Buy Gateway Distriparks - Karvy

Gateway Distriparks (GDPL IN): We initiate coverage on the stock with "BUY" recommendation with a target price of Rs. 204 per share, valuing GDPL at 12.0x its FY13-14E average EPS.

- CFS Business the cash cow; expanding capacities to fuel growth: We expect GDPL's CFS volume to grow by 3% and 7% during FY13-14E vs. 3% during FY12E, as new capacities get commissioned at JNPT and Kochi. Strong relationship with shipping lines should boost the growth as it the shipping lines that notify which CFS to do business with (and not the cargo owners). Further, CFS is a cash cow, as it has very high OPM of ~54% and the segment generates >80% of PAT.

- Leadership position in the container train business: GDPL currently operates 21 rakes (2nd largest after Container Corp) with >85% of its capacity being deployed in the EXIM container transportation. It plans to add another 6-8 rakes during FY13E. We expect GDPL's rail volumes to grow by 29% and 15% during FY12E and FY13E.

Source : Equity Bulls

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