Gujarat Pipavav Port - 4QFY2015 Result Update - Angel Broking

Gujarat Pipavav Port Ltd (GPPL) reported a decent set of numbers for 4QFY2015. It reported a 14.9% yoy increase in revenue to Rs. 166cr, in line with our expectation. On a sequential basis revenues were down 2.4%. Top-line growth on yoy basis was driven by (1) 32.7% yoy increase in Bulk business volumes (to 921,000MT), and (2) 57.5% yoy increase in Liquid Cargo business to 126,000MT.

EBITDA for the quarter stood at Rs. 90cr (ahead of our estimate of Rs. 85cr), up 13.0% yoy and 5.3% qoq. Reported EBITDA margin came in at 54.5% in 4QFY2015 against 55.4% in the year ago quarter and 50.5% in the previous quarter. EBITDA for the quarter under review benefitted from de-hiring of equipments which were hired in the prior 2 quarters and increased contribution from the high margin Liquid Farm Tanks business.

PAT for the quarter amounted to Rs. 67cr, up 9.5% yoy and down 25.1% qoq. On adjusting for exceptional items, the Adj. PAT stood at Rs. 89cr, up 25.1% yoy, and ahead of our estimate of Rs. 86cr. Adj. PAT margin for the quarter came in at 53.8% (vs 49.4% in the year ago quarter and 52.6% in the previous quarter).

Risks to our Rating:

- Unfavorable movement in USD-INR movement,
- Delays in capex.

Outlook and Valuation: At CMP of Rs. 221, GPPL is trading at FY2016E and FY2017E P/E multiple of 28.5x and 26.9x, respectively. We have valued the Ports business using free cash flow to equity holders (FCFE) to arrive at FY2017E based business value of Rs. 210. We have assigned 10x P/E multiple to our FY2017E earnings estimate of Pipavav Rail Corporation Ltd (PRCL) to arrive at business value of Rs. 7 (adj. for 38.8% stake). On using the sum-of-the-parts (SOTP) based valuation methodology, we arrived at FY2017E based price target of Rs. 217. Given the limited upside from current levels, we maintain our Neutral Rating on the stock.

Shares of GUJARAT PIPAVAV PORT LTD. was last trading in BSE at Rs.209.75 as compared to the previous close of Rs. 212.05. The total number of shares traded during the day was 71436 in over 1498 trades.

The stock hit an intraday high of Rs. 218.5 and intraday low of 207.6. The net turnover during the day was Rs. 15270949.

Source : Equity Bulls

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