We maintain ‘buy’ on Gateway Distriparks (GDPL), but revise our target price to Rs 405 a share (earlier Rs 419).
The rail segment is the primary value driver for GDPL. While earlier the haulage hike led to fall in volumes, the recent weakness in trade is now denting it. Overall, the management has cut volume guidance and we have also cut our volume growth estimate in the rail segment.
GDPL Q1FY16 revenue at R260 crore came in 6% above estimate with CFS and rail segments reporting 5% and 6% above-expectations revenues, respectively, primarily driven by improved realisation. However, higher tax outgo (related to profit on land sale by GDPL to GRFL) and Snowman’s underperformance led to PAT coming in 24% below estimate and down 41% y-o-y to R21.6 crore.
Volume decline in the rail segment continued on account of lower trade growth. As a result, management has revised down FY16 volume guidance.
Rail segment volumes fell 8% y-o-y to 54,741 TEUs. The weakness seen at the start of the quarter sustained. Overall, the fall in exports not only pressurised volumes, but also heightened the imbalance between export and imports.
While Ebitda/TEU jumped 29% y-o-y to R7,266, it fell from R7,700 seen over the past two quarters. The first quarter also saw termination of third party contract at Sahnewal. However, management believes the termination will be revenue neutral and Ebitda-positive.