Gateway Distriparks Ltd - Re-iterating ACCUMULATE - Destimoney Securities Ltd.

We are re-iterating our ACCUMULATE rating on Gateway Distriparks Limited with a revised target price Rs.146 per share.

We had initiated coverage on Gateway Distriparks Limited (GDL) with an ACCUMULATE rating based on high margin CFS and rapidly growing rail business which started generating profits for the company in FY12.

The prevalent macroeconomic situation ensured flattish growth in volumes in key Mumbai and Chennai CFSs. Dwell time in Q4FY12 at Mumbai CFS declined from 12.5 days to 10 days. We expect similar trend to continue in light of deteriorating global trade and troubled European economies.

Rail segment witnessed impressive volume growth of 37.4% in FY12 and 51% YoY in Q4FY12 mainly driven by redeployment of rakes from domestic circuit to EXIM circuit. Empty running due to trade imbalances were partially negated by full quarter operations of Jodhpur and Sanand routes. Realizations per TEU remained stable during the year.

Snowman vertical, catering to the demand in the Cold Storage Logistics space, grew smartly by 34% in FY12 and 32.4% YoY in Q4FY12, mainly on account of increased pellet capacity. Similar growth in expected in FY13 as GDL intends to ramp up the current 18,250 pellet capacity to 46,000 shortly.

Uncertainty over the recent TAMP's# notification of rate cuts at JN Port container terminals may accelerate the diversion of traffic from JN Port to Gujarat ports. We see this as a dampener to GDL's operation.

Logistics sector being closely linked to GDP growth has started reflecting global economic stress in international trade data. We remain cautious on sudden fall in demand for finished product which could impact the containerized cargo volumes in India. We expect the recent government's move to spur exports, targeting to bridge the trade deficit, will provide respite to players like GDL.

Source : Equity Bulls

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