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Gujarat Pipavav Port (GPPV)
Infrastructure
Containers continue to deliver strong growth, but bulk and margins disappoint.
GPPL reported strong 3QCY11 revenue growth of 21% yoy (primarily on strong
container volume growth and higher average realization) and net PAT of Rs133 mn.
EBITDA margin expansion to 46% was below par (partly attributed to higher equipment
hire and fuel costs). Containers continued to record strong volume growth (up 30%)
but bulk cargo recorded sharp yoy and qoq decline. Downgrade to REDUCE (TP: Rs75).
Strong volume growth continues; however, margin expansion remains below par
GPPL reported strong 3QCY11 revenues of Rs979 mn, up 21% yoy, about 5% below our estimate.
Growth was primarily led by very strong container volume growth (up 30% yoy) and higher
average realization (up 19% yoy on favourable mix). Reported EBITDA margin of 46.1%, up 280
bps yoy, was lower-than-expected on higher equipment hire and fuel charges. GPPL reported a net
PAT of Rs133 mn for 3QCY11, versus a loss of Rs98 mn reported in 3QCY10.
Containers continue on strong growth path but see sharp dip in bulk partly on spillover to 2Q
Container - strong volume growth on addition of new lines. Container volumes at the
port continued to record a strong volume growth, up 30% yoy to 169,000 TEUs from 130,000
TEUs in 3QCY10. The container volume growth was led by addition of a new container service
– added a new line, CIX Service (APL/OOCL), in the previous quarter (this is further to two new
container services added in 1QCY11).
Bulk - sharp dip in volumes partly on advance arrival of some volumes in 2Q (versus 3Q).
GPPL reported a sharp decline in bulk volumes both on a yoy (down 35% yoy) as well as a
sequential basis (down 42.6% qoq) primarily attributed to some customers advancing the
volumes to the previous quarter versus 3QCY11. For 9MCY11, bulk volumes have recorded a
moderate growth of 8.5% yoy. We believe that in the near future, container cargo would
continue to drive volume growth while bulk would record only a moderate growth.
Marginally revise estimates and target price to Rs75/share; downgrade to REDUCE
We revise our estimates to Rs1.15 and Rs2.6 from Rs1.2 and Rs2.6 for CY2011E and CY2012E.
Key changes in assumptions include (1) lower bulk cargo volume estimate in CY2011E (to 3.7 mn
tons from 4.2 mn tons earlier), (2) lower EBITDA margin assumption for CY2011E based on lowerthan-
expected expansion in CY2011E so far - estimate full-year margin of 45.5% (versus 49.5%
earlier), (3) lower interest cost for the year on repayment of Rs895 mn of loans and (4) marginally
higher average realizations in CY2011E. We downgrade our rating to REDUCE (from ADD) with a
TP of Rs75 (from Rs78) on recent outperformance and limited upside to our estimates.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Gujarat Pipavav Port (GPPV)
Infrastructure
Containers continue to deliver strong growth, but bulk and margins disappoint.
GPPL reported strong 3QCY11 revenue growth of 21% yoy (primarily on strong
container volume growth and higher average realization) and net PAT of Rs133 mn.
EBITDA margin expansion to 46% was below par (partly attributed to higher equipment
hire and fuel costs). Containers continued to record strong volume growth (up 30%)
but bulk cargo recorded sharp yoy and qoq decline. Downgrade to REDUCE (TP: Rs75).
Strong volume growth continues; however, margin expansion remains below par
GPPL reported strong 3QCY11 revenues of Rs979 mn, up 21% yoy, about 5% below our estimate.
Growth was primarily led by very strong container volume growth (up 30% yoy) and higher
average realization (up 19% yoy on favourable mix). Reported EBITDA margin of 46.1%, up 280
bps yoy, was lower-than-expected on higher equipment hire and fuel charges. GPPL reported a net
PAT of Rs133 mn for 3QCY11, versus a loss of Rs98 mn reported in 3QCY10.
Containers continue on strong growth path but see sharp dip in bulk partly on spillover to 2Q
Container - strong volume growth on addition of new lines. Container volumes at the
port continued to record a strong volume growth, up 30% yoy to 169,000 TEUs from 130,000
TEUs in 3QCY10. The container volume growth was led by addition of a new container service
– added a new line, CIX Service (APL/OOCL), in the previous quarter (this is further to two new
container services added in 1QCY11).
Bulk - sharp dip in volumes partly on advance arrival of some volumes in 2Q (versus 3Q).
GPPL reported a sharp decline in bulk volumes both on a yoy (down 35% yoy) as well as a
sequential basis (down 42.6% qoq) primarily attributed to some customers advancing the
volumes to the previous quarter versus 3QCY11. For 9MCY11, bulk volumes have recorded a
moderate growth of 8.5% yoy. We believe that in the near future, container cargo would
continue to drive volume growth while bulk would record only a moderate growth.
Marginally revise estimates and target price to Rs75/share; downgrade to REDUCE
We revise our estimates to Rs1.15 and Rs2.6 from Rs1.2 and Rs2.6 for CY2011E and CY2012E.
Key changes in assumptions include (1) lower bulk cargo volume estimate in CY2011E (to 3.7 mn
tons from 4.2 mn tons earlier), (2) lower EBITDA margin assumption for CY2011E based on lowerthan-
expected expansion in CY2011E so far - estimate full-year margin of 45.5% (versus 49.5%
earlier), (3) lower interest cost for the year on repayment of Rs895 mn of loans and (4) marginally
higher average realizations in CY2011E. We downgrade our rating to REDUCE (from ADD) with a
TP of Rs75 (from Rs78) on recent outperformance and limited upside to our estimates.
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