Gateway Distriparks - Rail lead the show, Mumbai CFS grabs market share - Edelweiss

Gateway Distriparks' (GDL) revenues grew 14% QoQ at INR2.67bn due to robust performances across all divisions. CFS Division at INR0.8bn was up 9%QoQ, Rail Division at INR1.6bn grew 5% QoQ and Snowman Division at INR339mn rose 6% QoQ. Mumbai CFS throughput increased 19% QoQ primarily due to lower realization of INR9.5k/TEU (down 7%QoQ) to combat competition. Rail EBITDA margins improved 600bps to 18% due to the benefits of double stacking. Implementation of Hub & Spoke model from May, 13 will lead to a surge in margins. We continue to like the stock and maintain 'BUY' with a target price of 190.

Rail division on a high, Snowman expanding steadily

Rail volumes increased 2% QoQ and 10% YoY due to lower empty running at 10% (12% in Q3FY13) backed by steady realization at INR26K/TEU (up 2%QoQ). Margins improved by 600bps due to savings from double stacking facilities despite the effect of rail haulage hike in Q4FY13. Hub & Spoke model implemented from Q1FY14 will lead to improvement in margins and volumes. Snowman added 3.3k pallets in Q4FY13 leading to total capacity of 36K pallets in FY13. Realization dipped by 8% QoQ due to strong expansion, but increased in rates by 10‐12% in Q1FY14 will lead to higher realizations in the coming quarters. Management targets to add ~35K pallets in FY14.

CFS volumes improved, ICD Faridabad opening awaited

Mumbai CFS volumes improved despite slowdown in the economy. GDL has gained market share in Q4FY13. Realisations reduced in Q4FY13 due to lower dwell time and price cuts due to intense competition. Operations in Punjab Conware commenced from Feb this year. Management expects improvement in realizations from Punjab Conware. GDL is still awaiting a final approval for some facilities at Faridabad ICD and expects operations to start within 2 months.

Outlook and valuations: Robust performance; 'BUY'

Positive Triggers: 1) Opening of Faridabad ICD, 2) Growth in Punjab Conware operations, 3) Improved market share in CFS segment, 4) Implementation of Hub & Spoke model. Negative Triggers: 1) Lower realization due to increased competition. Higher upside in target price will come from lower than expected dilution in the rail business. The stock is attractively valued at 11.6 x FY14 P/E. Maintain 'BUY' with a target price of INR 190.

Source : Equity Bulls

Keywords