Buy Gateway Distriparks, target price Rs 125: HDFC Securities

Gateway Distriparks Ltd., incorporated in the year 1994, is a Small Cap company (having a market cap of Rs 1079.21 Crore) operating in Logistics sector.

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Promoters held 30.2 per cent stake in the company as of June 30, 2020, while FIIs held 26.9 per cent, DIIs 27.6 per cent and public and others 14 per cent.
HDFC Securities has given buy rating Gateway Distriparks with a target price of Rs 125. The share price moved down by 2.15 per cent from its previous close of Rs 88.40. The stock’s last traded price is Rs 86.40.

Gateway Distriparks Ltd., incorporated in the year 1994, is a Small Cap company (having a market cap of Rs 1079.21 Crore) operating in Logistics sector.

Financials

For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 252.78 Crore, down 15.48 % from last quarter Sales of Rs 299.08 Crore and down -31.48 % from last year same quarter Sales of Rs 368.91 Crore. The Company reported net profit after tax of Rs 11.13 Crore in latest quarter.
Gateway-graph

Investment Rationale
The brokerage expects volume recovery over FY22/23E and are factoring in growth of 16/18% in rail segment, aided by a pick-up in economic activities as well as commissioning of the DFC. It is raising EPS estimates by 21/7% over FY22/23E to factor in savings from lower interest cost payout. It has set a revised Sep-22 target price of Rs 125. It values the Rail business at 8.5x EV/EBITDA (8x earlier) to factor in the improving demand outlook.

Key risks:
Slower-than-expected recovery, delays in commissioning of DFC, and a substantial increase in capex requirement/inefficient capital allocation.

Promoter/FII Holdings
Promoters held 30.2 per cent stake in the company as of June 30, 2020, while FIIs held 26.9 per cent, DIIs 27.6 per cent and public and others 14 per cent.
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