ALLCARGO LOGISTICS

Expansion to Play a Vital Role

COMPANY PROFILE

Allcargo Logistics, an Avashya Group company, is among the leading logistics companies in India. The company offers specialized logistics services across Multimodal Transport Operations, Container Freight Station (CFS) Operations and Project & Engineering Solutions as an integral part of its logistics services.

The company currently operates out of 140 own offices in 65 countries and gets supported by an even larger network of franchisee offices across the world. Allcargo Logistics is among India's largest publicly owned logistics companies.

Allcargo Logistics is worldwide leading player in LCL business. Last year the company acquired two Hong Kong based companies engaged in Non Vessel Owning Common Carrier (NVOCC) business in China and other parts of the eastern region.

Today, Allcargo is among the largest operators in the country with world-class CFS facilities in Jawaharlal Nehru Port Trust (JNPT), Chennai, Mundra and Indore. Allcargo cater to the hinterland of North India through its Inland Container Depots (ICD) at Kheda, Pithampur in Madhya Pradesh and at Dadri, Greater Noida in NCR.

ALLCARGO’S CFS/ICD CAPACITY

Particular	JNPT CFS	JNPT – II CFS	Chennai CFS	Mundra CFS	Kheda ICD	Dadri ICD	Total
Nearest port/rail siding	18 km	18 km	7 km	7 km	3 km	0.3km	12km*
Annual capacity (teu)	144000	200000	145000	48000	40000	75000	652000
Land area (acre)	28	23	24	16	11	10	112
Warehouse area (m2)	11400	22800	14257	12210	3100	5160	68927
*: Weighted average

INVESTMENT  RATIONAL 

• Allcargo is world leader in LCL forwarding. It also has a great network spanning world over for NVOCC. Going forward, the company is expanding in segments like ship owning which will help the company’s Multimodal Transport Operations. We observe that the company has maintained top line growth of 25% since last four years and we expect it will maintain same growth in coming years led by  the ramp up in the project division and the commissioning of the additional 100,000 TEUs CFS capacity near JNPT.
• Expanding CFS capacity at JNPT to boost growth: With the 2nd CFS near JNPT getting commissioned in 2QFY13, AGLL’s Mumbai CFS capacity will rise to 2.44 lk TEUs. This would boost company’s share at JNPT upwards from the current 7%
• Project order book provides revenue visibility : The Engineering solution segment possesses order book of Rs, 300 cr. which provides revenue visibility for the next three to five quarters.
• Currently the company is trading  at 7x of its earning multiple at Rs. 130. We expect the company to report EPS growth of 30% during FY13 and FY14  to Rs. 26 and Rs. 33. We recommend Buy on Allcargo at CMP with price target of Rs. 165 for the time horizon of 12-15 months.

 

Price Information
Latest Price (Rs)	135
1 Year Price Var%	-2.76	Key Ratio
52 Week High (Rs)	156	Latest EPS (Rs)	17.48
52 Week Low (Rs)	109	TTM PE (x)	7.74
Beta	0.48	Price/BV(x)	1.13
Face Value (Rs)	2	Dividend Yield%	1.15
Industry PE	13.38	MCap/TTM Sales(x)	0.51
Market Cap(Rs Cr.)	1725	Book Value (Rs)	119.8

 

Financial Highlights (Consolidated)				(Rs. in Crore)
Description	201203	201012	200912	200812	200712
Equity Paid Up	26	26	25	22	20
Reserve	1463	1154	954	558	448
Total Debt	768	378	204	344	126
Gross Block	2153	1382	924	708	558
Net Sales	4271	2863	2061	2314	1613
PBIDT	574	298	247	230	147
PAT	298	176	141	122	86
Dividend %	75	150	50	25	50
Adj. EPS(Rs)	21.86	12.71	10.41	9.63	7.56
Adj. Book Value (Rs)	114	90	78	52	46
Quarter on Quarter (Consolidated)				(Rs. in Crore)
Particulars	201206		201203		YoY %
Net Sales	975		854		14.18
Total Expenditure	862		752		14.66
PBIDT (Excl OI)	113		103		10.69
PAT	59		69		-14.54
PBIDTM% (Excl OI)	11.64		12		-3
PBIDTM%	12.12		13.14		-7.76
PATM%	6.06		8.09		-25.09
Adj. EPS(Rs)	4.26		5.09		-16.31

Peer Group Comparison (Consolidated)								(Rs. in Crore)
Company Name	Year End	Net Sales	PBIDT	PAT	EPS(Rs)	PBIDTM%	PATM%	ROCE%	ROE%
Allcargo Logistics	201203	4271	574	298	21.86	13.43	6.97	22.7	22.34
Arshiya Internatl.	201203	1057	279	121	20.53	26.41	11.42	10.06	15.47
Gateway Distriparks	201203	821	264	136	12.19	32.16	16.51	16.07	18.92

Logistics Sector : Sector of Future

LOGISTICS SECTOR

Sector of the Future

Logistics has been a traditionally dull business in India, at least as far as the  capital Market is concerned. The market has not taken up in a big way to any logistic company in the past, except perhaps Blue Dart and a few courier companies in the past. For a brief while.

The Logistics business has undergone a major transformation in the last one decade, and today in our view it is the business of the future. There are many players in this segment and new avenues of doing this business have opened up. There could be even more changes in the offing, and in our view this sector needs close watching. There is scope for large players emerging in this segment, and catching the possible candidates early may yield huge returns over the long term.

In this Report we have tried to identify such potential leaders. The companies included in this Report have the potential, but have not yet grown to their full potential . Will they grow as per expectation? We think so, but only time will tell.

 

SERVICES OFFERED

PEER COMPARISON

Logistics Companies

Segment Mix

It is very important to have good segment mix for any logistics company. We have selected three companies out of the logistics universe. These three companies have fully integrated businesses across all segments. All the three companies are leaders in particular segments.

· Allcargo is the leader for Multimodal Transport Operations. Allcargo is also focusing on expanding its network across the world and it is adding more and more ECU line franchises.

· Arshia Int. has setup a rail network across the nation which helps it for inland transport movement. Further the company is focusing more on its FTWZs operation. Currently it possess only 16% business share which is likely to  increase sharply over the years.

· GDL is operating through its two subsidiaries named GDL Rail and Snowman. While very different from the other two companies, GDL has 50-50 business mix from transport operation and CFS operations. Further the company is expanding more on the front of Cold Chain and Distripark business.

SEGMENT WISE PBT MARGINS

Traditionally Logistics Companies were running with very low profit margins, because of asset heavy and labor intensive business model. But now a days the scenario is changing since couple of years, because of operation optimization and implementation of efficient machinery. Among these three companies also there are big gaps in profit margins. Arshiya Int. has highest margins in all the three segments that are because of its business mix. Its FTWZ/CFS segment offers many unique benefits and value added services for exporters and to re-exporters. Further lower business share from this segment prevented a major impact on bottom-line. Because of that Arshiya is going to expand its FTWZ/CFS segment.  Gateway Distripark has very thin margin for its transport segment. But the company has good margins in its cold chain operations. Though Allcargo is the leader in MTO, this segment has very low margins. Overall, all the three companies manage profit margins by managing business mix.

For investment purpose one can have exposure to all the three companies as each of them is leader in its particular segment. Allcargo will be benefited by its logistics network through its direct office as well as through its franchisees. Arshiya International has introduced new concept of FTWZ in Indian Logistics sector which will gain the biggest benefit of growing exports and imports. GDL is the only company which has organized pan India cold chain transportation network. Keep reading my blog to have company specific update for these three and many more companies.

Happy Investing !!