Gujarat Pipavav Port - De-growth in volumes and onetime expenses spoils the show - GEPL Capital

Decline in dry bulk volumes affects revenue

In Q3CY12, GPPL reported of 7% Y-o-Y in drop in total revenues to Rs.865 mn as compared to Rs.925 mn in Q3CY11, which was the result of lower volumes. Revenue contains Rs.27 mn of entitlement from SFIS (Served for India Scheme). Container volumes for the Q3CY12 dropped by 25% Y-o-Y to 125,945 TEUs as compared to 168,983 TEUs in Q3CY11, apart from that on sequential basis there was increase of 3%. Dry-bulk Volumes witnessed 4% slide Y-o-Y and stood at 0.75 mn tonnes as compared to 0.78 mn tonnes in Q3CY11, in addition to that on sequential basis it was down by 14%.

On cost front the company witnessed 15% Y-o-Y growth in total operating expenses to Rs.607 mn in Q3CY12. There were some onetime expenses such as double payment of handling charges and refurbishment of cranes, which inflated total operating expenses by Rs.60 million and the end result was lower EBITDA margins at 36% vs 46% in Q3CY13. Interest Cost declined by 16% Y-o-Y as the company paid off its Indian Rupee Debt of Rs.3,500 mn from the amount which is collected via QIP and promoters funding. The company had to pay charges on pre-payment of loans, else Interest cost would have been further lower by Rs.56 mn. And the resultant PAT was down by 38% Y-o-Y to Rs.82 mn.

Outlook & Valuation

Though, GPPL has witnessed drop in volumes since last two quarters, we believe that things will improve from hereon rather than going opposite. The slew of fiscal reforms which the government has announced will play out to be positive for overall economy. We maintain our BUY rating and Price Target of Rs.70.

Source : Equity Bulls

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