LOGISTICS :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

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http://www.kotaksecurities.com/pdf/dmb/MorningInsight10042012.pdf


LOGISTICS
Performance of Logistics companies involved with container rail business,
CFS business and related business is strongly linked to performance of the
port sector in the country. With the container volumes in January and
February 2012 (March not available) at the 12 major ports of the country
growing to 1.26 mn tonnes ( +3% YoY) and minor ports like Mundra
estimated to grow much faster (14% CAGR), we expect the Logistics
companies in our coverage to report healthy growth in Q4FY12(except
Concor).
Container Corporation of India (SELL: Target Price - Rs 905)
 Q4FY12 consolidated revenue is expected to increase ~ 9 % YoY and ~ 4% QoQ
to Rs 10,850 mn in sync with growth in volumes at major ports. It is important to
note here that Concor primarily operates in Exim segment out of JNPT.
 The domestic volumes of the company are estimated to report a YoY drop of
~10%.  In the previous quarter Concor had reported a 13% YoY decline in domestic volumes primarily led by new railway policy effective Dec-2010. Railways
increased the specified rating of five commodities (cement, stone other than
marbles, iron & steel, alloys & metals, POL products) leading to higher haulage
by 100% to 275%. This led to Concor losing almost the entire volumes of these
commodities to road transportation.
 Operating profit is expected at Rs 2,824 mn which translates into an operating
margin of ~26 %, declining almost 50 bps YoY from 26.5% primarily due to increased competition in the Exim segment (waning pricing power) and higher
haulage cost in domestic segment ( not completely passed to customers till
date).
 Net profit for Q4FY12 is expected at Rs.2,233 mn against Rs 2,413 mn in Q3FY12
(-7% QoQ) and Rs 2,013 mn in Q4FY11.
 Due to recent hike in rail haulage effective 1st April, 2012; we had changed the
rating of the stock from Reduce to SELL.
Gateway Distriparks Ltd (Accumulate: Target Price - Rs 154)
 We expect GDL's Q4FY12 revenues to increase ~25% YoY and  ~8% QoQ to Rs
2,100 mn. This, we believe, would be largely led by congestion at JNPT and
Chennai port (it leads to higher CFS volumes and realization) and improved load
factor in the rail business.
 The rail business is expected to report healthy load factor of 80% (previous year
75%) with operating margin of 17%. This would be fifth consecutive quarter for
the rail business to report profits at net level.
 With improved CFS realizations (YoY) and robust rail performance we expect
GDL to report operating profit of Rs 630 mn which translates into healthy operating margin of ~30%
 Net profit is expected at Rs 343 mn versus Rs 331 mn in Q3FY12 and Rs 350 mn
in Q4FY11.
Allcargo Global Logistics (Buy: Target price - Rs 195)
 Q4FY12 or Q1CY12 consolidated revenue is expected to increase ~ 40% YoY
and 3% QoQ to Rs 10,250 mn, Again, the congestion at JNPT and Chennai port
would help the company report better numbers in the CFS business. ECU line
and domestic MTO business is also estimated to report 5% growth in volumes in
line with growth of global container volumes. However the realization should be
under pressure due to uncertainty in Eurozone.