MOSL: ALLCARGO LOGISTICS (Buy)-Strong performance from MTO-Higher provision impacts P&E segment
​Allcargo Logistics: Strong performance from MTO; Higher provision impacts P&E segment
(AGLL IN, Mkt Cap USD0.6b, CMP INR167, TP INR215, 29% Upside, Buy)
- EBITDA miss due to higher provisioning in P&E segment: 2QFY18 revenue increased 10% YoY to INR15.47b (est. of INR16b), led by 15% YoY growth in MTO revenues. EBITDA declined 17% YoY (+2% QoQ) to INR1.05b, driven by EBIT loss in the P&E segment due to higher provisioning for doubtful debt. PAT decline was restricted to 2% YoY at INR638m due to a lower tax rate of 1% (v/s 22% in 2QFY17) on account of MAT credit.
- MTO shows consistent improvement: MTO volumes grew 12% YoY to 142,945 TEUs in 2QFY18, led by growth in global trade. EBIT margin remained stable at 4.1%, as the shipping freight rates have stabilized globally. Realization increased 2% YoY to INR97,093/TEU. Hence, revenue increased 15% YoY to INR13.9b.
- CFS profitability stable: CFS volumes stood at 65,362 TEUs (-6% YoY), primarily due to a decline in JNPT and Chennai volumes. EBIT margin contracted ~5.3pp YoY due to lower dwell time, impact of direct port delivery (DPD) in JNPT, and higher lease rentals.
- P&E provisioning remains elevated: P&E revenue declined 29% YoY due to lower asset utilization (wind power market impacted) and sale of unproductive assets. P&E reported EBIT loss of INR40m due to higher provision for doubtful debt in 2QFY18.
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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