Sical Logistics a market performer: Karvy

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Sical Logistics a market performer: Karvy

Karvy Stock Broking firm has recommended a market performer rating on Sical Logistics with target price of Rs 262.

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Karvy Stock Broking firm has recommended a market performer rating on Sical Logistics with target price of Rs 262.

Karvy Stock Broking firm report on Sical Logistics:

For Q1 FY08 (standalone), Sical reported revenue decline of 7.1% YoY (QoQ decline of 28.8%) to Rs 2.24 billion mainly due to decline of 17.2% YoY to Rs 1,264 million in logistics segment. Non logistics business revenue was stable at Rs 985 million. Revenue was lower by 5% than our estimate of Rs2.3billion. EBIDTA margin declined from 10.3% in Q1 FY07 to 4.6% in Q1 FY08 on account of trading activity.

Traded goods as a percentage of sales increased from 25.6% in Q1FY07 to 37.1% in Q1FY08. Operating profit declined from Rs 192.4 million to Rs 103 million. The net Interest cost was lower at Rs 30.8million during the quarter as against Rs 73.3million in Q1FY07 due to interest income from surplus cash. Adjusted profit declined by 80% YoY to Rs 22.7million translating into EPS of 0.6 as against expectations of Rs 4.6. The company has reported net gain of Rs 112.8 million on account of foreign exchange fluctuations in respect of Foreign Currency Convertible Bonds (FCCB) Loan and bank balances in foreign currency. We have lowered our profit estimates mainly due to lower margins in treading business and Joint venture PSA Sical.

We now expect consolidated net profit to increase at a CAGR of 21.3% (previous 30%) to Rs 663 million in FY09 on back of business restructuring and growth in offshore business. At current market price of Rs 239, the stock is trading at 18.7x FY08 and 12.7x FY09 earnings. Based on EV/EBIDTA it is trading at 13.4x FY08 and 8.9x FY09. We maintain our valuation at 14xFY09 earnings with revised target price of Rs 262 (Previous Rs 301).