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Wednesday, July 27, 2011

Sical Logistics Ltd:-Buy/sell/,growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

Calls review:Sical Logistics Ltd
Recommended price:26(19.5.09)
Present price:78

Scripscan:Sical Logistics Ltd
Traded in:Nse-bse

Story:It is primarily engaged in moving bulk commodities like coal and iron ore. Its various long-term contracts provide visibility to the current revenue stream. It has entered into a 20-year contract (''01-21) with Tamil Nadu Electricity Board (TNEB) for coal handling at Ennore Port terminal and transporting it to the adjoining power plant. There is a wide gap in the terminal''s capacity (14 million metric tonnes) and the coal handled (8.5 mmt). The company can handle 14 mmt without significant capex, which is expected to take place in the next two years, given TNEB''s expansion plans.The company has a presence in containerised logistics through its subsidiary, Sical Distriparks. It operates and manages container freight stations (CFS) at Chennai, Vizag and Tuticorin. It is the leader in terms of number of containers handled at Vizag and ranks second at Tuticorin. At Chennai, the capacity of 120,000 TEUs per annum can be scaled up to 200,000 TEUs without significant capex. It also manages offshore vessels for ONGC. It acquired Torino, an offshore supply vessel, in FY07. Such initiatives will boost its topline and bottomline as offshore services is a high-margin and high-growth business.It has reached financial closure for its Rs 514-crore iron ore terminal project at Ennore Port. The first phase is expected to be operational by early ''10 and the second by mid-''11. Lesser turnaround time for ships and rail connectivity will help to shift the traffic from Chennai to Ennore Port.The company has started work on a road terminal at the Multimodal International Hub Airport at Nagpur (MIHAN). It also plans to set up a rail terminal at MIHAN. The company plans to invest in buying more rakes as it expects containerised traffic to gain momentum in India. With this, Sical will have a presence in containerised traffic, which will feed into its CFS and inland container depots (ICDs).SICAL LOGISTICS is one of the largest multi-modal logistics players in India. The company has been divesting its non-core, low-margin businesses to focus more on high-margin core logistics business. It has huge expansion plans, which will transform it into a major integrated multi-modal logistics player in central and south India. Investors may consider exposure in the stock at current levels with a minimum investment horizon of two years, as most projects in the pipeline will be completed by then.The stock is trading at a discount to that of peers like Allcargo Global and Gateway Distriparks.A combination of reasonable P/E and aggressive expansion plans make it a good long-term investment bet.

Present update:More than tripled from the suggested price and consolidating before making an another northward journey.Hold on to it for more future gains

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