IGI Logo

Global container market showing growth spurts

About the stock: Gujarat Pipavav is a South-West Gujarat based port with an MNC promoter (APM Terminals – Maersk Group). It lies at a strategic international maritime location, which connects India with the Far East, on the one side, and Middle East, Africa, Europe and the US, on the other.

? The port container capacity is at 1.35 million TeUs, bulk capacity at 4-5 million MT and liquid capacity at 2 million MT

? Container segment comprises ~70% of revenues

Q1FY23 Results: QoQ lower bulk volumes impacted EBITDA.

* Net revenues de-grew 6% QoQ to | 208 crore

* EBITDA de-grew 12% to | 113 crore with margins at 54.4% (vs. 58.4% in Q4FY22)

* Subsequently, PAT de-grew 20% to | 59 crore as a weak operational performance was further impacted by an exceptional loss of | 13 crore

What should investors do? While the management expects bulk volumes to stay strong in FY23, container volumes are expected to make a comeback (led by DFC normalisation, lower congestion and freight volatility expected in FY23E).

* We remain positive on the stock and maintain our BUY recommendation

Target Price and Valuation: We value the stock at | 100 i.e. 15x P/E on FY24E EPS.

Key triggers for future price performance: With GPPL planning to build capacities in warehousing, its JV PRCL looking at growing CTO business and parent entity Maersk planning to build an end-to-end logistics infra in the country (could benefit GPPL); the company remains a play on growing logistics sector in India. However, extension of agreement with GMB remains a key event to watch.

? Addition of three service lines in FY23 expected to boost Exim volumes

? DFC commissioning is expected from September onwards (higher market share and time tabled train running)

? Debt free company with RoIC reaching ~40%+ levels in FY24E

Alternate Stock Idea: Apart from GPPL, we remain positive on Adani Ports.

? Adani Ports and Special Economic Zone (APSEZ) is the largest commercial port operator with 25% share of India’s port cargo movement. The company has evolved from a single port dealing in a single commodity to an integrated logistics platform

? We have a BUY rating on the stock, with a target price of | 900

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html SEBI Registration number is INZ000183631

Above views are of the author and not of the website kindly read disclaimer