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Motilal Oswal Securities
Allcargo Logisitics (Buy)
CMP: ₹106.9
Target: ₹140
Overall revenue of Allcargo Logisitics (AGLL) increased 12 per cent y-o-y to ₹1,740 crore (our estimate: ₹1,700 crore) in 2QFY19, led by 11 per cent y-o-y growth in MTO (multi-modal transport) segment. EBITDA increased 19 per cent y-o-y (+22 per cent q-o-q) to ₹130 crore, higher than our estimate of ₹107 crore, led by lower-than-estimated loss from P&E segment. PAT declined 3 per cent y-o-y to ₹61.8 crore (our estimate: ₹53.7 crore) due to a higher tax rate of 24 per cent v/s 1 per cent in 2QFY18.
Management commentary: 1) MTO volumes grew 22 per cent y-o-y; the segment continued gaining market share in key markets across the world, despite challenging trade and freight conditions; 2) CFS volumes increased 22 per cent y-o-y, driven by Kolkata operations. Kheda ICD has been closed as it was not profitable. AGLL also increased its share in DPD volumes at JNPT.
Valuation view: MTO is likely to perform well over the medium term, led by healthy volume growth. Volume growth in CFS should be driven by the Kolkata operations. Losses at P&E are likely to narrow further due to an uptick in asset utilisation. Valuations of 11.9x/10.6x FY19/20E earnings appear attractive, given AGLL’s strong fundamentals and earnings CAGR of 17 per cent over FY18-20.
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