Hold Allcargo Logistics: target of Rs 115: ICICI Securities

ICICI Securities research report on Allcargo Logistics

The total consideration for Allcargo logistics’ (AGLL) acquisition of 46.86% stake in Gati has been ~ Rs 4.29bn. Gati’s Q1FY21 operating results, though, did disappoint with ~ Rs 263mn EBITDA loss. There are multiple efforts being undertaken by the AGLL management to i) improve operational efficiency ii) invest necessary equity and iii) recover outstanding dues from all parties including earlier management for excess managerial remuneration in Gati’s subsidiaries. The deal with Blackstone for the transfer of logistics park portfolio is underway with Rs 2.37bn of money received till date and another Rs 590mn Lease rental discounting upstreamed to AGLL.

Outlook

We maintain HOLD with a revised target of Rs 115/share (Rs 93 earlier). AGLL’s board has received and accepted the delisting offer from ‘promoters’. Net debt stands at ~Rs 10bn, and management expects the same to increase to Rs13.5bn as Gati acquisition completes.

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