Prabhudas Lilladher's research report on Allcargo Logistics
AGLL Q4FY18 results were below expectation with EBITDA at Rs0.74bn (down 30%YoY). MTO volumes were strong (26% up YoY) however profitability was impacted by weak freight rates & higher share of FCL. PES segment continued to struggle as the overall capex in the economy remains low and also due to provision for doubtful debts (~Rs150m), dragging the overall earnings down. AGLL has approved logistic park in Jhajjar (Haryana) containing ICD, PFT & Warehousing facility near the proposed route of DFC at a capex of ~Rs5bn, expected to be completed over 2-3 years depending on the mode of implementation. Company alo continues to explore inorganic opportunity in contract logistics space.
We like AGLL for consistent cash generation & strong management bandwidth, though the performance off late has been below expectations. We however expect the capex to bear fruits only from FY20E and we expect limited upside from current valuations. "Accumulate" with a TP of Rs160
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