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ALLCARGO GLOBAL LOGISTICS LTD
PRICE: RS.167 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.195 CY12E P/E: 10.7X
Robust Operational Performance
Allcargo Global (AGLL) recorded better than expected results for the quarter
on the back of improved performance in the CFS and MTO segment. AGLL
PAT grew 75% YoY to Rs 665 mn. The EBIDTA margins for the quarter stood
at 12%, up 160bps YoY. Revenue grew ~34% YoY to Rs 8.5 bn on the back
of 35% and 60% YoY growth in revenue in EcuLine and CFS segment. CFS
segment revenue growth was mainly contributed by the 38% YoY increase
in average realization and 16% growth in total volume. We believe that
higher realisations follow our estimation of shift of northbound cargo to
the other western ports like Pipavav and Mundra. JNPT continues to handle
greater amount of Western India cargo, hence the throughput from the local
CFS's would increase. The NVOCC/MTO segment also saw healthy growth,
with EcuLine revenue growth at 35% YoY at Rs6.1 bn contributing 72% to
the total revenue. Consolidated MTO volume growth stood at 16% YoY, inline
with expectations (we expect 14% CAGR over CY10-CY12E). We
maintain our estimates and ACCUMULATE rating on the stock with a target
of Rs 195 with 16% upside from current levels.
Financial highlights
n Consolidated revenue grew 34% YoY to Rs 8.5 bn with the ECU Line and CFS
segment acting as the major growth drivers with 35% and 60% YoY growth.
Revenue in the project cargo/equipment handling division also grew 20% YoY.
n EBIDTA margins improved on the back of improvement in CFS margins with the
CFS EBIT margin improving by 800 bps to ~52%% in Q2CY10. ECU Line margins
however remained stagnant at 5.7%. The ratio of Imports to Exports containers
handled in the CFS segment also improved for the quarter from 4.5:1 to
5.3:1, which also contributed for the margin improvement.
n PBT improved by 65% YoY to Rs802 mn and Adjusted PAT improved by 75%
YoY to Rs.665 mn mainly due to the higher realizations in CFS segment and improvement
in margins.
n The tax rate stood at a lower 13.8% due to higher MAT entitlement for the
quarter as the earnings contribution from the CFS segment increased.
n Overall volume growth in MTO and CFS segments stood at 16% YoY. The realization
growth in the CFS segment stood at 38% YoY and the ECU Line
realisation grew by 6% YoY
Outlook and Valuation
We expect the NVOCC realizations to come under pressure due to the correction in
freight rates in the container shipping market in Q2CY11. As the impact will take a
quarter's time to pass on, Q3CY11 is expected to show lower realizations for the
ECU Line entity. However, volume growth estimates are being maintained at 14%
over CY10 to CY12E. Any impact on the global trade post the recent signs of slowdown
would warrant downgrade at volume estimates.
The CFS segment has shown a growth of 38% in realization which we expect to
slow down from here. With capacity constraints at the JNPT port and expected slowdown
in trade, the CFS segment realization growth is expected to slow down in the
coming quarter. At CMP, the stock is trading at 10.7 x to CY12 earnings estimates
and available at ~20% discount to its peer group average of 13 x. We have valued
the stock at par with peers. We arrive at a target price of Rs 195 per share. The
target price implies a potential upside of 16% for an investment horizon of 12
months
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ALLCARGO GLOBAL LOGISTICS LTD
PRICE: RS.167 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.195 CY12E P/E: 10.7X
Robust Operational Performance
Allcargo Global (AGLL) recorded better than expected results for the quarter
on the back of improved performance in the CFS and MTO segment. AGLL
PAT grew 75% YoY to Rs 665 mn. The EBIDTA margins for the quarter stood
at 12%, up 160bps YoY. Revenue grew ~34% YoY to Rs 8.5 bn on the back
of 35% and 60% YoY growth in revenue in EcuLine and CFS segment. CFS
segment revenue growth was mainly contributed by the 38% YoY increase
in average realization and 16% growth in total volume. We believe that
higher realisations follow our estimation of shift of northbound cargo to
the other western ports like Pipavav and Mundra. JNPT continues to handle
greater amount of Western India cargo, hence the throughput from the local
CFS's would increase. The NVOCC/MTO segment also saw healthy growth,
with EcuLine revenue growth at 35% YoY at Rs6.1 bn contributing 72% to
the total revenue. Consolidated MTO volume growth stood at 16% YoY, inline
with expectations (we expect 14% CAGR over CY10-CY12E). We
maintain our estimates and ACCUMULATE rating on the stock with a target
of Rs 195 with 16% upside from current levels.
Financial highlights
n Consolidated revenue grew 34% YoY to Rs 8.5 bn with the ECU Line and CFS
segment acting as the major growth drivers with 35% and 60% YoY growth.
Revenue in the project cargo/equipment handling division also grew 20% YoY.
n EBIDTA margins improved on the back of improvement in CFS margins with the
CFS EBIT margin improving by 800 bps to ~52%% in Q2CY10. ECU Line margins
however remained stagnant at 5.7%. The ratio of Imports to Exports containers
handled in the CFS segment also improved for the quarter from 4.5:1 to
5.3:1, which also contributed for the margin improvement.
n PBT improved by 65% YoY to Rs802 mn and Adjusted PAT improved by 75%
YoY to Rs.665 mn mainly due to the higher realizations in CFS segment and improvement
in margins.
n The tax rate stood at a lower 13.8% due to higher MAT entitlement for the
quarter as the earnings contribution from the CFS segment increased.
n Overall volume growth in MTO and CFS segments stood at 16% YoY. The realization
growth in the CFS segment stood at 38% YoY and the ECU Line
realisation grew by 6% YoY
Outlook and Valuation
We expect the NVOCC realizations to come under pressure due to the correction in
freight rates in the container shipping market in Q2CY11. As the impact will take a
quarter's time to pass on, Q3CY11 is expected to show lower realizations for the
ECU Line entity. However, volume growth estimates are being maintained at 14%
over CY10 to CY12E. Any impact on the global trade post the recent signs of slowdown
would warrant downgrade at volume estimates.
The CFS segment has shown a growth of 38% in realization which we expect to
slow down from here. With capacity constraints at the JNPT port and expected slowdown
in trade, the CFS segment realization growth is expected to slow down in the
coming quarter. At CMP, the stock is trading at 10.7 x to CY12 earnings estimates
and available at ~20% discount to its peer group average of 13 x. We have valued
the stock at par with peers. We arrive at a target price of Rs 195 per share. The
target price implies a potential upside of 16% for an investment horizon of 12
months
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