"At current market price, it’s prudent to remain cautious after this massive rally and wait for Q4FY18 results and management’s commentary on FY19 outlook," says Akash Jain, Vice-president, Equity Research at Ajcon Global Services.
GATI has witnessed a strong rally of around 30 percent in last 3 days ahead of the Board meeting on Thursday to discuss the possibility of inducting partner.
The company on Monday informed exchanges that a meeting of the board of directors will be held on Thursday, April 26 to review, consider and pass the enabling resolution for exploring the possibility of inducting a new financial/strategic partner.
We believe the market participants are upbeat on its e-commerce division performing well in coming quarters. In Q3FY18, its e-commerce revenues contributed 35 percent of its standalone business, which stood at Rs 110.8 crore, for the quarter ended December 31, 2017 (Q3 FY18).
Bala Aghoramurthy, Deputy Managing Director, GATI Kintetsu Express Limited said in the analyst call in Q3FY18, it did not have the festival season built into it, the festival season in this 2017 year was spread between September and October and this Q3 is not directly head to head comparable with last Q3, etc.
“Having said that we do not expect the business to go down any lower, but I must say our bigger interest is not about the topline on e-commerce, our bigger interest is on the bottomline, so our efforts are more directed towards what mix of the e-commerce business and gave us better bottomline."
Aghoramurthy also said "E-commerce logistics continues to see significant competitive pressure in terms of pricing and also volume fragmentation within local geographies, so clearly e-com is continuing to be in a state of evolution there as an industry and as a business. We are less worried on the topline of e-commerce.”
In its call, the company said that the cash-on-delivery (COD) orders has been stabilized and it is not a cause for worry. COD orders contributed about 50 percent in terms of volumes, and 55 percent in terms of income. In Q3FY18, consolidated profit after tax (PAT) stood at Rs 4.9 crore. Consolidated revenue from operations was Rs 448.5 crore, up 5.6 percent over Q3 FY17.
However at current market price, it’s prudent to remain cautious after this massive rally and wait for Q4FY18 results and management’s commentary on FY19 outlook.Disclaimer: The author is Vice-president, Equity Research at Ajcon Global Services. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.