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Kotak SECURITIES
Guj Pipavav (Attractive)
CMP: ₹153.60
Target: ₹175
As detailed in our recent report, we expect the shift of north-bound volumes of Jawaharlal Nehru Port Trust (JNPT) to the Gujarat ports to restart soon and possibly accelerate. With increased relevance of inland transportation cost for shipping lines (other costs have declined) and with DFC still some time away, the decision to continue offloading north-bound cargo at JNPT would be contested. The shift of 0.5 million TEUs (twenty-foot equivalent units) from JNPT can support 1-3 per cent outperformance of Gujarat ports versus the sector in the next few years.
The recent exim line addition of Shipping Corporation of India to Pipavav port is a weekly service to Gulf region (started from December 22). The service involves smaller vessels (half the length and one-fourth the capacity of the typical 6,500 TEU capacity vessels associated with GPPV). Our initial checks suggest that the current throughput of the exim line at GPPV would yield a 5,000-10,000 TEUs a year, a 1-2 per cent increase. This may be the first of such additions at Pipavav as it aims to increase its exposure to the European/ West Asia regions.
Key upside risk to our ₹175 SoTP is a large line addition and key downside risk is pricing.
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