Kotak Securities revises Target Price for Allcargo Logistics to Rs. 170 on Healthy Q3 performance

Healthy Performance - Company consolidates new acquisitions

Allcargo Logistics (ALL) reported consolidated adjusted PAT of Rs 570 mn (vs. our estimate of Rs 460 mn). Volumes were stable for the key Container Freight Station (CFS) segment at ~48,000 TEUs while volumes in the Multimodal Transport Segment (MTO) segment post consolidation of the acquisitions - US based Econocaribe Consolidators and Netherlands based FCL Marine Agencies- has increased to 91,725 TEUs (+30% YoY and +20% QoQ).Performance of the quarter is healthy considering weak global container shipping market, slowing of trade and strong competition in the CFS business (leading to lower utilisation).

Post consolidation, we estimate the MTO segment to grow at 18.7% in FY14 and 4.8% in FY15 with some margin decline despite bad times. Strong relationships will help the company to outperform its peers and report stable volumes in the CFS division. We estimate earnings to grow by 19% in FY14 at Rs 2 bn (EPS of Rs 15.8/share) and to grow by 18.6% in FY15 to Rs 2.37 bn (EPS of 18.8/share).

We assign a PE of 9 x to the stock on the back of 1) Immune nature of MTO (LCL) business to weak trade: 2) Latest acquisitions which help diversify the business and 3) estimated recovery in global trade. We continue to recommend BUY on Allcargo with an increased TP of Rs 170 (earlier Rs.160).

Shares of ALLCARGO LOGISTICS LTD. was last trading in BSE at Rs.140.4 as compared to the previous close of Rs. 142. The total number of shares traded during the day was 3455 in over 225 trades.

The stock hit an intraday high of Rs. 145.25 and intraday low of 139. The net turnover during the day was Rs. 491658.

Source : Equity Bulls

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