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Gateway Distriparks’ (GDL) 3QFY24 revenue grew 15% YoY/-1% QoQ to INR 3.93bn, 2% below JMFe. EBITDA/PAT grew 8%/16% YoY respectively on the back of higher profitability in the rail segment as higher double stacking (index at 42% vs. 35-37% earlier) and favourable mix (higher origination cargo in NCR) helped offset increased costs fully (IR imposed Busy Season Surcharge from w.e.f. 1 st Oct’23 and GDL has passed this on to its customers). Industry volume remained under pressure on account of weak exports, further aggravated by a) recent attacks in the Red Sea and b) increased competitive intensity, particularly in the Ludhiana region. On YoY basis, GDL’s market share was steady in NCR but fell in Ludhiana (though stable QoQ) as it let go low margin/loss-making volumes. We tweak our FY24-26EPS estimates to reflect 3Q performance and commentary. We value GDL at 11x FY26 EV/EBITDA to arrive at Mar’25TP of INR 120. We maintain BUY. Key risks: a) lowerthan-expected cargo growth and b) adverse outcome in pending litigations.

* 3QFY24 summary: Consolidated revenue grew 15% YoY (+7% 4-year CAGR ; -1% QoQ) to INR 3.9bn (2% below JMFe) with 8% rise in volume (+4% 4-year CAGR; -6% QoQ and 3% below JMFe) and 7% increase in blended realisation (+3% 4-year CAGR; +5% QoQ; and 1% above JMFe). EBITDA grew 8% YoY (+11% 4-year CAGR; -5% QoQ) to INR 978mn (4% below JMFe) and margin contracted by 180bps YoY (-100bps QoQ) to 24.9%. PBT grew 12% YoY (+98% 4-year CAGR; -10% QoQ) and was 8% below JMFe. Adj. PAT grew 16% YoY (-13% QoQ; 4% above JMFe) to INR 633mn.

- A) Rail: Revenue grew 20% YoY to INR 3.2bn (+11% 4-year CAGR; +1% QoQ) with volume rising 16% YoY to 91k TEU (6% below JMFe) while realisation rose by 4% YoY to INR 35,596/TEU (8% above JMFe) as GDL passed on busy season surcharge levied by Indian Railways (w.e.f.1st Oct’23). EBITDA (excluding other income) is estimated to have risen 25% YoY/-1% QoQ to INR 882mn (1% above JMFe) while EBITDA/TEU rose 8% YoY (+10% QoQ) to INR 9,700/TEU (8% above JMFe) because of a) increase in double stacking volume to 42% from 35-37% earlier, b) increase in originating volumes from Garhi and c) decline in empty running containers & increasing spot business.

- B) CFS: Revenue fell by 5% YoY (-13%QoQ) to INR 710mn (-6% 4-year CAGR; 10% below JMFe) as volume was flat YoY (-2% QoQ) at 91k TEU (1% above JMFe). Realisation fell 5% YoY to INR 7,845/ TEU on account of significant increase in competition in key CFS locations amidst weak EXIM trend, driving significant reduction in ground rent. EBITDA (excluding other income) declined 53% YoY/33% QoQ. EBITDA/TEU (including other income) fell 53% YoY/31% QoQ to INR 1,053/TEU.

* EXIM segment facing challenges: Rail revenue grew 20% YoY led by robust volume growth of 16% YoY on the back of consolidation of Kashipur terminal acquisition and volume growth in Garhi, negating a) spillover of cargo from Europe/East coast of USA from Dec’23 to Jan’24 on account of Red Sea attacks, b) volume decline in its Ludhiana ICD as it let go low margin/loss-making cargo, particularly on account of increased

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