Gateway Distriparks, a provider of port-related logistics support services has acquired additional 26 per cent stake in its Visakhapatnam-based subsidiary Gateway East India for Rs 4.68 crore. Recommendation: BUY & hold for 12-18 months from Current level. Target: Rs 110 CMP: Rs 60
Gateway Distriparks already had 74 per cent stake in the subsidiary firm. The company has acquired 11.70 lakh shares of Gateway East India Pvt Ltd, representing 26 per cent stake at a price of Rs 10 a share.
Post acquisition, Gateway East India has become a wholly owned subsidiary firm of the company.
This acquisition will enable Gateway Distriparks in expanding the scope of its operations and consolidate its presence in the eastern and southern region of India.
On our revised estimates, the stock is trading at a P/E of 7.4x. With domestic container route providing scalability to the business model and improvement in EXIM margins, we maintain our ‘BUY’ recommendation on the stock but with reduced price looking at the slowdown in domestic freight movement and the clearly visible signs of a prolonged slump in export and import activity are likely to take a toll on the domestic logistics players, who may now have to grapple with a considerable fall in volumes.
Economic Slowdown may limit the stock's participation in any upside over the next year or so. This is because the recent de-rating in the stock has been based on company-specific concerns — expectations of a considerable slowdown in GDL's CFS business and a longer period to break even for its rail logistics business.
Valuations: Gateway Distriparks (GDL) has reported steady performance for this quarter on the back of improved realisations and margins in the CFS business. Realisations improved on account of tariff rationalisation and passing-on of power and fuel expenses to the customers.
Post acquisition, Gateway East India has become a wholly owned subsidiary firm of the company.
This acquisition will enable Gateway Distriparks in expanding the scope of its operations and consolidate its presence in the eastern and southern region of India.
On our revised estimates, the stock is trading at a P/E of 7.4x. With domestic container route providing scalability to the business model and improvement in EXIM margins, we maintain our ‘BUY’ recommendation on the stock but with reduced price looking at the slowdown in domestic freight movement and the clearly visible signs of a prolonged slump in export and import activity are likely to take a toll on the domestic logistics players, who may now have to grapple with a considerable fall in volumes.
Economic Slowdown may limit the stock's participation in any upside over the next year or so. This is because the recent de-rating in the stock has been based on company-specific concerns — expectations of a considerable slowdown in GDL's CFS business and a longer period to break even for its rail logistics business.
Valuations: Gateway Distriparks (GDL) has reported steady performance for this quarter on the back of improved realisations and margins in the CFS business. Realisations improved on account of tariff rationalisation and passing-on of power and fuel expenses to the customers.
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