Buy Arshiya International - Karvy

Arshiya International (ARST IN): We initiate coverage on the stock with "BUY" recommendation with a target price of Rs. 227 per share, valuing ARST at 7.0x its FY13-14E average EBITDA.

- FTWZ expansion boosts earnings growth in FY12-14E periods: Arshiya International (ARST) is the pioneer of the FTWZ (Free Trade Warehousing Zones) concept in India. It plans to ramp up its warehouse capacities at both the FTWZ by ten-fold to 35 warehouses by FY14E. Based on these expansions, we expect revenues of this high margin (EBIT margins of >55%) segment to grow by >100% CAGR during FY12-14E.

- Rail Business (Third largest operator) on expansion spree: ARST is the third largest container train operator in India with 16 operational rakes and plans to add another eight rakes during FY13-14E. We expect these additions to boost the segmental revenues by 38% CAGR and EBITDA CAGR of 28% during FY12-14E.

Source : Equity Bulls

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