ALL Cargo_data Points Research Report

8/2/2019 ALL Cargo_data Points Research Report

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2nd Feb , 2011

B P EQUITIESAllcargo Global Logistics Ltd.

Share Holding Pattern (%)

Sector Outlook Bullish

CMP Rs 165

Target Price Rs 241

BSE code 532749

NSE Symbol ALLCARGO

Bloomberg AGLL IN

Reuters ALGL.BO

Key Data

Nifty 5,736

52WeekH/L(Rs) 18,943

O/s Shares (mn) 130.5

Market Cap (Rs bn) 21.5

Average volume

3 months 151,575

6 months 99,693

1 year 71,493

Stock

Face Value (Rs) 2.00

Relative Price Chart

Research Analyst

Rupin Shah

[email protected]

022-61596408

Improvement in all segments, valuations attractive

Company Overview

Allcargo Global Logistics Ltd (Allcargo) is the second largest Non Vessel Owning Common Carrier(NVOCC) in the world offering specialised logistics services across Multi Modal Transport Opera-tions (MTO), Container Freight Station (CFS)/ Inland Container Depot (ICD) and Project & Engineer-ing Solutions.

Investment Rationale

Aggressive capacity expansion to boost top-line

Allcargo has planned to spend Rs 2.5bn in CY11 out of which it has allocated ~ Rs 1bn for doublingits capacity at JNPT CFS to ~288,000 TEUs (Twenty-Foot Equivalent Unit) and expansion of otherCFS. We expect the company would add JNPT capacity by Q3CY11 end. The company has allo-cated Rs 400mn for setting up ICDs at Dadri and Hyderabad with capacities of 52,000 TEUs and36,000 TEUs respectively. The company is also planning to spend Rs 500mn for expanding its fleetsize for project and engineering solution segment. We believe capacity expansion at JNPT CFS(current utilisation rate above 95%) & new capacity at ICDs as well as order book position (INR1.8bn) of project and engineering solution segment would drive top-line growth. We expect revenuesof the company to increase at a CAGR of 21.4% to 38.8bn between CY10-CY12.

Improvement in international market to drive MTO volume

ECU Line (subsidiary) generates its major revenues (more than 40%) from European region. As perthe World Banks estimate, European economy is expected to grow at GDP growth rate of 1.3% and1.8% in CY11 and CY12 respectively and the world economy is expected to grow at a GDP rate of3.3% and 3.5% in CY11 and CY12 respectively. We believe with improvement in international trade,ECU Lines volume to increase at a CAGR of 9.6% to 257,643TEUs between CY10-CY12.

Gradual shift towards higher margin services

The company is focusing on expanding its ICDs/CFS network to improve overall margins as its CFSdivision enjoys higher margins (EBIT margin ~45.4% in CY10). We believe the contribution in totalrevenue from CFS business would increase to 10.2% in CY12 compared to existing 7.6%. Goingahead, we expect change in revenue mix toward high margin CFS business to expand consolidatedEBIT margin to 60bps to 9.1% in CY12.

Outlook and ValuationAllcargo has a strong presence in NVOCC business through wide network of ECU Line and also hasa strong hold on domestic MTO business. Considering aggressive capex plans for growing ICDs/ CFS and Project & Engineering Solution segments, we believe margins to expand going forward. AtCMP, the stock is trading at 7.9x to CY12 earning estimates and available at ~56% discount to itspeer group average of 14x. We have valued the stock on the basis of DCF method due to the hugecapex plan, the benefits of which would accrue over a longer period. We arrived at the target price ofRs 241 per share. The target price implies a potential upside of 46% for investment horizon of 12-18months. We initiate coverage with a BUY recommendation.

Logistics | Initiating Coverage 29 th March 2011

Buy

BUY HOLD SELL

> 15% -5% to 15% < -5%

Stock Rating

0.000

0.010

0.020

0.030

0.040

100

120

140

160

180

200

Mar-10 Jun-10 Sep-10 Dec-10 M

AllCargo Relative to Nif

YE M arch (Rs mn) CY08A CY09A CY10A CY11E CY12E

N et Sa le s 23 ,141 20,609 26,329 32,507 38 ,821Sales growth (%) 43.4% -10.9% 27.8% 23.5% 19.4%EBIT 1,754 1,640 2,245 2,832 3,541EB ID T A 2 ,201 2,185 2,790 3 ,544 4 ,307Net Pro fit 1,116 1,299 1,710 2,193 2,726D ilut ed EP S 10.0 11.1 13.1 16 .8 20.9No o f Diluted shares (mn) 111.8 117.2 130.5 130.5 130.5

EBIT (%) 7.6% 8.0% 8.5% 8.7% 9.1%EB ID T A (%) 9.5% 10 .6% 10 .6% 10 .9% 11.1%NPM (%) 4.8% 6.2% 6.4% 6.7% 7.0%R o E (%) 20.6% 16 .3% 15 .4% 16 .3% 17.3%RoCE (%) 33.7% 20.5% 17.3% 19.4% 22.2%Debt/Equity (x) 0.56x 0.21x 0.32x 0.25x 0.15x

P / E (x) 12 .8x 17 .7x 11.2x 9 .8x 7 .9xP/BV (x) 2.3x 2.4x 1.5x 1.5x 1.3xEV/EBIDTA (x) 7.7x 11.1x 7.2x 6.4x 5.0x

Key Financials

Key Rat io s

Valuat ion Rat ios

Source: Company Reports, BP Equities


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Allcargo Global Logistics Ltd. Initiating Coverage

Institutional Research BP Equities Pvt. Limited (www.bpwealth.com) 31/3/2011 2

Investment RationaleAggressive capacity expansion to boost top-line

After spending Rs 2.5bn for expanding CFS capacity at Chennai and Mundra as well as on fleetexpansion of project & engineering segment in CY10, the company has planned to spend anotherRs 2.5bn in CY11 mainly for expanding ICDs/CFS capacity and for increasing its fleet size in pro-

ject and engineering solution segment. The company has planned to spend Rs ~1.0bn for dou-bling its capacity at JNPT CFS to ~288,000 TEUs and expanding other CFS. Currently, JNPTcontributes ~58% (~131,870 TEUs) of total CFS volume of the company. We expect the companywould add this capacity by Q3CY11 end. The company has allocated Rs 400mn for setting upICDs at Dadri (Greater Noida-Uttar Pradesh) and Hyderabad with capacities of 52,000 TEUs and36,000 TEUs respectively. We believe the company would start its commercial operation at DadriICD by Q3CY11 and at Hyderabad ICD by Q3CY12. The company is also planning to spend Rs500mn for expanding its fleet size for project and engineering solution segment.

CY11 Capex Break-up (Rs 2.5bn)

Expansion Plan of ICDs/CFS

We believe expansion of ICDs/CFS facility would increase the revenues from CFS segment , par-ticularly from JNPT CFS as currently its operates above 95% capacity utilization with ~9% marketshare at JNPT port. Currently, JNPT contributes more than 60% of CFS volume of the companywhich attracts higher realization compared to other CFS in India mainly due to most of its volumeis contributed by imports. JNPT has registered a CAGR of ~15% to 4.1mn TEUs between FY01and FY10. We believe this growth would continue in future considering overall growth in the econ-omy and Allcargo is well positioned to get the benefit of increasing traffic on Indias largest port(accounts for ~60% of container traffic). Therefore, We expect revenues of the company wouldincrease at a CAGR of 21.4% to 38.8bn between CY10-CY12.

We believe expansion atgrowing JNPT port wouldbenefit the company to in-crease its CFS revenue.

JNPT, 40%

ICD,16%

Other,8%

Project &Engineering,

20%

warehousing,16%


CFS/ICDsExpansion

(TEUs)Total Capacity

(TEUs) Ex pe cte d to comple teJNPT CFS 144000 144,000 288,000 Q3CY11Dadri ICD Nil 84,000 84,000 Q3CY11Hyderabad ICD Nil 36,000 36,000 Q3CY12

Current Capapcity(TEUs)


Allcargo has a very aggressive capex plan for expanding its ICDs/CFS network.


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Improvement in domestic & international market to drive MTO volume

Allcargo generated its ~10% MTO volume (25,880 TEUs in CY10) from Indian market and it gen-erates remaining 90% MTO volume (~211,700 TEUs in CY10) through ECU Line which has its

presence in over 59 countries. Container traffic has positive co-relation with overall growth in theeconomy.

The growth of Standalone MTO business is largely depends upon overall growth in Indian econ-omy. We believe container traffic would continue to show uptrend in the coming years with in-crease in industrial production and improved trend of Indias import and exports. We believestandalone volume to increase at a CAGR of 5.4% to 28,733 TEUs in CY12 as the Indian econ-omy is expected to grow above 8% for the next two years.

Standalone MTO volume & volume growth Indias EXIM Performance

Source: Company Reports, BP Equities Source: Economy Survey Report, BP Equities

ECU Line generates its major revenues (more than 40%) from European region. As per the WorldBanks estimate, European economy is expected to grow at GDP growth rate of 1.3 % and 1.8%in CY11 and CY12 respectively and the world economy is expected to grow at a GDP rate of3.3% and 3.5% in CY11 and CY12 respectively. We believe with improvement in internationaltrade, ECU Lines volume would increase at a CAGR of 9.6% to 257,643 TEUs between CY10-CY12.

Project & Engineering solution segment showing high potential for revenue growth

Considering the robust demand from windmill, power projects, refineries, metro & airport projectsand building construction projects, the company has earmarked Rs 500mn for expanding fleetsize of Project and Engineering solution in CY11. In Engineering Solution business, the companyis currently operating at above 90% capacity utilization level. The current order book of the seg-ment is ~Rs 1.8bn. We believe the company would execute all the order in CY11 with the existingfleet size and additional expansion of fleet size would set the platform for executing additionalorders in this high growth area. We expect Project & Engineering Solution revenues would in-crease at a CAGR of 13.1% to 4.2bn between CY09 and CY13.

Current Fleet size of Project & Engineering Solution

We believe container trafficwould continue to show up-trend in the coming yearswith increase in industrialproduction and improvedtrend of import and exports.

22,000

24,000

26,000

28,000

30,000

CY08 CY09 CY10 CY11e CY12e

Standalone MTO volume (TEUs) % of growth

We believe the company would execute all the order in CY11 with the existing fleet size and additional expansion of fleet size would set the platform for executing additional orders in this high growth area.

Current fleet sizeCranes 101

Forklifts 68Reach Stackers 25Trailers 423Source: Company Reports , BP Equities


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Adjusted EPS to grow at a 3 year CAGR of 21.4% to Rs 23.3 in CY13e

Adjusted EPS (Rs)

Source: Company Reports BP Equities Research

Q4CY10 PerformanceStandalone revenue of the company increased by 27.3% YoY to Rs 1,779mn in Q4CY10 on theback of growth across segments, particularly CFS segment which reported a 37.1% YoY growthto Rs 614.6mn in revenue. Project & Engineering solution segment registered 33.2% YoY in-crease to Rs 662.8mn in Q4CY10. Domestic MTO segment registered 12.7% YoY increase to Rs545.7mn on the back of 24.2% YoY growth in average realization to Rs 89470 per TEU in

Q4CY10.

Consolidated revenue during the quarter increased by 25.9% YoY increase to Rs 7,037.5mnmainly due to volume growth across segments. EBIT margin during the quarter improved 350bpsYoY to 8.4%. Adjusted net profit margin increased 208bps to 5.9% in Q4CY10.

Quarterly Performance (Rs mn)

Source: Company Reports BP Equities Research

Standalone revenue of the company increased by 27.3% YoY to Rs 1,779mn in Q4CY10 on the back of growth across segments, particularly CFS segment which reported a 37.1% YoY growth to Rs 614.6mn in revenue.

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

0.0

2000.0

4000.0

6000.0

8000.0

Q4CY09 Q1CY10 Q2CY10 Q3CY10 Q4CY10

Total Revenue (Rs mn) EBIT margin (%)

Net margin (%)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

CY07 CY08 CY09 CY10 CY11e CY12e CY13e

CAGR: 21.4% (CY10-13e)


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Company Description

Allcargo is the 2nd largest global player in LCL (less than container load) consolidation business.Through its MTO operations, the company offers end-to-end freight services to exporter and im-porter of cargo and this is done through more than one form of transportation modes. MTO seg-ment continues to be the major revenue driver for the company, accounting for ~81% of its CY10revenues, with the balance being contributed by CFS operations (~8%) and Project & EngineeringSolution segment (~11%).

The company operates primarily in three segments, viz. MTO, CFS/ICDs operations and Project &Engineering Solution segment.

Allcargos Revenue segments


Segment wise client break up


Allcargo is the second largest

NVOCC player in the world.

CFS

Ship ping Lines

Freightforwarders

MTO

Freightforwarders

Project & Eng ineering

Capital intensiveco mpanies l ike Oil

& Gas, Power

Tran sformer &wind turbinecompanies

MTO Operation

Allcargo Global Logistics Ltd.

NVOCC

CFS/ICDs Projects & Engineering

Solution

Project cargo

Import Export

FCL/LCL

Engineering Solution


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Projects & Engineering solution business : It provides integrated end to end project, engineer-ing and logistics through a diverse fleet of owned or rented special equipment like cranes, hydrau-

lic axles, barges, reach-stackers, to carry ODC/OWC as well as project engineering solutionsacross various infrastructure industries. The company offers equipments like cranes, reach-stackers and trailers on rental basis. Currently, the company has 101 cranes, 68 forklifts, 423 trail-ers, 25 reach stackers.

Project cargo provides services in ODC (over dimensional cargo) and OWC (overweight cargo)logistics. The company has successfully executed many projects for its clients such as BHEL,British Gas, Weatherford, Delhi Metro Corporation, Jindal, Vedanta, Bombardier, TVS Motors, etc.

Allcargos Geography-wise revenue break-up

Source: Bloomberg, BP Equities

The company has successfully executed many projects

for its clients such as BHEL,British Gas, Weatherford,Delhi Metro Corporation, Jin- dal, Vedanta, Bombardier,TVS Motors, etc.

31%

27%

18%

15%

5% 2% 2%

Europe IndiaFar East AmericaMediterranean Australia & New ZealandAfrica


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MTO business

MTO includes consolidation and transport of cargo as less than container load (LCL) cargo andfull container load (FCL) cargo, by utilizing multiple modes of transport such as sea, road and railunder a single Multimodal Transport document. NVOCC involves LCL consolidation activities inIndia and overseas. NVOCC services are classified under two sub-categories: LCL (less thancontainer load) and FCL (full container load) consolidation. Allcargo undertakes LCL consolidationof multiple types of cargo from various consignees in a single container. This service is beneficialfor small exporters/importers, since they often have insufficient cargo to fill an entire container.ECU Line is the main subsidiary of the company which has overseas network for LCL activities.Allcargo, by acquiring ECU Line, has expanded the geographical reach of its LCL services.

Allcargos LCL Consolidation Flow


CFS/ICDs business : A CFS is a warehouse located near a port that facilitates customs clearanceof cargo, essentially acting as an extension of the port. The CFS container yard space is equippedto handle containers and provide storage, handling and cargo consolidation services. It involvescargo stuffing, de-stuffing, custom clearance and other related ancillary services to importers andexporters. The companys largest CFS is located at the Jawaharlal Nehru Port Trust (JNPT),Mumbai. This CFS is spread over 23 acres and has a total storage capacity of up to 144,000TEUs Apart from CFS at JNPT, the company also has CFS at Mundra and Chennai as well as anICD at Pithampura (Indore). The company commands ~9% market share at JNPT, ~10% market

share at Chennai and ~7% market share at Mundra in Q4CY10.

Allcargos Existing Capacity at various ICDs/CFS

Source: Company Reports

Allcargo undertakes LCL consolidation of multiple types of cargo from various consignees in a single container.

Primary Functions of ICD/CFS

Source: Company Reports, BP Equities Existing Capacity

CFS

JNPT(144,000

TEUs)

Chennai(120,000

TEUs)

Mundra(77,000TEUs)

ICD

Pithampur-Indore(36,000TEUs)


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Industry Overview

The Indian Logistics Industry

Logistics refers to all activities relating to the procurement, transport and storage of goods. Thefortune of a company operating in the Indian logistics sector is closely linked to Indias overallGDP growth. The Indian economy has witnessed fast paced growth over the last decade, makingit one of the preferred investment locations across the globe. As per the Planning commissionreport of Government of India, GDP is expected to grow at 8-9% over CY10-CY20.

The amount spent on logistics in India is around 13%-15% of GDP, higher than developed coun-tries due to poor infrastructure and undeveloped services. National highways in India account forless than 2% of the total road network but carry 40% of the traffic, resulting in a national averagespeed of commercial vehicles in India of 20 miles per hour, compared to around 60 miles per hourin some developed economies. The lifespan of a vehicle in India is directly correlated with thecondition of Indias roads. Poor condition increases logistical operating costs and reduces effi-ciency. Furthermore, rail transportation in India is around 3-4 times more expensive than thesame service in some European countries. These additional costs are compounded by Indias

cumbersome and substandard custom clearance processes. For example, the average time takento clear import and export cargo at a port in India is 19 days, compared to 3-4 days in Singapore.These factors are increasing margins and driving down the profitability of Indian logistics compa-nies. However, as companies focus on their core competencies, they are outsourcing ancillaryactivities to third party service providers. Outsourcing logistics requirements to third party logisticsplayers has improved customer service, enhanced flexibility and reduced costs. Third party logis-tics providers specialize in integrated operations, warehousing and transportation services thatcan be scaled and customized according to a clients requirements. However, this sector is at avery nascent stage in India. Currently, third party logistics players in India handle only 7% of totallogistics business, compared to more than 50% in developed economies.

MTO businessMTO is a low capital business and there are virtually no entry barriers. Therefore, it is a very frag-mented sector dominated by unorganized players. The MTO business is a low margin business,

and economic viability only comes with high volumes. Of the MTO businesses, LCL is a highermargin business compared to FCL due to value added by consolidation. NVOCC operates itsMTO business as an LCL and a FCL sea freight forwarder and undertakes the consolidation ofcargo by renting space on vessels for their own containers.

CFS/ICDs businessThere are around 199 ports in India, 12 of which are major ports which handle ~75% of total porttraffic. Freight forwarders and MTOs are the key clients of CFS operators. The performance ofoperators in this market sector is essentially determined by their ability to balance volumethroughput and dwell time.

Industry Outlook:The National Maritime Development Programme (NMDP) launched by the Government of India(GoI) in 2005 is the GoIs most significant initiative to bring about an all-round improvement in theIndian maritime sector. A total of 251 projects at an investment outlay of INR 568bn have beenidentified to augment the capacity of the major ports by 429 mmt, thereby taking the total beyondthe 1,000 mmt mark by FY12. The first phase of this project was completed in FY09 while thesecond phase, which is currently under way, is scheduled for completion by FY12 end. In FY10,of the total traffic handled at the major ports, Petro products accounted for the maximum at 31%,iron ore (18%) and coal (13%).

Going forward, we believe cargo growth to continue on an upward trajectory given the ongoingand proposed investments in the key user segments. Thermal coal imports in the country are ex-pected to increase significantly on the back of the large number of ongoing and proposed powerprojects of companies like TATA Power, Adani Power, Mundra and other projects. With a numberof greenfield refineries in project stage and brownfield expansions being implemented at existingrefineries, the import of crude oil and export of surplus petroleum products are expected to bemajor contributors to overall cargo volumes.

Going forward, we believe cargo growth to continue on an upward trajectory given the ongoing and proposed investments in the key user segments.

In MTO businesses, LCL is a higher margin business compared to FCL due to value added by consolidation.


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Experienced and efficient Top Management

Source: Company reports

1993 Started as cargo handeling operator at Mumbai port1995 Entered into LCL consolidation as an agent of ECU Line2003 Started CFS at JNPT

2005-06 Acquired ECU Line in stages

2006 Listing on BSE & NSE, Acquired Hindus tan Cargo (freight forwarding company of Thomas Cook)

2007 Started CFS at Chennai & Mundra2008 Merged the Equipment Hiring business (Trans India), Balckstone acquired stake in AllCargo

2009 Blackstone increased its stake, Started ICD at Indore2010 Raised USD 23.5mn through QIP, Acquired two Hongkong based companies


Key Milestone

Name Designation/ Role DegreeTotal Years of

ExperienceMr. Shas hi Kiran Shetty Chairm an & Managing Director B.Com over 32 years

Mr. Kris De Witte

CEO of the ECU Line Group of companieswith responsibility for the Far East, Australia,New Zealand and the Americas regions and

jointly with Marc Stoffelen of the ECU LineGroup

degree inshipping and

logisticsover 27 years

Mr. Marc StoffelenCEO of the ECU Line Group of companieswith responsibility for the Europe, MiddleEast Africa regions and jointly with Kris DeWitte of the ECU Line Group

degree inshipping and

logisticsover 27 years

Mr. Adarsh Hegde Executive DirectorMechanicalEngineering

over 18 years

Management Profile


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Key Risks

Economic slowdown may have an adverse impact on company

The Logistics industry has witnessed strong traffic growth due to robust economic growth in India.However, India may face the risk of economic slowdown in future. Since the countrys growth haspositive correlation with the Logistics industry, Allcargos performance would be affected if Indiasgrowth will slow down going forward. Similarly, as the company generates its majority revenuesfrom other countries through ECU Line, its growth is subject to overall performance of world econ-omy.

Changes in regulatory environment may impact negatively

The domestic market in which the company operates is highly regulated. Any changes in oil pricesor on tax structure declared by regulatory authorities would impact companys margins.

Volatility in currency risk

The company generates more than 65% of i ts revenues from ECU Line and as it operates in morethan 59 countries, Allcargos revenues are subject to foreign exchange volatility risk. Major volatil-ity in foreign exchange may affect the company top-line.

Delay in capacity addition at JNPT port

Currently, JNPT is operating almost at full capacity (more than 95% utilization rate) level. In viewof expected growth in container traffic going ahead, Allcargo is doubling its capacity at JNPT from144,000 TEUs to 288,000 TEUs. We expect Allcargo would complete capacity expansion byQ3CY11. However, any delay in expansion of existing capacity will impact our earning estimates.

We expect Allcargo would complete capacity expansion by Q3CY11. However, any delay in expansion of existing capacity will impact our earning estimates.

Since the countrys growth has positive correlation with the Logistics industry, All- cargos performance would be affected if Indias growth will slow down going forward.


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Valuation & Recommendation

We expect the Logistics industry to perform well on the back of various infrastructure development activities such as ports expan-sion/modernization mentioned in the Eleventh Planning Commission report (total outlay Rs 2,618bn). We are bullish on the stockconsidering different expansion plans for setting up ICDs/CFS. Allcargo has a strong presence in NVOCC business through widenetwork of ECU Line and also has a strong hold on its domestic MTO business. Allcargo benefits from the growth in the ECU Linebusiness (NVOCC) and also spreading its wings through inorganic acquisitions in emerging markets. The companys project andengineering solution division is performing really well and is expected to continue its growth momentum going forward on the backof current order book of INR 1.8bn which would be executed in CY11. We believe expansion of CFS capacity at JNPT would im-prove margins going forward. At CMP, the stock is trading at ~56% discount (7.9x) to its peer group average PE multiple of FY12(14x). We believe valuations are attractive considering its aggressive expansion plans, margin improvement and its relative earn-ings multiple with peer group average.

We value Allcargo on the basis of DCF valuation due to the huge capex plan, the benefits of which would accrue over a longer pe-riod. We arrived at the target price of Rs 241 for the investment horizon of 12-18 months. Therefore, we recommend a Buy on thisstock.

DCF Method Key Assumption

We have done DCF on the FCFF (Free Cash Flow to the Firm) basis from CY11e to CY20e. WACC: 11.2% Perpetual growth rate: 2.5%

Peer comparison

Container Corporation of India Ltd (Concor) is the largest player in Railway Logistics as well as ICDs/CFS business in India. It alsoprovides cold storage solution to its clients. Gateway Distriparks Ltd (GDL) is the largest private player in railway logistics which alsohas a network of ICDs and CFS at various location in India. The company also provides cold storage facility like Concor.

Allcargo generates its major revenue from NVOCC segment which is a very low margin business (EBIT margin of ~5%). Allcargooperates its business model with unique synergy between NVOCC and CFS/ICDs business. At one hand, Allcargo contacts andbooks container space with shipping companies for its clients of NVOCC segment and on other hand, it gets clients of CFS/ICDsservice from shipping companies. Therefore, the company gets clients of CFS/ICDs business from shipping companies by providingbusiness of containers cargo to shipping companies through NVOCC business.

Comparative Analysis

Companies CMP

Market Cap

(Rs mn) FY11 FY12 FY11 FY12 FY11 FY12 FY11 FY12AllCargo Global* 165 21,482 9.8 7.9 6.4 5.0 1.5 1.3 0.7 0.6Gateway Distriparks 119 12,889 14.1 12.0 8.8 7.3 1.5 1.4 2.2 1.8Concor 1240 161,187 17.7 16.0 12.4 11.2 3.0 2.7 3.8 3.4Source: Bloomberg except for AllCargo, BP Equities *estimates for Calendar Year

P/E EV/EBITDA P/BV P/Sales


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Key Ratios

Valuation Ratios

Consolidated Income Statement Consolidated Balance Sheet

Consolidated Cash Flow

Source: Company reports, BP Equities Research

YE March C Y08 C Y09 C Y10 CY11E CY12E

Net Sales 23,141 20,609 26,329 32,507 38,821

% chg 80.2% (10.9%) 27.8% 23.5% 19.4%

Total Expenditure 20940 18424 23538 28963 34514

% chg 42.3% (12.0%) 27.8% 23.0% 19.2%

EBIDTA 2,201 2,185 2,790 3,544 4,307

Margin (%) 9.5% 10.6% 10.6% 10.9% 11.1%

Other Income 106 286 259 385 366

Depreciation 447 545 545 712 767

Interest 249 232 220 296 300

Extraordinary - (27) (3) - -

P B T 1,612 1,667 2,282 2,922 3,606

Margin (%) 6.9% 8.0% 8.6% 8.9% 9.2%

Total Tax 357 260 482 617 761

(% of PBT) 22.2% 15.6% 21.1% 21.1% 21.1%

Exceptional Item (39) (33) 5 - -

P A T 1,216 1,374 1,805 2,305 2,845

Minority Interest 139 108 101 112 119

Adj . PA T 1,116 1,299 1,696 2,193 2,726

% chg 46.4% 16.4% 30.6% 29.3% 24.3%

Margin (%) 4.8% 6.2% 6.4% 6.7% 7.0%


Y E M a r c h C Y 08 C Y09 C Y10 C Y11E C Y 12 E

S O U R C E S O F F U N D SEquity Share Capital 518 250 261 261 261

Reserves & Surplus 5,580 9,545 12,165 14,227 16,822

Net Wo rth 6,097 9,795 12,426 14,488 17,084

ESOPs Out standing 16 16 13 13 13

To tal Loans 3,440 2,044 3,980 3,625 2,564

Net Deffered Tax Liabilities 127 179 179 179 179

M inority Interest 115 135 236 348 467

Capital Employed 9 ,795 12,169 16,834 18,653 20,307

A P P L I C AT I O N OF F U N D S

Gro ss Block 7,084 9,241 11,477 13,977 14,777

Less: A cc. Depreciation 1,460 2,053 2,597 3,310 4,076

N e t B l o c k 5,624 7,188 8,880 10,667 10,701

Capital Work-in-Progress 741 750 853 928 952 Investments 828 1,668 1,378 1,378 1,378

Current Assets 5,673 5,463 8,689 9,046 10,977

Current Liabilities 3,075 2,900 2,966 3,366 3,701

Net Current Assets 2,599 2,563 5,723 5,680 7,276

M iscellaneous Expenditure 3 - - - -

Capital Deployed 9 ,795 12,169 16,834 18,653 20,307


Y E M a r ch C Y0 8 C Y09 C Y10 C Y11E C Y12E

Profit before tax 1,612 1,667 2,282 2,922 3,606

Depreciation & Amortisation 447 545 545 712 767

Change in Working Capital (1,381) (414) (780) (515) (1,209)

D irec t t axes paid & F ringe Benef it Tax 35 7 112 482 617 761

Other Non-cash Exp/(Inc) (141) - 216 296 300

Cash Flow from Operations 894 1,910 1,781 2,797 2,703

(Inc.)/Dec. in Fixed Assets (1,742) - (2,236) (2,500) (800)

Cap WIP (336) (9) (103) (75) (24)

Free Cash Flow (1,184) 1,901 (558) 222 1,879

Inc./(Dec.) in Investments (1,098) (3,630) 290 - -

Inc./(Dec.) in Capital 3 1,120 - - - Inc./(Dec.) in Loans 2,177 (386) 1,936 (355) (1,061)

Dividend paid (incl. tax) (49) (138) (131) (131) (131)

Interest paid (Net) (249) (232) (220) (296) (300)

Cash Flow from Financing 2,130 347 2,644 (781) (1,492)

Inc./(Dec.) in Cash 395 (75) 2,380 (559) 387

Opening Cash balances 631 1,012 916 3,297 2,738

Closing Cash balances 1,027 937 3,297 2,738 3,125


YE March CY08 CY09 CY10 CY11E CY12E

Key Operating Ratio s

EBITDA Margin (%) 9.5% 10.6% 10.6% 10.9% 11.1%

Tax / PBT (%) 22.2% 15.6% 21.1% 21.1% 21.1%

Net Profit Margin (%) 4.8% 6.2% 6.4% 6.7% 7.0%

RoE (%) 20.6% 16.3% 15.4% 16.3% 17.3%

RoCE (%) 33.7% 20.5% 17.3% 19.4% 22.2%

Current Ratio (x) 1.8x 1.9x 2.4x 2.9x 2.7x

Dividend Payout (%) 10.1% 10.9% 7.6% 6.0% 4.8%

Book Value Per Share (Rs.) 55 84 95 111 131

Financial Leverage Ratios

Debt/ Equity (x) 0.6x 0.2x 0.3x 0.3x 0.2x

Interest Coverage (x) 7.1x 7.1x 10.2x 9.6x 11.8x

Interest / Debt (%) 10.6% 8.4% 7.3% 7.8% 9.7%

Growth Indicators %

Growth in Gross Block (%) 26.9% 30.4% 24.2% 21.8% 5.7%

Sales Growth (%) 43.4% -10.9% 27.8% 23.5% 19.4%

EBITDA Growth (%) 54.6% -0.7% 27.7% 27.0% 21.5%

Net Profit Growth (%) 46.4% 16.4% 31.6% 28.2% 24.3%

Diluted EPS Growth (%) 32.6% 11.1% 18.2% 28.2% 24.3%

Turnover R atios

Debtors (Days of net sales) 47 42 45 41 44

Creditors (Days of Operating Exp.) 40 39 38 35 32

Inventory (Days of Optg. Exp.) 0 1 1 1 1


YE March CY08 C Y09 CY10 C Y11E CY12E

P/E (x) 12.8x 17.7x 11.2x 9.8x 7.9xP/BV (x) 2.3x 2.4x 1.5x 1.5x 1.3x

EV/EBITDA (x) 7.7x 11.1x 7.2x 6.4x 5.0x

M arket Cap. / Sales (x) 0.6x 1.1x 0.7x 0.7x 0.6x



15/15

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BP WEALTH Pvt. Ltd. and BP EQUITIES Pvt. Ltd have exercised due diligence in checking the correctness and au-thenticity of the information contained herein, so far as it relates to current and historical information, but do not guaran-tee its accuracy or completeness. The opinions expressed are our current opinions as of the date appearing in the ma-terial and may be subject to change from time to time. Prospective investors are cautioned that any forward lookingstatement are not predictions and are subject to change without prior notice.

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