Gati - Analyst Meet Update - Nirmal Bang

We had initiated coverage on the company on 29th May 2012 with a price target of Rs.46 after which the stock touched a high of Rs.45. Post discussion with the management; we have altered interest rate projections in our model for FY13E. Interest burden for FY13E now comes to ~ Rs.44 crore (earlier Rs.25 crore). The company is partly paying the debt and utilizing the rest for working capital needs and up gradation of infrastructure in the express division.

We believe worst is over for the company and we can expect revival in its core business of express distribution. In addition, its loss making shipping business is also expected to get into profits in FY13E. Stock remains subdued due to concerns in the overall economy and Gati's shipping business which made heavy losses in FY12. We believe any signs of improvement in these two factors should see momentum in the stock price.

At CMP, the stock is trading at 10.6x itsFY13E and we remain positive about the prospects of the company.

Source : Equity Bulls

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