Hold Allcargo Logistics; target of Rs 93: ICICI Securities

ICICI Securities research report on Allcargo Logistics

Allcargo Logistics (Allcargo) has been able to manage its cashflows reasonably well. Presence in the multimodal transport segment provides a cashflow buffer with Q4FY20/FY20 volumes up 8%/10% YoY respectively, given the relative buoyancy of global container trade. CFS (volumes down 8-9% YoY for two successive quarters) and project and engineering segment (with a reported negative EBIT of Rs188mn in H2FY20) continue to drag. Cash inflow from sale of Logistic Parks assets to Blackstone coincides with outflow on Gati acquisition. We do find reason in management guidance of current net debt of Rs11.5bn as peak (and to reduce to Rs6bn-7bn by FY21-end).

Outlook

This will be achieved through additional receipt of payments / offloading of debt to the separated Logistics Parks business. Maintain HOLD with a revised target price of Rs93 (Rs109 earlier).

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