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LOGISTICS
Port volumes at 12 major ports in Q2FY12
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. Port volumes in H1FY12 at the 12 major ports of
the country has grown to 280 mn tonnes ( +3% YoY) and container volumes
within that to 3.88 mn TEUS (+3% YOY). Minor ports like Mundra is
estimated to have grown much faster (14% CAGR). We expect the Logistics
companies in our coverage to report healthy growth in Q2FY12 (except
Concor).
Container Corporation of India (Accumulate: TP - Rs 1000)
n Q2FY12 consolidated revenue is expected to increase ~ 4 % YoY and increase ~
3% QoQ to Rs 9800 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.
n The domestic volumes of the company are estimated to report a YoY drop of
~10% in volumes. 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.
n Operating profit is expected at Rs 2635 mn which translates into an operating
margin of ~27 %, declining almost 100 bps YoY from 27.74% 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).
n Net profit for Q2FY12 is expected at Rs.2325 mn against Rs 2342 mn in Q1FY12
(remaining flat) and Rs 2068 mn in Q2FY12.
n As the valuations had become little attractive during the quarter, we had
changed the rating of the stock from Reduce to Accumulate on 29 August 2011.
Gateway Distriparks Ltd (Buy: TP - Rs 160)
n We expect GDL's Q2FY12 revenues to increase~38% YoY and increase ~3%
QoQ to Rs 1880 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.
n The rail business is expected to report healthy load factor of 80% (previous year
~75%) with operating margin of 17%. This would be third consecutive quarter
for the rail business to report profits at net level.
n With improved CFS realizations (YoY) and robust rail performance we expect
GDL to report operating profit of Rs 640 mn which translates into an improved
operating margin of ~34 %, improving almost 600 bps YoY from ~ 27%.
n Net profit is expected at Rs 350 mn versus Rs 334 mn in Q1FY12 and Rs 205 mn
in Q2FY11.
Allcargo Global Logistics (Buy: TP - Rs 195)
n Q2FY12 consolidated revenue is expected to increase ~ 25% YoY and increase
3% QoQ to Rs 8,800 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 4% growth in volumes in line
with growth of global container volumes. However the realization should be under
pressure due to uncertainty in Eurozone.
n Operating profit is expected at Rs 1050 mn which translates into an operating
margin of ~11.93 %, falling marginally YoY from 11.98% primarily due to pricing
pressure in the key MTO business.
n Net profit is expected at Rs 650 mn against profit of Rs 665 mn in Q1FY12 and
profit of Rs 379 mn in Q2FY11.
