Sell Gujarat Pipavav; target of Rs 155: Emkay

Emkay research report on Gujarat Pipavav PortQ2FY16 revenue came in at Rs1.49 bn de-growth of 12.3% YoY lower than our expectation of Rs1.76 bn, driven by lower than expected volumes, volumes came at 2.54 MT -26% YoY versus expectation of 2.96 MT. Realizations have come at Rs552/t +25% YoY versus expectation of Rs530/t EBITDA came at Rs764 mn against our expectation of Rs1.05 bn driven by lower revenue flow. EBITDA margin came at 51.3% -512 bps YoY versus expectation of 59.5% on lower than expected container and bulk volumes (change in product mix, more of fertilisers got handled) Container volumes de-grew by 24.5% YoY at 146,000 TEUs, in line with estimates; and bulk volumes came at 0.63 MT -38% versus our expectation of 1.05 MT. Liquid volumes came at 163,000 tons against our expectation of 150,000 tons Reduced earnings estimates for FY16E/17E by 37%/42% as we cut container volumes by 16%/12% in FY16E/17E and bulk volumes by 6%/2% which lowers our margins for FY16E/17E by 212bps/29bps (higher operational leverage in containers). And we also introduce a Deferred Tax charged to P&L account at the normal corporate tax rate. Adjusting for this deferred Tax charge our earnings estimates for FY16E/17E have reduced by 6%/13%. Maintain Reduce with a revised target price of Rs155 For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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