Gati soars 14% as pre-festive orders drive Q2 volumes

Analysts at Nuvama Institutional Equities initiated a ‘buy’ coverage on the counter, seeing a potential upside of 39 percent (from current price of Rs 168 per share)

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Shares of Gati skyrocketed 14 percent to day’s high of Rs 168 per share on the BSE on October 16 after volumes rose 18 percent year-on-year (YoY) in the July-September quarter of fiscal year 2023-24 (Q2FY24), as per the company’s business update. The S&P BSE Sensex stood flat 66,205 levels, as of 11:15 am.

So far on October 16, around 3.9 million equity shares exchanged hands at both NSE and BSE versus 0.4 million equity shares on an average of one-week, suggested data.

In the past six months, the logistics company's stock surged 42 percent as against 9 percent rise in the Sensex benchmark. Earlier, the company had touched its 52-week low of Rs 97 apiece on March 27, 2023 and scaled to a 52-week high of Rs 184 apiece on October 27, 2022.

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In an exchange filing on October 13, the company said that they witnessed strong pre-festive ordering, which led to strong volumes in the September-ended quarter. Moreover, the management expects the trend to continue in the current month as well.

The company’s total volume, which included surface and air express stood at 109 kt for the month ended September 2023, recording an increase of 8 percent in September 2022.

That said, last month, the management said that they expect 18-20 percent increase in festive season demand, especially in segments like e-commerce and white goods, among others.

"To facilitate festive volume-based e-commerce logistics fulfilment, we have increased our network capacity by 20-25 per cent to accommodate the peak season load and build superior delivery efficiency," said Rajesh Gowrinath, senior Vice President for sales at Gati.

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Analysts at Nuvama Institutional Equities initiated a ‘buy’ coverage on the counter, seeing a potential upside of 39 percent (from current price of Rs 168 per share).

“We are optimistic of Gati’s long-term growth story due to capacity expansion, improving efficiency and service levels, strong growth in profitability, strengthening balance sheet, and favourable industry dynamics. We expect valuations to catch up with peers as its margin and market share improves. We expect EV/Ebitda and P/E multiple of 14.7 times (x) and 31.1x on FY26 earnings, respectively,” the brokerage firm added, sharing a target price of Rs 234 per share.

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