Q3FY20 result highlights
Conf call highlights: (1) Deleveraging on track with debt reduced by Rs500mn from Chandra CFS sale and would be further cut by Rs2bn by FY20 end from completion of Snowman stake sale (Rs2.96bn; Rs2.5bn adj for tax); Net debt to be at ~Rs4bn by FY20 vs Rs7.6bn in FY19 (2) Mkt share in NCR increased by 1-2%; Ludhiana at 41% vs 36% earlier (3) Mgmt expects the first phase of DFC connecting Gujarat ports to be operational by Sept-20, which will improve turnaround times and drive efficiencies over the medium term (4) Post the debt reduction, focus to set up 2 satellite terminals to improve reach and market share (5) GDPL is confident on receiving SEIS income for FY19 and FY20, although payout could be differed till clarity emerges for the eligibility of rail.
Impact on financials: FY21E EPS cut by 5% to Rs9.7; FY20 EPS at Rs7.8
Valuation and view
The rail performance has been stable despite weak macro trade and volumes as GDPL has gained mkt share and higher double stack aided margins. However, CFS performance was impacted by the weak port volumes and integrated services would aid stability going forward. On the other hand, de-leveraging is on track with sale of non-core assets that would reduce interest costs. Over the medium term, we believe rail would see scale up once DFC is operational in 2HFY21-22. The stock trades at 6x FY21 EV/EBITDA and 14x FY21E earnings. Maintain Outperformer based on our SoTP of Rs194.
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.
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