Allcargo Global Logistics: Strong Quarter: ICICI Sec

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Allcargo Global Logistics: Strong Quarter…
Allcargo Global Logistics (AGL) reported net sales of | 703.9 crore in
Q3CY10, growth of 41.4% YoY and 10.1% QoQ, better than our
expectations mainly on account of healthy performance from ECU line.
Container freight station (CFS) volumes grew by 20.8% YoY and 0.8%
QoQ to 57,039 TEUs and multimodal transport operation (MTO)
volumes grew by 14.7% YoY and 3.6% QoQ to 62,566 TEUs.The
consolidated net profit after minority interest stood at | 56.7 crore, an
increase of 56.6% YoY and 49.7% QoQ


Highlights of the quarter
�� The company has re-assesed the estimated useful life of cranes
which has resulted in lower depreciation thereby increasing profit by
| 11.2 crore
�� ECU line reported healthy performance for Q3CY10 on the back of
improved demand scenario. ECU lines revenue increased by 27.1%
YOY to | 482.8 crore, EBITDA increased by 55.2% to | 29.8 crore,
while the EBITDA margins increased by 113 bps YoY to 6.2% and
the subsequent net profit after minority interest increased by 76.8%
YoY to | 14.5 crore.
�� Hindustan Cargo (HCL) reported revenues of | 57.3 crore indicating
a YoY growth of 145%. EBITDA stood at | 4.6 crore, while net profit
after minority interest stood at | 3.5 crore

VALUATION
At the current price of | 161, the stock is trading at a P/E multiple of 11.8x
its CY10E EPS of | 13.7 and 10.3x its CY11E EPS of | 15.6. AGL’s recent
acquisition in Hong Kong based companies engaged in NVOCC business
in China would increase its presence in high growth markets. Furthermore
the improvement seen in ECU lines performance augurs well for the
company. Hence, we recommend the investors to BUY the stock with the
target price of | 187, 12x CY11E EPS.