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Strong volumes put Gateway in sweet spot…
• Gateway Distriparks reported spirited Q2FY15 revenue growth of
16.5% YoY to | 292.7 crore vs. | 251.2 crore in Q2FY14. Rail segment
revenues recorded robust growth of 24% YoY to | 172 crore while
CFS grew ~16% YoY to | 89 crore
• EBITDA for the quarter stood at | 85.7 crore posting strong growth of
14% and 30% QoQ and YoY, respectively. On the margin front,
EBITDA margin expanded ~301 bps YoY and 237 bps QoQ to 29.3%
• PAT for the quarter stood at | 47.7 crore posting growth of ~42%
YoY. On the volume front, CFS throughput for Q2FY15 stood at
1,02,587 TEUs with rail/ICD at 67,706 TEUs, posting growth of 22%
and 33%, respectively, YoY
CFS volume grows strong at Vizag and Kochi; Mumbai volumes return
GDL with ~5,50,000 TEUs annual capacity is one of the largest container
freight station (CFS) operators in India. Throughput of GDL’s CFS
business grew at a modest CAGR of ~1% in FY11-13 to 342662 TEUs.
However, with an improvement in the economy and maturity of new CFS
such as Kochi and Vizag, we expect CFS volumes to post a CAGR of 16%
over FY14-17E. For Q2FY15, CFS volume at Mumbai grew ~12% YoY to
56,989 TEUs whereas other CFS at Chennai, Vizag and Kochi posted
strong growth of 27.5%, 28% and 389% YoY to 24973, 16585 and 4040
TEUs, respectively. Going ahead, we expect volume growth to sustain as
major port’s container volume growth shows significant traction.
Rail/ICD segment continue to grow strong catalysing growth for GDL
GDL with nearly 785,000 TEUs capacity in ICD segment and 21 rakes in
Gateway Rail Freight (GRFL) is the second largest container train operator
(CTO) in the country. Rail/ICD throughput for GDL grew at a CAGR of
~7% over FY12-14 to 205538 TEUs. Going ahead, it is expected to grow
at ~12% CAGR over FY14-17E. The rakes ply mainly on the Exim route,
thereby reducing empty running and garnering higher margins. The
operating margins initially declined (by 100 bps YoY to 15% in FY13) in
the rail segment due to a hike in freight by Indian Railways. However, in
FY14, GDL has been able to pass on those hikes (partially) and also
enhanced its operational efficiency with double stacking and closure of
unprofitable routes, enabling the rail/ICD segment to report a 500 bps YoY
improvement in the EBITDA margin. For the quarter, the margin for the
rail segment improved ~725 bps YoY. Further, with Faridabad ICD
becoming operational and expected to gain critical mass in the next two
quarters, throughput of the rail/ICD segment is expected to improve
further. Going ahead, GDL is planning a capex of nearly | 75 crore in FY15
to develop another ICD near Ahmedabad, which is expected to be
operational in 18-24 months.
CFS volumes, higher rail segment margins shore up valuation
As container volumes at major ports like JNPT and Chennai post growth
of 9% and 5% YoY, respectively, in YTD, we expect the CFS segment to
post confident growth. Further, as diesel prices ease together with
superior Exim volume and operationalisation of Faridabad ICD, we
anticipate GDL rail/ICD segment will also report significant growth. Finally,
as the associate cold chain segment continues to grow at a steady pace
for GDL, we value it with 20% holding company discount together with
SOTP for CFS and rail segment to arrive at target price of | 330 with a
BUY recommendation.


LINK
http://content.icicidirect.com/mailimages/IDirect_GatewayDistriparks_Q2FY15.pdf