|Posted by SRIKANTHBABU KALIKI on October 16, 2011 at 9:20 AM|
Company: Allcargo Global (NSE Symbol: ALLCARGO)
Close Price: Rs. 144.55 (14-Oct-2011)
Recommendation: BUY in Dips
Market Cap 1875.97 * EPS (TTM) 11.57 * P/E 12.42 * P/C 9.81
* Book Value 74.90 * Price/Book 1.92 Div(%) 150.00% * Div Yield(%) 2.09
Face Value 2.00 Industry P/E 14.92
Allcargo Global Logistics operates in three segments -- multi modal transport operations ( MTO), container freight stations (CFS)/inland container depot (ICD) and project & engineering solutions. The company's multi-modal transport operations are carried through its Belgium-based subsidiary ECU Line, which is one of the world's largest players in less-than-container load (LCL) segment. CFS operations involve cargo stuffing, de-stuffing, custom clearance and other ancillary services to both importers and exporters. The company's CFS/ICDs are located at JNPT, Chennai, Mundra and Kheda in Madhya Pradesh.
The company is doubling its CFS capacity at JNPT to 200,000 TEUs by March 2012. The ICD at Dadri with a capacity 52,000 is set be completed in the next quarter. Besides, the company is planning to set up ICDs at Hyderabad, Bangalore and Nasik, which are in the initial stages. The company has a unique model where it provides volumes for the shipping companies. These companies in turn use the CFS of AllCargo.
The company is now venturing into other logistics segments such as third-party logistics (3PL) and coastal shipping. It currently has warehouses at Goa, Bhivandi and Indore, and a new capacity at Hosur to be completed by March 2012. The company forecasts a 20% growth in revenues this year, which looks achievable as it has already grown by 29% year-onyear in the first half of this year. Further, the capacity expansion will help in generating volumes for the company. The implementation of GST will help logistics companies as manufacturing firms will look for warehouses at strategic cargo locations. In the current sales tax regime, logistic decisions by manufacturers are made in line with tax policies of different states.
In June 2011 quarter, revenues from CFS segment increased 60% y-o-y to Rs73 crore mainly due to rise in average realisation and dwell time. On a consolidated basis, the company improved its EBITDA margin by 250 basis points y-o-y to 12.3% on the back of various cost-reduction measures and rationalisation of procurement system.
The company has been generating a return on capital employed of more than 15% every year in the past four years. As of June this year, the company is placed at a comfortable debt-toequity ratio of 0.6. This will provide enough space for leveraging to fund its expansion plans.
The company is currently trading at price-to-earnings multiple (P/E) of 8.64. Its nearest competitor, Gateway Distriparks, is trading at a P/E of 16.86. Given the growth and healthy performance of the company, it deserves a better valuation.
SOURCE : ECONOMIC TIMES
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