Company Update: Allcargo Logistics Ltd. - BUY - TP Rs.205 - Kotak

- Weak Exim trade, demonetisation, weak global trade and competition in the CFS segment impacted the performance of the company in FY17. However, with improvement in volumes at major ports at 2.25 mn TEUS in Q1FY18 (from 2.12 mn TEUs in Q1FY17) is a positive sign for ALL. Also, the fourth container terminal at JNPT (total capacity = 4.8 mn TEUs and partially operational by end of CY17) and the start of Dedicated Freight Corridor should boost volumes across segments for ALL. Management expects the utilization levels and volumes to improve at JNPT for ALL from FY19. Broadly, we expect the growth to come from the key Multimodal Transport Operation (MTO) segment and new CFS in Kolkata in near term. Estimate earnings to grow at 19% CAGR over FY17 to FY19E, with ROE of 11.7% and ROCE of 14.1% for FY19. We also estimate ALL to be one of the biggest beneficiary of any recovery in trade and GST implementation. Maintain "BUY" with an increased TP of Rs 205 (from Rs 190) valuing the stock at 16x FY19E.

Shares of ALLCARGO LOGISTICS LTD. was last trading in BSE at Rs.175.15 as compared to the previous close of Rs. 177.55. The total number of shares traded during the day was 21917 in over 346 trades.

The stock hit an intraday high of Rs. 178.6 and intraday low of 175. The net turnover during the day was Rs. 3888267.

Source : Equity Bulls

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