Gujarat Pipavav Port - Strong performance but priced in - Espirito Santo Securities

We recommended Gujarat Pipavav Port (GPPV) as our Silver Bullet idea for Q2CY13 as we expected it to benefit from a steady ramp-up in container volumes by shipping lines and a subsequent improvement in operating margin. Q1CY13 performance was in line with the above expectation, with container volumes registering 2.8% growth on a sequential basis. Bulk volumes for the quarter were disappointing (26% decline sequentially); however, with the onset of monsoon, management expects fertilizer demand to offset the loss. One-off income of Rs47mn (rebate reversal) and higher bulk realization led to better-than-expected net profit of Rs354mn.

The stock has outperformed BSE500 index by 19% over the past 3 months and with our FV of Rs51 per share providing limited upside from the current levels, we downgrade the stock from BUY to NEUTRAL.

Source : Equity Bulls

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