Gateway Distriparks - Rail IPO to Unlock Value; Result Update Q3FY15 ::Edelweiss

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Gateway Distriparks’ (GDPL) Q3FY15 revenue at INR2.7bn (up 10.3% YoY) came in 4% ahead of our estimate. Like-for-like (ex-Snowman) revenue and EBITDA jumped 32% and 62%, respectively, YoY. EBITDA surged primarily due to improvement in the rail segment. PAT jumped 70% YoY to INR543mn. The company is now planning to go ahead with the IPO of Gateway Rail Freight (GRFL). With investor interest in railway stocks, we expect the stock to factor in unlocked value of GRFL, post IPO.

Rail segment continues to outshine, but Q4 guidance weak

The rail segment continued to surge ahead with volumes jumping 24% YoY (down 5.5% QoQ) to 63,952TEU. EBITDA margin catapulted to INR7,965/TEU, highest in the past 5 years and up 30% QoQ due to: (a) increased double stacking from Garhi-Harsaru; and (b) hike in prices at the commencement of Q3FY15 in anticipation of increase  in haulage charge. The company has guided for further volume loss of ~5% in Q4FY15 due to impact of price hikes as the surge in rail haulage charges is passed on.

CFS segment and Snowman performance in line

CFS volumes jumped 16% YoY (down 6% QoQ) because of a strike at Mumbai and a cyclone in Vizag. CFS revenue surged 25% YoY to INR893mn. Realisations improved 8% YoY to INR9,245/TEU led by improvement in both Mumbai and non-Mumbai realisation. Though Snowman’s realisation/pallet was down 15% YoY, it was up 6.3% QoQ to INR6,453 as the company, for second quarter in a row, did not expand capacity. Its PAT jumped 157% QoQ to INR59mn on account of lower interest expense and higher interest income received on unused IPO funds.

LINK
https://www.edelweiss.in/research/Gateway-Distriparks--Rail-IPO-to-Unlock-Value;-Result-Update-Q3FY15/28214.html