Anand Rathi Research has recommended 'Buy' on Gateway Distriparks with target price of Rs 436 as against the current market price of Rs 352 with time horizon of 12 months.
Commenting on the investment rationale, the stock broker said, ''During the financial year FY15, GDL has reported a growth of 9.7% in its consolidated revenues at Rs 11,113 million as against Rs 10,128 million in FY14. Its growth was mainly led by Rail business which grew 21.3% while CFS business grew 13.2% for the year.The company's EBITDA margins for the year stood at 29.4% at Rs 3267 million in FY15 as against Rs 2,571 million in FY14. The increase in profitability was due to both increase in throughput, cost savings due to operation of double stacking. On operational front, utilisations at its newer CFS facilities in Vizag & Kochi have picked up while its Faridabad ICD continues to struggle for sustainable pick up in volumes and may take few more quarters to stabilize.
As per the management, GDL plans to incur ~Rs 2,500 million capex to set up new facility at Varangaon, upgrade its existing Gujarat switching location to into ICD and utilize its land banks to further extend capacities. The company has also received private freight terminal approval for its Garhi & Sahnewal ICDs.
Going ahead, we expect GDL's rail business to continue to grow at around 20% (+/- 3%) and CFS business at mid single digits for the short and medium term with an upside risk to growth with pick up in EXIM trade and economic recovery is faster and steeper. We initiate our coverage on Gateway Distriparks with a Buy rating and a target price of Rs 436 a share.''
Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.
