MOSL: ALLCARGO LOGISTICS (Buy)-Margin improvement led by firm container shipping freight rates
​ALLCARGO LOGISTICS: Margin improvement led by firm container shipping freight rates
(AGLL IN, Mkt Cap USD0.7b, CMP INR176, TP INR228, 30% Upside, Buy)
PAT beat led by higher other income, lower tax: 4QFY17 revenue fell 2% YoY to INR13.6b (largely in-line) due to lower revenue from P&E segment. EBITDA stood at INR1.1b (in-line; -8% YoY, +8% QoQ), with QoQ margin improvement in MTO segment led by a sharp rise in global container freight rates. Adj. PAT came in at INR625m (est. of INR466m; -2% YoY, +19% QoQ) on higher other income of INR169m (est. of INR57m; +31% YoY, -31% QoQ) and a lower tax rate of 18% (est. of 26%; 30.6% in 3QFY17, 14.1% in 4QFY16).
MTO margin expands sharply, volumes up: MTO volumes grew 13% YoY to 126,833 TEUs in 4Q, led by growth across geographies due to higher penetration. EBIT margin expanded to 4.3% from 3.5% in 3QFY17 due to a sharp improvement in container freight rates globally. Revenue fell 2% YoY to INR11,613m due to a notional currency impact and transfer of freight forwarding business to ACCI. Margin is likely to remain strong led by firm container freight rates.
CFS profitability stable: CFS volumes stood at 77,021 TEUs (+15% YoY, +2% QoQ), led by volumes growth in Chennai and ramp-up of new CFS in Mundra. EBIT margin expanded ~100bp YoY/QoQ, despite lease rentals of Kolkata CFS and expenses related to new CFS at Mundra. We expect a strong improvement in CFS EBITDA in FY18, led by ramp-up of Mundra CFS and commencement of Kolkata CFS.
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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