Citi: Three stocks to play India's logistics sector

In a 57-page report, analysts at Citi discussed prospects for the sector, and outlined three stocks - Adani Ports and SEZ, Container Corporation and Gujarat Pipavav - that they believe could be potential beneficiaries of an expected economic turnaround.

- Gujarat Pipavav (GPPL) has successfully scaled up its business despite its small size. 1HCY14 revenue / EBITDA / PAT grew 22 percent/48 percent/80 percent YoY and, as a result, concerns have faded about competition from larger ports and customer churn.

- On top of a substantially improved business performance, GPPL offers a rare mix (at least in the India infrastructure space) of a transparent business model, clean and healthy cash flows, and a balance sheet that should soon turn net cash.

- GPPL's EBITDA margin expanded to 56.2 percent in 2QCY14, from a low of 41 percent in 2QCY12. This sharp expansion is on the back of efficiency gains and the inherent operating leverage in the port business. Given continuing traction in the business, we expect the margin to continue to expand, to about 62 percent by 2016.

- We expect GPPL's total cargo/container cargo to grow at 12 percent/14 percent CAGs over 2013-16. Revenue/EBITDA/PAT should grow at 18 percent/28 percent/40 percent CAGR over the same period.

- We are increasing target price to Rs 185 (from Rs104): We increase our target EV/EBITDA multiple for GPPL to 18x (from 15x) given a re-rating of market multiples and substantial improvements in the business.

Shares of GUJARAT PIPAVAV PORT LTD. was last trading in BSE at Rs.143.55 as compared to the previous close of Rs. 148.1. The total number of shares traded during the day was 98111 in over 1618 trades.

The stock hit an intraday high of Rs. 148 and intraday low of 142.55. The net turnover during the day was Rs. 14189262.

Shares of ADANI PORTS AND SPECIAL ECONOMIC ZONE LTD. was last trading in BSE at Rs.282.85 as compared to the previous close of Rs. 288.1. The total number of shares traded during the day was 360372 in over 6269 trades.

The stock hit an intraday high of Rs. 293.85 and intraday low of 281.15. The net turnover during the day was Rs. 102908058.

Shares of CONTAINER CORPORATION OF INDIA LTD. was last trading in BSE at Rs.1317.85 as compared to the previous close of Rs. 1327.85. The total number of shares traded during the day was 12708 in over 2985 trades.

The stock hit an intraday high of Rs. 1404.95 and intraday low of 1311.15. The net turnover during the day was Rs. 17187591.

Source : Equity Bulls

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