Buy Gateway Distriparks; target of Rs 252: Axis Direct

Axis Direct's research report onGateway Distriparks

Q3 Rail volume declined 4% QoQ (up 8% YoY; Concor volume down 2% QoQ, up 11%YoY) on intermittent impact of rising trade imbalance (imports growing faster than exports); management highlighted slower volume growth for hinterland based cargo, though port volumes have grown YoY. EBITDA margin was stable QoQ (despite rising competitive intensity) on hub-and-spoke benefits from Viramgam terminal (to JNPT), lowering cargo imbalance impact.

Outlook

We cut FY19/20E EBITDA by ~15% to factor in slower volume growth (rail & CFS) and rising competitive intensity. Maintain BUY with SoTP-based TP of Rs 252 (Rs 58 for CFS, Rs 166 for rail, Rs 28 for Snowman) vs. Rs 300 earlier.

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