India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Logistics Sector Monthly Update - November 2010
Logistics Sector: Port volume data
Iron ore volumes weigh on port throughput
Traffic at India’s 12 major ports grew by a marginal 0.8% yoy during
April-November 2010 (-5.6% mom) on account of the 15.4% yoy decline in iron
ore volumes and moderate growth of 2.4% yoy reported by the petroleum oil and
lubricant (POL) products. Iron ore exports have been declining since July 2010
post the ban of exports by Karnataka from ten of its ports. In November 2010,
iron ore exports were down 37.4% yoy and 38.0% qoq at 4.0mn tonnes as
against 6.3mn tonnes in November 2009 and 6.4mn tonnes in October 2010.
The ban by the Karnataka government directly impacted port volumes where it is a
principally handled commodity viz. Mangalore (-13.1% yoy), Ennore (-12.3% yoy)
and Paradip (-2.2% yoy) during the period. However, the decline was balanced by
the 17.2% yoy and 13.2% yoy increase in fertiliser volumes and container tonnage
respectively, during the period.
Container volumes stabilising at higher levels
As per the Indian Port Association (IPA) data for November 2010, container
volumes at 12 major ports registered a growth of 12.6% yoy, but declined 3.0%
on a mom basis. The JNPT port, which handles around 61% of the country’s
container volumes, witnessed an increase of 9.4% yoy while posting 1.6% decline
on mom basis. The Chennai port, which handles around 16% of the country’s
container volumes, saw an increase of 21.3% yoy, but a mom decline of 14.3%.
The container data for FY2011 this far indicates that volumes have stabilised at
higher levels albeit on a low base. During April-November 2010, the major ports
handled 5.0mn TEUs v/s 4.4mn TEUs during the corresponding period of last
year, i.e. a yoy growth of 12.3%. Going ahead, we expect the ports to sustain the
monthly run-rate and surpass the 7.0mn TEU mark set for FY2011.
Company-wise, we estimate Concor to post 10.0% growth in Exim volumes in
FY2011 as against management’s guidance of 12%.
Exports picking up
In October 2010, India’s exports stood at Rs79,763cr (+15.3% yoy), whereas
imports were valued at Rs122,970cr (+1.5% yoy). Cumulative value of exports for
the April-October 2010 period stood at Rs556,162cr (+20.3% yoy), while the
cumulative value of imports stood at Rs889,827cr (+19.7% yoy) for the period.
Thus, the trade deficit increased by 18.7% yoy to Rs333,665cr during April-
October 2010. The revival in Exim trade has been visible in the overall port
throughput as well as container volumes.
Outlook
We believe that sustained growth in the Indian economy with GDP growth expected
at 8.5% over the next few years, as well as emergence of India as a global
outsourcing hub will facilitate the country’s container trade. In the current decade,
container traffic registered 12% CAGR compared to the 9% CAGR posted by the
total traffic at the major ports. We expect this trend to continue and container
traffic to register 11% CAGR over the next five years, driven by the addition of new
container terminals and increased containerisation.
We prefer companies that provide a decent blend of growth opportunities and are
quoting at attractive valuations. Accordingly, we maintain a Reduce on Concor as
the company is losing its pricing power in the high-margin Exim segment, and is
trading at expensive valuations. We maintain an Buy on GDL and expect the
company to register 14.1% CAGR in EPS over FY2010–12 on account of being
present at strategic locations, its ongoing expansion plans and break-even in the
rail business at the PAT level. We maintain a Buy on AGL owing to reasonable
valuations and improved performance by ECU Line over last few quarters.
No comments:
Post a Comment