MOSL: ALLCARGO LOGISTICS (Buy)-Healthy growth in MTO segment; P&E losses narrow

Allcargo Logistics: Healthy growth in MTO segment; P&E losses narrow

(AGLL IN, Mkt Cap USD0.4b, CMP INR116, TP INR146, 26% Upside, Buy)

• P&E segment losses reduce sequentially: 1QFY19 revenue increased 10% YoY to INR16.3b (est. of INR16.6b), led by 13% YoY growth in MTO revenue. EBITDA stood at INR1.02b (-1% YoY, +38% QoQ), higher than our estimate of INR914m on account of a lower-than-estimated loss from the P&E segment. PAT declined 68% YoY (-67% QoQ) due to lower other income of INR51m. Adj. PAT, too, was lower by 13% YoY (+187% QoQ) to INR531m (est. of INR496m) due to a higher tax rate of 14.4% compared to 11% in 1QFY18.
• MTO segment shows healthy improvement: MTO volumes grew 26% YoY to 174,043 TEU in 1QFY19, led by healthy growth in FCL volumes. EBIT margin was stable at 4% due to stable freight rates globally. Realization declined 10% YoY to INR83,624/TEU on account of a higher proportion of FCL volumes. Hence, revenue increased 13% YoY to INR14.5b.
• Muted volume growth in CFS: CFS volumes grew by 4% YoY (+13% QoQ) to 82,210 TEUs. Growth, although muted, was primarily aided by the commissioning of Kolkata operations and higher DPD volumes at JNPT. EBIT margin stood at 28% (+0.8pp YoY/-1.4pp QoQ).
• P&E losses narrow sequentially: P&E revenue fell 27% YoY to INR722m due to a decline in asset utilization (wind & power market impacted). P&E reported an EBIT loss of INR59m on account of negative operating leverage.