We believe AIL has been in an investment phase for the last two years. With Phase I, where the Mumbai and Khurja FTWZs will start operations from March and July 2010 respectively, we expect AIL to enter into a high growth phase from FY10 onwards."
"We expect the company's revenue and net profit to grow at 23% and 29% CAGR over FY09- 11E respectively. The stock trades at 17x FY10E and 8x FY11E earnings. Given its strong growth phase over the next few years and higher return ratios of the new ventures, we believe its valuations are un-demanding. We are initiating coverage on the stock with a BUY rating and a target price of Rs 230."
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