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Saturday, October 31, 2009

Patel Integrated Logistics Ltd:Buy/hold or sell?,analysis/recomendation/results and outlook

Scripscan:Patel Integrated Logistics Ltd

Story:Patel Integrated Logistics came into existence on merger of two companies, which are Patel Roadways and Patel Onboard Couriers; there was a merger of these two companies and FY06, which led to the formation of Patel Integrated Logistics. Now it covers the entire spectrum of the logistic space, which includes surface transport, door-to door express cargo service year-end CE transport besides providing ware housing and distribution services to the corporates.Now if you take a look at the logistics sector off led we have been seen a lot of interest in the sector from various market players, which include strategic investors as well as financial investors. In a few deals Reliance Group, Anil Dhirubhai Ambani Group has taken stakes in companies like DTDC and BLR Logistics. Even companies like in the listed space like TCI and Gati have also seen the interest from various financial investors and many have them taken a stake in both the companies.Patel is probably the only company, which is yet to offer a stake to a strategic investor, even though we keep hearing rumors in the market that they are in talk with few people.Now if you compare the valuation of Patel Integrated Logistics with the other listed players, TCI does revenue of close to Rs 1,300 crores and commands the market cap of Rs 550 crores.Gati does revenues of close to Rs 620 crores the market cap is around Rs 435 crores. As against this Patel Integrated quotes at a much lower valuation the revenues are Rs 283 crores in the market cap is just about Rs 38 crores in case Patel Integrated were to offer a stake to a financial or a strategic investor, the valuation parameter will be what is going on in the other listed companies space.And in the event of they are offering a stake to anybody it would lead to a re-rating of the stock. At the current valuation this stock looks crossly under valued compared to various to the other players if you compare it not just in the market cap criteria but on various other parameters like number of locations, price to earning ratio and the distribution network.

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