Gujarat Pipavav Port's Q2FY20 results (Neutral) - Volume surprise led by bulk cargo
Q2FY20 result highlights
- GPPL reported a 6% yoy decline in container volumes (224k TEU) but sharp 27% yoy growth in Bulk cargo (670kt) and 150% yoy increase in liquid volume (240kt). As a result, GPPL reported an overall volume of 3.9mt, a growth of 2.4% yoy.
- Average realization grew by 9% yoy to Rs485/MT in Q2FY20 on account of increase in tariff, increase in ICD volumes and favourable cargo mix. GPPL had increased the tariff by 4% from 7th April, 2019.
- As a result, adjusted revenue grew by 11%yoy to Rs1.9bn (vs our estimate of Rs1.8bn) in Q2FY20. Revenues have been adjusted for onetime write back of expenses. EBITDA grew by 21%yoy to Rs1.2bn (estimate of Rs1.1bn) and EBITDA margin improved to 62% (estimate of 58.9%).
- Adjusted PAT for Q2FY20 was Rs591m (up 7%yoy) was below our estimate of Rs632m on account of low other income (vs our estimate of Rs150mn).
- GPPL will continue with the current corporate tax regime till it utilises entire MAT credit of Rs1.6bn (expected to remain in current tax regime for another 3 to 4 years)
- During the quarter. ICD volumes improved on start of new block trains by CMA - CGM
Key positives: Strong growth in bulk and liquid cargo; Interim dividend of Rs2.1/share
Key negatives: Decline in container volumes of 6% yoy; New port policy of Gujarat to allow captive jetties to handle commercial cargo
Impact on financials: Maintain earnings estimates for FY20E and FY21E.
Valuations & view
GPPL container volumes have shown traction in FY19 and H1FY20. However, the profit growth is not commensurate with cargo growth and hike in tariff due to adverse cargo mix. Besides, bulk and liquid volumes continue to remain volatile. Though the stock trades cheaply at 15.4x/13.0x FY20E/FY21E earnings, we maintain Neutral rating led by uncertainty related to extension of concession agreements (ending in FY28).
Gujarat Pipavav Port Limited is an India-based company engaged in the business of port development and operations at Pipavav Port. The Company's Port Pipavav is located approximately 150 nautical miles from Nhava Sheva in Mumbai. The Company offers cargo handling facilities for container, bulk, break bulk and liquid cargo. It handles a range of bulk and break bulk cargo, such as coal, cement, clinker, fertilizers, steel, iron ore, agri-products, salt and soda ash. In addition, Port Pipavav handles all maritime services in-house, without any third-party operators. The Company offers maritime services, such as maritime personnel, including harbor master, pilots, control room operators, mooring crew and motor launch crew; towage, including one launch and tugboats, and port control facilities, including radar, very high frequency (VHF), Navigational Telex (NAVTEX), automatic weather station and automatic information system (AIS).
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.