Allcargo Logistics (ALL) has yet again reported strong PAT of Rs 725 mn which was above our expectation of Rs 690 mn. Volumes were stable for both the key segments of CFS and Multimodal Transport Operations (MTO) with improvement in margins. Sales were reported at Rs 14.3 bn (flattishboth YoY/QoQ).
In the last 3 quarters, the following has emerged as positives for Allcargo Logistics (ALL), 1) Healthy volume growth in the key Multimodal Transport Operations (MTO), 2) Recovery of volumes in the Container Freight Station (CFS) segment and 3) Improvement in Margins. We estimate volume for the MTO segment to grow at ~31% in FY15 and ~9% in FY16. Strong relationships will help the company to outperform its peers and report stable volumes in the CFS division.
We continue to assign a PE of 16x FY16E earnings to the stock on the back of 1) Immune nature of MTO (LCL) business to weak trade: 2) Latest acquisitions which help diversify the business: 3) Stable performance of the CFS segment and 4) estimated recovery in global trade. Recommend "BUY" on Allcargo Logistics with an unchanged TP of Rs 390", says Kotak Securities research report.
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