Edelweiss Securities has maintained 'Hold' on Gujarat Pipavav Port (GPPL) with target price of Rs 74 as against current market price (CMP) of Rs 87 in its report.

Commenting on the investment rationale, the stock broker said, ''Gujarat Pipavav Port (GPPL) has revised down its capex guidance to Rs 4.6 billion Rs 8 billion earlier) with an objective to optimise on the payback period. We believe 5.6mTEUs capacity addition in JNPT over the medium term is also likely to have played a role in this decision. Due to improved profitability (including in rail JVs), gradual capex and low leverage we revise TP to Rs 74 (Rs 66 earlier).

While the downward revision in capex is positive, we believe sustained double digit container volume growth is a challenge given the increase in competitive landscape (recent container terminal awards at JNPT and scale up of neighbouring Mundra and Hazira ports).

At CMP of Rs 87 the stock is factoring in strong growth in cargo and margin expansion with limited room for error. We have revised our SOTP-based TP to Rs 74 (earlier Rs 66) due to the revision in capex outlay, gradual expansion and higher earnings from railway JV. We maintain 'Hold' due to rich valuations.''

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