Result Update: Gujarat Pipavav Port Ltd (GPPL) - ACCUMULATE - TP Rs.180 - Kotak

Q4FY17 performance was marked by 1) subdued volumes across segments, 2) improving product mix (liquid and Ro-Ro account for 10% of the volumes), 3) contribution from high margin project cargo business of Rs 247 mn, 4) commissioning of Khatuwas terminal (aids pickup in double-stacked rail volumes and addresses imbalance) and 5) operating leverage benefits and ongoing cost-reduction program at the port. Sales was reported at of Rs 1.75 bn (+8% YoY and 3.1% QoQ), EBIDTA of Rs 1.15 bn translating into highest ever OPM of 65.7% (+400 bps QoQ and +410 bps YoY) and PAT of Rs 661 mn ahead vs. expectation of Rs 639 mn. Weak global container market and intense competition is impacting the performance of the company in the key container segment. From here, we expect the growth to come from other segments. We are not optimistic about immediate term performance (expect quarterly PAT of Rs 6 to 65 bn), but are optimistic about the long term prospects of the company, with the company expected to benefit from the upcoming Dedicated Freight corridor (DFC) with Pipavav Rail Corporation preparing to connect the port with the DFC. We recommend ACCUMULATE (from Buy) with an increased TP of Rs 180 (from Rs 175).

Shares of GUJARAT PIPAVAV PORT LTD. was last trading in BSE at Rs.165.65 as compared to the previous close of Rs. 160.65. The total number of shares traded during the day was 465589 in over 5122 trades.

The stock hit an intraday high of Rs. 167.8 and intraday low of 160.3. The net turnover during the day was Rs. 77040455.

Source : Equity Bulls

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