gdl-feb 2012 - idbi

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COMPANY

REPORT

February 1, 2012

Gateway Distriparks Ltd.CFS still mainstay, but rail helps sustain turnaround

RESULTS

REVIEW

CMP Rs131

Target Price Rs145

Potential Upside/Downside +11%

Relative to Sensex

SummaryGateway Distriparks (GDL) results were largely in-line recording 23.7% YoY revenue growth Rs1.95 bn in Q3FY12. EBIDTA margins improved 220bps YoY to 31.8%. PAT grew 19.1% YoY Rs331 mn for the quarter. CFS segment continued to be the mainstay for profitability improvemedespite a fall in CFS volume. CFS realisation increased 30% YoY to Rs9,920/TEU. While Rsegment EBIDTA margin contracted 40bps QoQ to 16.8%, it sustained volume growth ~24% YoY.

With capex resumption, GDL plans to incur ~Rs2.5 bn in expansion of capacities across CFS, ICrail and cold chain in FY13E. With subdued EXIM scenario, growth prospects in container tradwill moderate to lower volume growth in CY12 than the 10%YoY growth achieved in CY11. In thlight, the fresh round of capex is concerning. CFS segment, mainstay of the profitability, is liketo sustain realization levels due to higher dwell times in the lean times. Improvement in r

segment EBIDTA margins will slow and seem unlikely to cross 18% in FY13E. An improvement the macro scenario could warrant improvement in our estimates. At CMP, the stock trades at 10.on our FY13E EPS of Rs12.4. We retain our ACCUMULATE rating on the stock with a SOTP bastarget price of Rs145.

Result Highlights

Revenue increased 19% YoY to Rs1.9 bn mainly on the back of 30%YoY increase in realizationCFS segment and 25% increase in volume in the Rail segment.

CFS segment recorded 19% YoY growth in revenue despite 8% YoY fall in volume mainly due realization growth.

The rail assets were further sequestered as the revenue grew 25% on similar asset base as last ye

of 21 rakes. EBIDTA margin for the quarter expanded 220bps YoY to 31.8%;.though on a QoQ basis it f

250bps. The QoQ contraction in margin was mainly due to the fall in margins in CFS and rsegment.

Rail segment almost reached its targeted FY12 EXIM:Domestic mix of 90:10 with the mix standing87:13 for Q3FY12.

Outlook and Valuation

GDL plans to incur Rs1.3 bn, Rs0.5 bn and Rs0.8 bn capex on Rail, CFS and Cold chain verticarespectively in FY13E. We believe that further capex in the rail division would depress return ratios (FYRoE 11.9%) in the medium term as utilization takes time to pick-up. Also, major portion of capex

envisaged for cold chain segment where a payback of of 4-5 years requires high utilization rates (>95%Despite these concerns, the CFS segment is likely to remain ma jor cash generator. We maintain that Gremains one of the preferred plays in the container logistics segment given its first mover advantage CFS segment and long term viability of rail operations. We retain our ACCUMULATE rating on the stowith SOTP based target price of Rs145.

Source: Capitaline

ACCUMULAT

Nifty: 5,236; Sensex: 17,301

Analyst

Chetan Kapoor

+91-22-4322 1232

[email protected]

Sector Logistics

Bloomberg / Reuters GDPL IN / GATE.BO

Shares o/s (mn) 108

Market cap. (Rs mn) 14,148

Market cap. (US$ mn) 286

3-m daily average vol. 28,812

Key Stock Data

52-week high/low Rs153/101-1m -3m -12m

Absolute (%) 2 (11) 24

Rel to Sensex (%) (10) (10) 28

Price Performance

Promoters 40.4

FIIs/NRIs/OCBs/GDR 28.7

MFs/Banks/FIs 15.5

Non Promoter Corporate 6.3

Public & Others 9.1

Shareholding Pattern (%) (Jun-11)

Table: Financial snapshot (Rs mn

Year Revenue EBITDA EBITDA (%) Adj. PAT EPS (Rs) PE (x) EV/EBITDA (x) RoE (%) RoCE (

FY10 5,166 1,249 24.2 791 7.3 17.8 12.3 11.2 8

FY11 5,991 1,597 26.7 968 9.0 14.6 8.6 10.9 10

FY12E 7,669 2,400 31.3 1,254 11.6 11.3 5.7 11.9 15

FY13E 8,765 2,635 30.1 1,331 12.4 10.6 5.2 12.2 15

Source: Company; IDBI Capital Research

80

90

100

110

120

130

140

150

F e b - 1 1

M a r - 1 1

A p r - 1 1

M a y - 1 1

J u n - 1 1

J u l - 1 1

A u g - 1 1

S e p - 1 1

O c t - 1 1

N o v - 1 1

D e c - 1 1

J a n - 1 2

F e b - 1 2

GDPL Sensex

8/2/2019 Gdl-feb 2012 - Idbi


Q3FY12 Result Review – Gateway Distriparks Ltd.

Table: Financials (consolidated) (Rs m

Year-end: March Q3FY11 Q3FY12 YoY (%) 9MFY11 9MFY12 YoY (%) FY11 FY12E YoY (%) FY13E YoY

Net Sales 1,578 1,952 23.7 4,254 5,680 33.5 5,991 7,669 28.0 8,765 14

EBITDA 467 622 33.1 1,107 1,861 68.1 1,597 2,400 50.3 2,635 9

EBITDA margin (%) 29.6 31.8 26.0 32.8 26.7 31.3 30.1

Other Income 56 31 (44.1) 38 31 (20.1) 129 31 (75.9) 32 3

Interest 66 32 (50.9) 162 101 (37.6) 182 123 (32.6) 130 6

Depreciation 150 148 (1.4) 368 427 16.1 502 614 22.3 688 12

PBT 307 473 54.0 615 1,363 70 1,041 1,694 (15) 1,849 9

Tax+minorities 29 142 18 431 2,364.6 44 441 899.7 518 17

PAT 278 331 19.1 597 931 55.9 997 1,254 25.7 1,331 6

PAT margin (%) 17.6 17.0 14.0 16.4 16.8 16.6 16.3 (1.8) 15.2 (7

EPS (Rs) 2.6 3.1 5.5 8.6 9.3 11.6 12.4


Table: Segmental consolidated (YoY) (Rs m

CFS Business Rail Business Cold Chain GDL Group

Q3FY11 Q3FY12 YoY (%) Q3FY11 Q3FY12 YoY (%) Q3FY11 Q3FY12 YoY (%) Q3FY11 Q3FY12 YoY (

Throughput (TEUs) 86,636 79,347 (8.4) 34,494 42,697 23.8 121,130 122,044

Realisation per TEU(Rs) 7,620 9,920 30.2 23,294 23,465 0.7

Total Income 660 787 19.2 804 1,002 24.7 114 163 42.6 1,578 1,952 2

EBIDTA 328 438 33.7 105 169 60.2 34 46 35.6 467 653 3

EBIDTA (%) 49.7 55.7 13.1 16.8 29.5 28.1 29.6 33.4

Other Income 13 24 83.8 4 4 (18.2) 5.6 3.8 (32.1) 23 31 3

PBT 283 390 37.7 3 52 NM 23 31 34.2 309 473 5

Tax 16 120 NM 0 1 13 20 NM 29 142

PAT (after MI) 267 270 1.1 3 51 NM 10 11 5.9 280 331 1

Net PAT 267 270 1.1 3 51 NM 10 11 5.9 280 331 1

Net margin (%) 40.4 34.3 0.4 5.0 8.9 6.6 17.7 17.0 Capital Employed 3,715 4,253 6,866 6,909 1,130 1,226 11,711 12,388


8/2/2019 Gdl-feb 2012 - Idbi



Table: Segmental consolidated (QoQ) (Rs m

CFS Business Rail Business Cold Chain GDL Group

Q2FY12 Q3FY12 QoQ (%) Q2FY12 Q3FY12 QoQ (%) Q2FY12 Q3FY12 QoQ (%) Q2FY12 Q3FY12 QoQ (

Throughput (TEUs) 86,890 79,347 (8.7) 43,057 42,697 (0.8) - 129,947 122,044 (6

Realisation per TEU(Rs) 9,135 9,920 8.6 22,233 23,465 5.5 - -

Total Income 794 787 (0.8) 957 1,002 4.7 137 163 18.6 1,888 1,952

EBIDTA 446 438 (1.7) 165 169 2.6 36 46 25.9 647 653

EBIDTA(%) 56.2 55.7 17.2 16.8 26.5 28.1 34.3 33.4

Other Income 28 24 (13.4) 3 4 33.3 4.6 4 (17.4) 35 31 (10

PBT 399 390 (2.3) 53 52 NM 22.7 31 36.6 474 473 (0

Tax 123 120 NM 1 1 14.8 20 NM 139 142

PAT (after MI) 276 270 (2.3) 51 51 NM 7.9 11 35.4 335 331 (1

Net PAT 276 270 (2.3) 51 51 NM 8 11 35.4 335 331 (1

Net margin (%) 34.8 34.3 5.3 5.0 5.8 6.6 17.8 17.0

Capital Employed 4,360 4,253 6,870 6,909 1,200 1,226 12,430 12,388


Concall Highlights

EXIM:Domestic mix for the rail segment stood at 87:13 in Q3FY11.

The dwell time at the JNPT CFS increased from 10.5 days in Q2FY12 to 12 days in Q3FY12.

Asoti ICD is expected to start operations through road linkage from Feb 2012, though rail linkage is expected to tatime.

Rail EBIDTA margins likely to remain at 17% levels in FY12E; to improve further in FY13E. However, overhang of new lower margin short haul locations like Sanand and Jodhpur is likely to limit profitability.

Snowman capacity currently stands at 18,250 pallets and has 90% occupancy. The capacity is expected to more thdouble to 46,000 pallets by FY13. To require capex of about Rs35,000/pallet. PAT margins estimated to be 15-16%

the peak utilization levels of 95%.

The current Chennai facility is running at full capacity. The company has set-up another facility at Chennai, effectivdoubling its capacity at Chennai from ~80000 TEU earlier.

The current rake strength stands at 21 with plans to add another 8 rakes in next one year. Total capex estimated to Rs2.5 bn in the next one year.

Rail haulage expense constitutes 69% of revenue in the rail segment.

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Financial Summary

Profit & Loss Account (Rs mn)

Year-end: March FY10 FY11 FY12E FY13E

Net sales 5,166 5,991 7,669 8,765

Growth (%) 14.6 16.0 28.0 14.3

Operating expenses (3,917) (4,394) (5,269) (6,130)

EBITDA 1,249 1,597 2,400 2,635

Growth (%) (14.5) 27.8 50.3 9.8

Depreciation (455) (502) (614) (688)

EBIT 794 1,094 1,786 1,947

Interest Paid (195) (182) (123) (130)

Other income 125 129 31 32

Pre-tax profit 724 1,041 1,694 1,849

Tax 79 (44) (441) (518)

Effective tax rate (%) (11.0) 4.2 26.0 28.0Net profit 803 997 1,254 1,331

Adjusted net profit 791 968 1,254 1,331

Growth (%) (0.5) 22.2 29.6 6.2

Shares o/s (mn nos) 108 108 108 108

Balance Sheet (Rs mn)

Year-end: March FY10 FY11 FY12E FY13E

Net fixed assets 8,702 9,831 9,911 10,724

Investments 150 130 - -

Current assets 2,003 2,881 3,408 3,394

Sundry Debtors 682 624 946 1,081

Cash and Bank 795 1,506 1,757 1,608

Loans and advances 503 706 706 706

Total assets 10,855 12,843 13,320 14,119

Shareholders' funds 7,262 10,445 10,629 11,278

Share capital 1,079 1,080 1,080 1,080

Reserves & surplus 5,558 5,797 5,899 6,498

Total Debt 2,099 1,154 1,300 1,300

Unsecured loans 2,099 1,154 1,300 1,300Other liabilities 2,287 1,294 1,440 1,440

Curr Liab & prov 1,342 1,538 1,251 1,401

Current liabilities 1,307 1,105 1,251 1,401

Provisions 35 433 - -

Total liabilities 3,593 2,399 2,690 2,840

Total equity & liabilities 10,855 12,843 13,320 14,119

Book Value (Rs) 67 97 99 105


Cash Flow Statement (Rs mn

Year-end: March FY10 FY11 FY12E

Pre-tax profit 724 1,041 1,694 1,84

Depreciation 444 360 614 68

Tax paid 82 (92) (441) (51

Chg in working capital 269 (94) (376) 1

Other operating activities - - -

Cash flow from operations (a) 1,518 1,215 1,492 2,03

Capital expenditure (1,014) (1,489) (694) (1,50

Chg in investments 80 20 130

Other investing activities - - -

Cash flow from investing (b) (934) (1,469) (564) (1,50

Equity raised/(repaid) 40 24 (419)

Debt raised/(repaid) 55 (945) 146 Dividend (incl. tax) (504) (1,008) (532) (73

Chg in minorities 8 2,913 82 5

Other financing activities 19 167 -

Cash flow from financing (c) (383) 1,151 (723) (68

Net chg in cash (a+b+c) 201 897 205 (14

Financial Ratios


Adj EPS (Rs) 7.3 9.0 11.6

Adj EPS growth (%) (0.5) 21.9 29.9

EBITDA margin (%) 24.2 26.7 31.3 30

Pre-tax margin (%) 14.0 17.4 22.1 21

ROE (%) 11.2 10.9 11.9 12

ROCE (%) 8.5 10.3 15.0 15

Turnover & Leverage ratios (x)

Asset turnover (x) 0.5 0.5 0.6

Leverage factor (x) 1.5 1.3 1.2 1

Net margin (%) 15.3 16.2 16.3 15

Net Debt / Equity (x) 0.2 0.0 0.0 0

Working Capital & Liquidity ratio

Inventory days 0 0 0

Receivable days 48 38 45 4Payable days 95 56 73 7

Valuation


P/E (x) 17.8 14.6 11.3 10

Price / Book value (x) 1.9 1.4 1.3 1

PCE (x) 11.3 9.6 7.6 7

EV / Net sales (x) 3.0 2.3 1.8 1

EV / EBITDA (x) 12.3 8.6 5.7 5

Dividend Yield (%) 2.7 4.6 4.6 4

8/2/2019 Gdl-feb 2012 - Idbi



Notes

Sonam H. Udasi – Head Research (91-22) 4322 1375 [email protected]

Dealing (91-22) 6637 1150 [email protected]

Key to Ratings

Stocks:

BUY: Absolute return of 15% and above; ACCUMULATE: 5% to 15%; HOLD: Upto ±5%; REDUCE: -5% to -15%; SELL: -15% and below.

IDBI Capital Market Services Ltd. (A wholly owned subsidiary of IDBI Ltd.)

Equity Research Desk

3rd Floor, Mafatlal Centre, Nariman Point, Mumbai – 400 021. Phones: (91-22) 4322 1212; Fax: (91-22) 2285 0785; Email: [email protected] Registration: NSE CM – INB230706631, NSE F&O – INF230706631, BSE CM – INB010706639, BSE F&O – INF010706639, NSDL – IN-DP-NSDL-12-96Compliance Officer: Christina Fernandes; Email: [email protected]; Telephone: (91-22) 4322 1212

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gdl-feb 2012 - idbi

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