BUY Allcargo Logistics; Target Price Rs. 390 ::Kotak Securities

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ALLCARGO			12-30-2014
Recommendation BUY ( + )	Target Price Rs. 390	Current Price (On report dt.) Rs.309.1

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In the last 2 quarters, the following has emerged as positives for Allcargo
Logistics (ALL), 1) Healthy volume growth in the key Multimodal Transport
Operations (MTO), 2) Recovery of volumes in the Container Freight Station
(CFS) segment and 3) Improvement in Margins. We estimate volume for the
MTO segment to grow at ~31% in FY15 and ~9% in FY16. Strong
relationships will help the company to outperform its peers and report
stable volumes in the CFS division.
We continue to assign a PE of 16x FY16E earnings to the stock on the back
of 1) Immune nature of MTO (LCL) business to weak trade: 2) Latest
acquisitions which help diversify the business: 3) Stable performance of the
CFS segment and 4) estimated recovery in global trade. Recommend "BUY"
on Allcargo Logistics with an unchanged TP of Rs 390
Non Vessel Owned Container Carrier (NVOCC) or Multimodal
Transport Operations (MTO) continues to show reasonable
growth
Volumes have improved for the MTO segment in H1FY15 at ~210,000 TEUS (+41%
YoY) primarily due to consolidation of the new acquisitions as well as improvement
in trade. We estimate the MTO segment to grow at ~31% in FY15 and ~9% in
FY16 attributed to 1) Growth in the MTO segment 2) Immune nature of Less than
Container Load (LCL) business and 2) Consolidation of Econocaribe Consolidators
and FCL Marine Agencies.

http://www.kotaksecurities.com/pdf/pdfs/FUNDALLCARGO30122014092234.pdf