MOSL: ALLCARGO LOGISTICS (Buy)-PAT miss led by higher tax rate
ALLCARGO LOGISTICS: PAT miss led by higher tax rate
(AGLL IN, Mkt Cap USD0.3b, CMP INR97, TP INR130, 34% Upside, Buy)
- 1QFY20 revenues at INR18.15b (est. INR 18.3b; +12%YoY, 5% QoQ) were led by growth in the MTO and CFS business. EBITDA came in at INR1.4b (est. INR1.24b; +38% YoY, +31% QoQ). EBITDA margin was at 7.7% (v/s 6.3% in 1QFY19). PBT stood at INR805m (+35%YoY). The adoption of IND AS-116 has resulted in a decrease in PAT by INR8m. PAT came in at INR630m (est. INR709m; +19% YoY, -21%QoQ) as tax rate stood at 22% in 1QFY20 (est. 14%).
- MTO volumes up 6%; CFS up 3%: (a) 1QFY20 MTO segment volumes increased 6% YoY to 1,84,342TEUs. Revenue increased 10% YoY to INR16b. EBIT margins were lower by -0.2pp YoY to 3.8%. (b) CFS segment volumes increased 3% YoY to 85,004TEUs. Revenues increased 8% YoY to INR1.19b. EBIT margins increased ~2.8pp YoY to 30.8%. (c) Project and Engineering (P&E) segment revenues increased 62% YoY to INR1.2b. P&E reported EBIT of INR84m as against loss of INR59m in 1QFY19. Total revenue from Logistics parks was INR18m for 1QFY20 as against INR8m for the corresponding period last year.
- Management commentary: (1) Volume growth in CFS was driven by Mundra, Kolkata & Chennai operations. (2) Current executable order book in Project Logistics is around INR1.30b. (3) Project Logistics secured its first project in Africa and is in discussion for multiple projects in East African countries. (4) Investment in logistics parks for 1QFY20 was INR1.15b. (5) Provisions written back in P&E division were INR30m in 1QFY20.
- Valuation view: MTO is likely to perform well over the medium term, led by healthy volume growth. In case of CFS, volume growth should be driven by the Kolkata operations. Valuations of 9x/7.4x FY20/FY21E earnings appear attractive, given earnings CAGR of 17% over FY19-21. We value AGLL at 10x FY21 EPS to arrive at a target price of INR130. Maintain Buy.
Allcargo Logistics Limited is an India-based holding Company. The Company is engaged in providing integrated logistics solutions. It offers logistics services across multimodal transport operations, inland container depot, container freight station operations, contract logistics operations, and project and engineering solutions. Its segments include Multimodal Transport Operations, which involves non-vessel owning common carrier operations related to less than container load consolidation and full container load forwarding activities; Container Freight Stations (CFS)/Inland Container Depot (ICD) Operations, which is involved in import/export cargo stuffing, de-stuffing, customs clearance and other related ancillary services, and Project & Engineering Solutions (P&E), which provides integrated end-to-end project, engineering and logistic services through a fleet of owned/rented special equipment, such as hydraulic axles, cranes, trailers, barges, reach-stackers, forklifts and ships.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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