"Allcargo Logistics (ALL) has reported not so encouraging PAT of Rs 555 mn which was below our expectation of Rs 690 mn. Volumes were stable for both the key segments of CFS and Multimodal Transport Operations (MTO), but realisations have fallen. It is important to note that Q4 is usually weak for Logistics companies. Sales were reported at Rs 14.1 bn (- 2% QoQ). EBIDTA came in at Rs 1.07 bn translating into weak operating margin of 7.6% primarily due to lower realisations and provisioning for discounts given for the year in the current quarter."
"In the last 4 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 continue to assign a PE of 16x FY17E 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 increased TP of Rs 395 (Earlier Rs 390)", says Kotak Securities research report.
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