PAT miss led by higher tax rate
* 1QFY20 revenues at INR18.15b (est. INR 18.3b; +12%YoY, 5% QoQ) were led by growth in the MTO and CFS business. EBITDA came in at INR1.4b (est. INR1.24b; +38% YoY, +31% QoQ). EBITDA margin was at 7.7% (v/s 6.3% in 1QFY19). PBT stood at INR805m (+35%YoY). The adoption of IND AS-116 has resulted in a decrease in PAT by INR8m. PAT came in at INR630m (est. INR709m; +19% YoY, -21%QoQ) as tax rate stood at 22% in 1QFY20 (est. 14%).
* MTO volumes up 6%; CFS up 3%:
(a) 1QFY20 MTO segment volumes increased 6% YoY to 1,84,342TEUs. Revenue increased 10% YoY to INR16b. EBIT margins were lower by -0.2pp YoY to 3.8%.
(b) CFS segment volumes increased 3% YoY to 85,004TEUs. Revenues increased 8% YoY to INR1.19b. EBIT margins increased ~2.8pp YoY to 30.8%.
(c) Project and Engineering (P&E) segment revenues increased 62% YoY to INR1.2b.
P&E reported EBIT of INR84m as against loss of INR59m in 1QFY19. Total revenue from Logistics parks was INR18m for 1QFY20 as against INR8m for the corresponding period last year.
* Management commentary:
(1) Volume growth in CFS was driven by Mundra, Kolkata & Chennai operations.
(2) Current executable order book in Project Logistics is around INR1.30b.
(3) Project Logistics secured its first project in Africa and is in discussion for multiple projects in East African countries.
(4) Investment in logistics parks for 1QFY20 was INR1.15b.
(5) Provisions written back in P&E division were INR30m in 1QFY20.
* Valuation view: MTO is likely to perform well over the medium term, led by healthy volume growth. In case of CFS, volume growth should be driven by the Kolkata operations. Valuations of 9x/7.4x FY20/FY21E earnings appear attractive, given earnings CAGR of 17% over FY19-21. We value AGLL at 10x FY21 EPS to arrive at a target price of INR130. Maintain Buy.
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