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Gateway Distriparks - Q3FY21 - Multiple triggers at play - ICICI Securities

Posted On: 2021-01-19 22:23:58 (Time Zone: Arizona, USA)

Gateway Distriparks' (GDL) Q3FY21 result witnessed higher than expected topline and EBITDA. Topline at Rs3,138mn was up 5% YoY (I-Sec 3036mn) and EBITDA up 36% YoY. Rail segment realisation surprised with 8% QoQ pricing gains, which resulted in 18% QoQ increase in rail EBITDA/teu. Increase in rail share for EXIM transportation continues to help players like GDL. Net debt continues to reduce from Rs5.1bn to Rs 4.9bn QoQ, partly muted by ~Rs4/share of announced interim dividend for FY21. Management reiterated its plans to spend ~Rs2bn of capex for satellite terminals around NCR to help increase GDL market share. Advent of DFC (Rewari - Palanpur to Mundra and Pipavav ports) should complete by Sept 21 (as per management) allowing increased volume and operational tailwinds. We maintain BUY with SoTP-based target price of Rs197/share.

- Rail EBITDA/teu up 25% YoY and 18% QoQ - positive surprise mainly due to higher realisation QoQ (higher by 8.4% QoQ). This has positive implications for Concor as well. Rail volumes (teu) were up 8.8% YoY at 67042/teu (along expected lines). Management highlighted that GDL did not witness any meaningful volume disruption due to the ongoing farmer protest in the NCR region. Management continues to guide Rs8,000/teu EBITDA for rail business; we have been more conservative in our assessment on the same leading to possible upside risks in earnings.

- CFS performance was lower than expected on volumes which lead to a slightly lower-than-expected EBITDA/teu at Rs2,880/teu against Rs3,100/teu expected. CFS volumes were down 11% YoY while improving 7.4% QoQ. CFS revenues are down only 3% YoY. CFS continues to enjoy the pricing benefits seen since Covid. We have considered a much lower EBITDA/teu trajectory for FY22/23E YoY.

- Snowman; primed for a turnaround. Topline grew at 2.4% YoY. While warehousing segment reported nearly flat revenue YoY, EBITDA was up 21% YoY. Transportation EBITDA has turned positive. Snowserve - fullfillment centre for ecommerce (Amazon) is showing highest growth in topline and EBITDA (reached Rs30mn revenue and Rs12mn EBITDA with no base YoY). This is also reflecting in product mix with ecommerce contributing ~5% of topline from near 0% YoY. Pharma share in the topline has also increased by 1% point YoY to ~9%. Net debt has come down to Rs 305mn from Rs 669mn YoY. Greenfield 8,000 pallets capacity addition and brownfield 26,000 pallets capacity addition is ongoing. Base capacity is 107,450 pallets across 35 locations.

- Maintain BUY. GDL remains a direct play on: i) Theme of rail freight progressively gaining share over road, accentuated by DFC, ii) cold chain logistics opportunity in India augmented by increased focus on pharma vertical, given its 40% controlling stake in Snowman Logistics; and iii) meaningful deleveraging 'net debt to market cap' at ~33%. Meaningful value unlocking cannot be ruled out.

Shares of GATEWAY DISTRIPARKS LTD. was last trading in BSE at Rs.116.8 as compared to the previous close of Rs. 115.85. The total number of shares traded during the day was 87050 in over 1665 trades.

The stock hit an intraday high of Rs. 123.05 and intraday low of 114.9. The net turnover during the day was Rs. 10325888.

Source: Equity Bulls

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