Suggested buy price:58(6.4.2009)
Story:Scripscan:Gateway Distriparks Ltd
Story:Gateway Distriparks (GDL) is the largest private sector logistics service provider in the container freight station (CFS/ICD) business with a market share of 18%. With India’s containerised traffic set to double to 10 million TEU over the next five years, GDL is well-positioned to capitalise on the same.Unbridled competition in the traditional CFS business has led to a price war, which is most likely to play out for a few more quarters. Hence, margins may remain range-bound at 50%.GDL is in the right business at the right time. While opportunities are compelling, the near-term prospect for GDL is lukewarm. Hence, GDL is an investment proposition only for the long term.Valuation wise too it doesnt look amazingly attractive.Good defensive bet meant for hard-core long term investors.TRaders and short term greedy guys be better off in good high beta scrips.
Present update:Higher realisations from container freight stations (CFS) business and increasing share of high margin EXIM in rail volumes helped Gateway Distriparks to maintain its growth momentum in the September 2011 quarter. As revenues from the existing CFS are likely to remain flat in the near term, rail business would be the key growth driver for the company.The CFS segment continued to be the main contributor in profits for the company in the September 2011 quarter. It contributed 82% to the company's net profits, while rail freight and cold chain segment contributed 15% and 2% respectively.Despite a muted growth in volumes, higher realisations led to jump in revenues by 47% Y-o-Y in the CFS segment. Realisations increased primarily on account of increase in value-added services like warehousing. Volumes in the next halfyear are unlikely to increase since capacity utilisation is around 80 to 90% at its various CFSs. The company's CFS at Kochi is expected to commence operations by the end of this financial year.However, volumes at Kochi CFS are unlikely to improve in near future due to the shortage of Indian flagged vessels necessary to move cargo between coastal ports as required under Indian Cabotage Law.As a result, foreign large vessels currently prefer Colombo for transhipment to send goods to smaller Indian ports. The company is also in process of acquiring land for its new CFS at Chennai. The company expects this CFS to be operational by next eighteen months.In the rail segment, rise in volumes and higher contribution from the EXIM space increased company's net profit by Rs 5.1 crore in September 2011 quarter. The rail business had turned profitable in the third quarter of last financial year. The share of EXIM segment was 76% to the total volumes, which the company intends to increase to 80% in future.In coming months, rail volumes are set to rise as the Inland Container Depot at Faridabad commences operations next quarter. The company plans to ramp up its cold chain operations by doubling its capacity to 37,000 pallets by end FY12. This, however, will continue to remain the smallest segment for the company.Hold on to the company.