Analyst's Pick: Gateway Distriparks
Edelweiss maintains 'Reduce' recommendation on Gateway Distriparks (GDL).
By ET Bureau |
GATEWAY DISTRIPARKS
RESEARCH:
EDELWEISS
RATING:
REDUCE
CMP: Rs 48
Edelweiss maintains `Reduce��� recommendation on Gateway Distriparks (GDL). Growth in container volumes is a function of global trade. Therefore, in the absence of any uptick in the EXIM trade, GDL container volumes are expected to be under pressure in H2FY09. Management expects a decline in volume in the fourth quarter to be steeper, to the tune of 20% q-o-q . In a declining volume scenario, realisation for the company in the past few quarters has been increasing.
The company expects that, with train operators increasing their services and providing last mile connectivity, there will be a shift in volumes from the traditional roadways to transportation of goods by railways which is 30% cheaper vis-��-vis road transportation. Current market share for railways is 35%, which is expected to be 55% in the coming few years. At current market price, the stock is trading at a P/E of 6.0x and 5.2x FY09E and FY10E EPS of Rs 7.3 and Rs 8.5, respectively. Though the valuation looks attractive, with container volumes expected to decline in the coming few quarters, high realisation is unlikely to sustain.
RESEARCH:
EDELWEISS
RATING:
REDUCE
CMP: Rs 48
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Edelweiss maintains `Reduce��� recommendation on Gateway Distriparks (GDL). Growth in container volumes is a function of global trade. Therefore, in the absence of any uptick in the EXIM trade, GDL container volumes are expected to be under pressure in H2FY09. Management expects a decline in volume in the fourth quarter to be steeper, to the tune of 20% q-o-q . In a declining volume scenario, realisation for the company in the past few quarters has been increasing.
The company expects that, with train operators increasing their services and providing last mile connectivity, there will be a shift in volumes from the traditional roadways to transportation of goods by railways which is 30% cheaper vis-��-vis road transportation. Current market share for railways is 35%, which is expected to be 55% in the coming few years. At current market price, the stock is trading at a P/E of 6.0x and 5.2x FY09E and FY10E EPS of Rs 7.3 and Rs 8.5, respectively. Though the valuation looks attractive, with container volumes expected to decline in the coming few quarters, high realisation is unlikely to sustain.
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