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Steady quarter; CMP building in all positives. GPPV reported in-line operating results with weakness in cotton trade compensated by growing bulk trade. While GPPV’s key trading geographies are reporting growth moderation, its differentiated offerings (rail-evacuation, double stacking) would protect business. The port, though, would find it difficult to outgrow the market on a sustainable basis for long (cautious approach to adding capacities; small, leftover rail opportunity from JNPT for GPPV’s non-major ports). CMP prices in all positives (business, capex, capacity, margin). REDUCE.
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Quarterly results: surge in bulk business helps compensate for loss of cotton container volumes GPPL reported in-line 4QCY14 results with revenues of `1.84 bn, up 27% yoy, 1.6% ahead of our estimate. The strong growth in bulk volumes (grew >2X yoy) compensated for the weakness in container volumes (195,000, up 1% yoy, impacted by 20,000 yoy lower cotton volumes). Higher share of bulk impacted margin (54.5% versus 57% estimate). Strong operating performance coupled with absence of interest cost boosted PAT (`0.89 bn, up 47% yoy, meets `0.89 bn estimate). Business headwinds to limit growth; small leftover JNPT opportunity to curb outperformance Based on the company’s past peak monthly volumes (77,000 TEUs) and capacity constraints, it can achieve a maximum annual throughput of about 950,000 (we build these volumes for FY2016E). Capacity expansion by end-FY2016 would then provide headroom for growth (on schedule). Moderating trade demand from China and Europe (~40-50% GPPV’s business) and weak cotton exports (down 60% yoy) would likely put downward pressure on container volumes. GPPV may not get as affected by this slowdown based on its differentiated offerings (double-stacking solutions). We do note difficulty for GPPV to grow ahead of the market on a sustainable basis. Against its 0.8 mn TEUs business, JNPT has limited rail-linked cargo to offer (0.6 mn TEUs), for which there are other takers too (Adani Ports, Hazira). CMP prices in the positives for business, capacity and margin GPPV’s CMP implies strong growth assumptions (12% decadal container volume CAGR, 5X capacity increase, concessional royalty through CY2048). This extends current growth momentum beyond the key milestones of (1) JNPT’s North-bound traffic getting absorbed by Gujarat’s ports by CY2019 and (2) royalty reset in CY2028. At our `200 SOTP, we build in full value of extension of concession period, while building in 10% royalty (yields 16-17% IRR on equity investment made by GPPV over the past 15 years). We retain our estimates and `200 SOTP (based on December 2016-based DCF and 14X December 2016 earnings for
PRCL).
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily05022015pu.pdf
Steady quarter; CMP building in all positives. GPPV reported in-line operating results with weakness in cotton trade compensated by growing bulk trade. While GPPV’s key trading geographies are reporting growth moderation, its differentiated offerings (rail-evacuation, double stacking) would protect business. The port, though, would find it difficult to outgrow the market on a sustainable basis for long (cautious approach to adding capacities; small, leftover rail opportunity from JNPT for GPPV’s non-major ports). CMP prices in all positives (business, capex, capacity, margin). REDUCE.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Quarterly results: surge in bulk business helps compensate for loss of cotton container volumes GPPL reported in-line 4QCY14 results with revenues of `1.84 bn, up 27% yoy, 1.6% ahead of our estimate. The strong growth in bulk volumes (grew >2X yoy) compensated for the weakness in container volumes (195,000, up 1% yoy, impacted by 20,000 yoy lower cotton volumes). Higher share of bulk impacted margin (54.5% versus 57% estimate). Strong operating performance coupled with absence of interest cost boosted PAT (`0.89 bn, up 47% yoy, meets `0.89 bn estimate). Business headwinds to limit growth; small leftover JNPT opportunity to curb outperformance Based on the company’s past peak monthly volumes (77,000 TEUs) and capacity constraints, it can achieve a maximum annual throughput of about 950,000 (we build these volumes for FY2016E). Capacity expansion by end-FY2016 would then provide headroom for growth (on schedule). Moderating trade demand from China and Europe (~40-50% GPPV’s business) and weak cotton exports (down 60% yoy) would likely put downward pressure on container volumes. GPPV may not get as affected by this slowdown based on its differentiated offerings (double-stacking solutions). We do note difficulty for GPPV to grow ahead of the market on a sustainable basis. Against its 0.8 mn TEUs business, JNPT has limited rail-linked cargo to offer (0.6 mn TEUs), for which there are other takers too (Adani Ports, Hazira). CMP prices in the positives for business, capacity and margin GPPV’s CMP implies strong growth assumptions (12% decadal container volume CAGR, 5X capacity increase, concessional royalty through CY2048). This extends current growth momentum beyond the key milestones of (1) JNPT’s North-bound traffic getting absorbed by Gujarat’s ports by CY2019 and (2) royalty reset in CY2028. At our `200 SOTP, we build in full value of extension of concession period, while building in 10% royalty (yields 16-17% IRR on equity investment made by GPPV over the past 15 years). We retain our estimates and `200 SOTP (based on December 2016-based DCF and 14X December 2016 earnings for
PRCL).
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily05022015pu.pdf
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