Buy Sical Logistics; tgt Rs 155: Karvy

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Buy Sical Logistics; tgt Rs 155: Karvy

We expect consolidated net profit to increase at a CAGR of 16.2% to Rs 510 million in FY10 considering business restructuring and growth in offshore business. We maintain our valuation at 12xFY10 earnings with target price of Rs 155.

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Karvy Stock Broking has maintained buy rating on Sical Logistics , with price target of Rs 155, in tis report dated August 18, 2008.

For Q1FY09 (standalone), Sical reported the revenue decline of 45.3% YoY (QoQ decrease of 8.9%) to Rs 1.22 billion. The company has sold non logistics business i.e refractories, agri-bio products, flexible shafts, palm oil in H1FY08. The company completed the de-merger of its non logistics business into a wholly owned subsidiary, Sicagen India ltd after receiving High Court sanction in January 2008. The revenue was lower by 17.5% than our expectations of Rs 1.48 billion".

"Operating margins increased marginally from 6.3% in Q1FY08 to 6.8% Q1FY09 as against expectations of 6.9%. Operating profit declined by 40.5% YoY to Rs 83.4 million in Q1FY09. Other income declined by 35.9% to Rs 18.1 million. Overall, net profit declined by 59.8% to Rs 24 million in Q1FY09 translating into EPS of Rs 0.7. On Consolidated basis, revenue declined by 36.2% to Rs 1.62 billion and profits declined by 7% to Rs 76.6 million, translating into EPS of Rs 2.2. At current market price of Rs 98, the stock is trading at 8.6x FY09 and 7.6x FY10 earnings. Based on EV/EBIDTA it is trading at 8.2x FY09 and 7.6x FY10. We expect consolidated net profit to increase at a CAGR of 16.2% to Rs 510 million in FY10 considering business restructuring and growth in offshore business. We maintain our valuation at 12xFY10 earnings with target price of Rs 155".

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