Gateway Distriparks' Q1FY19 results (Outperformer) - Volume uptick across businesses
Q1FY19 result highlights
- PAT +131% yoy to Rs307m: on pick up in CFS and rail volumes (low base) as well as recognition of Rs300mn of SEIS income (export incentive) in rail business.
- Continued momentum in exim, price hikes drives rail performance: Vol +18% yoy on a low base and continued momentum in exim. Revenues grew 20% yoy to Rs2bn as realisations grew 1% yoy on low base and price hikes on import volumes (Rs1000/TEU in May-18; full impact in 2Q19). EBITDA +39% yoy to Rs351mn (OPM +245bps yoy to 17.5%) due to lower discounting and haulage savings on Viramgaon terminal (double stack benefits). On a qoq basis, margins declined 120bps due to higher empty running on continued imbalance. PAT +5x yoy at Rs384m on SEIS income of Rs300mn (for FY17; cash received)
- CFS PAT improves (+10% yoy to Rs113m): Revenues +4% yoy to Rs1.03bn on +15% yoy in volumes led by pick up in JNPT & K’patnam. Realizations saw a 9% yoy decline as higher share of Krishnapatnam & DPD volumes. OPM +130bps yoy to 21.3% (+40bps qoq) due to positive operating leverage and stabilisation of DPD impact. Hence, EBITDA +11% yoy to Rs220m. Higher capital charges (depn, interest) on Krishnapatnam CFS restricted PAT growth.
Conf call highlights: (1) Rail evacuation issue continue; this has been mitigated by leasing 6 additional rakes (5 rakes on long term lease, 1 on short term); more rakes to be leased in 2H19 to drive volume growth (2) Increased mkt share in NCR to 13.3% (vs 11% in FY18); Ludhiana at 40% (3) FY19 volume guidance: 440k+TEUs for CFS (35k at K’patnam) and 250k TEUs for rail; (4) Blackstone deal to conclude by Sep-18; to borrow Rs6bn
Impact on financials: Cut FY19/20 EPS by 0.6%/2.4% to Rs8.4/9
Valuation and view
GDL’s profitability has been impacted over the past two years on headwinds on macro trade (higher imbalance, discounts, etc) and DPD impact on its CFS business. However, we believe the earnings have bottomed and as trade is improving as reflected in rising port volumes should bode well for GDL. Concurrently, the acquisition of the 49% stake in rail from Blackstone is value accretive (Rs8.1bn payout) and does not put a strain on balance sheet. Considering our SOTP of Rs227 (15x rail EV/EBITDA), we maintain our Outperformer rating on the stock. Key risk would be further scale up of DPD and slowdown in exim trade.
Gateway Distriparks Limited is an integrated logistics facilitator. The Company's principal business activities include storage and warehousing, which includes general merchandise warehouses and warehousing of furniture, automobiles, gas and oil, chemicals and textiles. It also includes storage of goods in foreign trade zones. Its segments include Container Freight Station, which includes common user facilities located at various sea ports in India, offering services for handling (including related transport), temporary storage of import/export laden and empty containers, and cargo carried under customs control, and Rail Logistics, which includes transportation by rail, storage, handling of the containers and related transportation by road. It is also engaged in business of container-related logistics. Its primary business is to operate Container Freight Stations, which are facilities set up for the purpose of in-transit container handling, examination and assessment of cargo.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.