Gujarat Pipavav Port - Erratic Slump in Volumes spoils the show - GEPL Capital

Q2CY12 Result Highlights

Decline in volumes results in modest revenue growth

In Q2CY12, GPPL reported a modest gain of 3% y-o-y in total revenues to Rs.1,025.36 mn as compared to Rs.997.63 mn in Q2CY11, which was below our estimate of Rs.1,117 mn, thanks to slide in volumes. Revenue contains Rs.87.6 mn of entitlement from SFIS (Served for India Scheme). Container volumes for the Q2CY12 dropped by 9% y-o-y to 122,716 TEUs as compared to 134,370 TEUs in Q2CY11, in addition to that on sequential basis the drop stood at 26%. Dry-bulk Volumes witnessed 36% slide y-o-y and stood at 0.87 mn tonnes as compared to 1.36 mn tonnes in Q2CY11, however on sequential basis it was up by 38%.

Even after significant decline in volumes, we managed to notice a modest growth in revenues is because of higher realization. The reason for higher realization is decrease in transshipment which decreased as ME1 (vessel of AP Moller Maersk) is not calling on GPPL anymore. The SFIS revenue also led to inflate EBITDA margin of 46% in Q2CY12. EBITDA margin improved by 510 bps y-o-y to 46% in Q2CY12, interest and depreciation were in line with our estimates and the PAT stood at Rs.157.25 mn, which was broadly in line with our estimates.

Valuation & Viewpoint

We have slightly revised our estimates on account of lower than expected container volume, however, the change is not significant as the effect of lower volumes is subsided by higher realizations. We believe that environment clearance is a major positive for the company as liquid division is expected to contribute significantly on EBITDA margins of the company. Decline in volume for next 2-3 quarters lead to decline target price to Rs.70 from Rs.72 earlier.

Source : Equity Bulls

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