Buy Gateway Distriparks; target of Rs 192: SKP Securities

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Buy Gateway Distriparks; target of Rs 192: SKP Securities

SKP Securities is bullish on Gateway Distriparks (GDL) and has recommended accumulate rating on the stock with a target of Rs 192 in its October 07, 2011 research report.

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SKP Securities is bullish on Gateway Distriparks (GDL) and has recommended accumulate rating on the stock with a target of Rs 192 in its October 07, 2011 research report.

"Gateway Distriparks Ltd (GDL), a leading provider of port related logistics support services in India. GDL operates container freight station on a pan India basis with strategic locations at JNPT, Chennai, Vizag and Kochi and ICDs located at Garhi Harsaru and Ludhiana, Kalamboli and Asoti, Faridabad. This presence enables it to cater to the West coast traffic, demand from the Northern hinterlands as well as the east coast traffic.

• GDL is one of the key player in CFS business with a total capacity of 0.44 mn TEUs. GDL is focusing to enhance CFS business, given that CFS division attracts higher margin.
• It has expanded its capacity at Chennai and Vizag port to 90000 and 48000 TEU respectively. Kochi port facility is expected to start its operation by Q4FY12, with this total CFS capacity would increase to 0.54 mn TEU by FY13E from 0.44 mn TEUs in FY11.
• We expect CFS volume to register 12.2% CAGR from 3,33,422 TEUs in FY11 to 4,20,000 TEUs in FY13E with the new capacity starting at Kochi. We expect CFS division to register a top line of Rs. 274.0 crore and Rs. 327.5 crore in FY12E and FY13E respectively.
• GDL Ltd is now the largest private railway haulage operator in India and operating 21 rakes and 3 ICDs at strategic locations. ICD at Faridabad is expected to be operational from Q3FY12E.
• On the rail business, volume is expected to grow at a CAGR of 16.5% over FY11-FY13E.We estimate GDL's Railway business's sales to grow at a 16% CAGR in FY11-FY13E.
• Snowman Logistics Ltd (SLL) is the only organized pan India cold chain logistics player in this growing business, with a nationwide network connecting more than 100 cities and more than 4400 outlets.
• Company has a capacity of over 16000 pallets for frozen and chilled products and fleet of over 100 refrigerated trucks. We expect pallet capacity to increase to 31000 in FY12E and 41000 by FY13E.

At current market price of Rs. 138-, GDL is trading at P/E of 12.4x and 10.0x of FY12E and FY13E earnings of Rs. 11.1 and 13.8 respectively. We
recommend BUY rating on the stock with a target price of Rs 192/- (40% upside) in 15 months at the P/E of 14x on FY13E earnings," says SKP Securities research report.

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To read the full report click on the attachment