Gateway Distriparks - Market share gains in NCR as CONCOR raises prices - HDFC Securities

Mr. Aditya Makharia, Institutional Research Analyst, HDFC Securities

Gateway Distriparks (GDL) reported strong 4QFY21 results, with PAT at INR 461mn (+41% QoQ) while EBITDA margin expanded 90bps QoQ to 27.2% and interest costs reduced to INR 173mn (-30% YoY). GDL's share in the NCR region has risen by 11% as CONCOR has increased prices (due to higher LLF fees). We raise our EBITDA estimates by ~11% over FY22/23E and maintain BUY with an SOTP-based TP of INR 235 (rail business is valued at 10x FY23E EV/EBITDA). We reiterate our preference for GDL over CONCOR (ADD) as the former will gain market share due to pricing distortions for the market leader.

4QFY20 financials: GDL's revenue at INR 3.5bn grew 17/12% YoY/QoQ, owing to 15/16% growth in rail volumes. CFS volumes were up 7/11%. EBITDA margin at 27.2% surprised positively (+90bps QoQ, 570 bps YoY) as the company benefitted from higher volumes and rebate on container volumes (5% on haulage and 25% on empty running) offered by IR till Apr-21. The company has been repaying its debt post the fundraise and, hence, the interest cost is down 30% YoY. APAT grew 41% QoQ to INR 461mn (partially aided by lower tax rate of 5% in 4QFY21, on availing of MAT credit).

Call takeaways: (1) Market share gains: The company gained an 11% share in the NCR region as CONCOR has taken a price hike in its TKD terminal due to the LLF increase. Even though the market has declined by 5%, GDL's volumes have risen due to the above. The company reported its highest ever monthly rail volumes of 26,426 TEUs in March. (2) Deleveraging: The company's net debt stands reduced at INR 4.4bn (vs INR 6.81bn in FY20) as it has prepaid debt from funds raised (via its right issue). Further, high cost NCDs of INR 2.8bn are likely to be prepaid as cash flows improve. (3) DFC progress: The 306km stretch from Rewari to Madar was inaugurated in Jan- 21, while trial runs have commenced on the 342-km stretch of Madar- Palanpur. The complete stretch will commence in 2HFY22 (link to our report: Indian Railways - getting aggressive). (4) Snowman: The company plans to create 200k of new palate capacity with a Capex of INR 4bn, of which INR 2-2.5bn will be raised via a QIP. Pharma and e-com segments are in focus currently and are growing at 25% CAGR (QSR at 15% CAGR).

Shares of GATEWAY DISTRIPARKS LTD. was last trading in BSE at Rs.206.95 as compared to the previous close of Rs. 195.7. The total number of shares traded during the day was 141747 in over 5691 trades.

The stock hit an intraday high of Rs. 213.9 and intraday low of 195.2. The net turnover during the day was Rs. 28987798.

Source : Equity Bulls

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