Buy Gati, target price Rs 288: ICICI Securities

ICICI Securities has buy call on Gati with a target price of Rs 288. The current market price of Gati is Rs 132.7.
Time period given by analyst is one year when Gati Ltd. price can reach defined target.

Gati Ltd., incorporated in the year 1995, is a Small Cap company (having a market cap of Rs 1628.11 Crore) operating in Logistics sector.


Gati Ltd. key Products/Revenue Segments include Diesel, Petrol & Lubricants, Freight & Demurrage and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 386.73 Crore, down -7.04 % from last quarter Total Income of Rs 416.01 Crore and down -5.35 % from last year same quarter Total Income of Rs 408.61 Crore. Company reported net profit after tax of Rs -29.72 Crore in latest quarter.

Investment Rationale
According to the management, current infrastructure is adequate to meet Gati’s NCR infrastructure needs for the next 10 years. Gati CEO Pirojshaw Sarkari reiterated the exit revenue run-rate of Rs30bn in three years and the exit FY23E gross margin/EBITDA run-rate of 29/9% and FY24E exit gross margin / EBITDA run-rate of 32 /12-15%, respectively. There will not be any meaningful increase in lease expenses despite Seven new sorting centres coming up as Gati will be giving up old sorting centres. It maintains BUY rating on the stock.

Promoter/FII Holdings
Promoters held 51.66 per cent stake in the company as of 31-Mar-2022, while FIIs owned 3.3 per cent, DIIs 1.23 per cent.