Buy Gateway Distriparks; target Rs 188: SPA Research

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Buy Gateway Distriparks; target Rs 188: SPA Research

SPA Research is bullish on Gateway Distriparks (GDL) and has recommended buy rating on the stock with a target of Rs 188 in its February 2, 2012 research report.

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SPA Research is bullish on Gateway Distriparks (GDL) and has recommended buy rating on the stock with a target of Rs 188 in its February 2, 2012 research report.

"Gateway Distriparks Ltd. (GDL) reported good set of numbers in Q3FY12. Company consolidated sales grew by 23.62% YoY to INR 1,964mn backed by high revenue growth in all the three businesses i.e CFS, Rail Freight and Cold Chain. EBIDTA margins came at 32.27%, an improvement of 362bps YoY. PAT at INR 331mn was up 18.25% YoY. CFS business reported YoY growth of 19.79% in revenues at INR 792mn in Q3FY12 on the back of strong growth in realization. Total throughput declined by 8.42% YoY and 8.68% QoQ to 79,347 TEUs due to lower volumes at Mumbai CFS (65% of total CFS throughput) which were partially impacted by lower port volumes at JNPT. Other CFS at Chennai (8.74% YoY) and Vizag (31.28% YoY) maintained good volume growth. The lower growth in volumes was made up by strong growth in realization/TEU which grew by 30.81% YoY on the back of increased dwell time (12 days in Q3FY12 compared to usual 10.5-11 days). Higher realizations also boosted EBIDTA margin by 514bps YoY to 52.96%."

"GDL rail freight business continued to maintain good run-rate in revenues which grew by 24.45% to INR 1,006mn in Q3FY12. This was on the back of higher throughput growth of 23.78% YoY with improvement in capacity utilization (~87% in Q3FY12). Company also took a new initiative by adding new routes connecting Mundra/ Pipava with Sanand in Gujarat and Jodhpur in Rajasthan by linking up existing facilities which are not owned by the company. This resulted in better utilization of rakes but impacted EBIDTA margins slightly which came at 16.78%, down by 36bps QoQ."

"GDL continued to show impressive growth in revenues on back of higher realization in CFS and volume growth in rail freight and cold logistic division. Going forward, we expect company to continue to maintain strong growth momentum in rail freight and cold logistics business on back of capacity expansion plans. Throughput in CFS business also expected to improve with commencement of operations at Kochi CFS and addition of port capacities in the long term. At CMP, stock is trading at 9.77x FY13E EPS. We retain BUY with a target price of INR 188," says SPA Research report.

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To read the full report click on the attachment