1. Page | 1
IInniittiiaattiinnggCCoovveerraaggee
ttiiaattiinnggCCoovveerraaggee
ttiinnggCCoovveerraaggee
ggCCoovveerraaggee
CCoovveerraaggee
vveerraaggee
rraaggee
ggee
Gati Ltd
QQ33aannddFFYY1144RReessuullttUUppddaattee––1155MMaayy22001133
4
Recommendation Hold The company reported Total Income of Rs. 383 crore which is up 3.6% QoQ and
up 21% YoY on the back of 23% YoY growth seen in the Gati KWE Express
Division. EBIDTA margins fell by 60 bps QoQ to 7.5% due to higher losses in
shipping segment and investments made for the ecommerce segment. Core
business continues to perform well with newer clientele being added, however
we continue to remain cautious about its shipping business which continues to
incur losses. Management expects 15-20% growth in the core business which
contributes 75% to the total revenues and better traction in the ecommerce
and cold chain businesses. At CMP, the stock is trading at 18x and 12x its FY15E
and FY16E expected earnings and we continue to have a positive outlook on
the stock.
Highlights of the Quarter
Gati’s KWE business grew by 23% YoY/4.2% QoQ at Rs.272 crore. And margins
in this segment have remained flat QoQ at 9%. Company expects this segment
to grow by 15-20% in FY15E and improvement in margins as well. During the
quarter, the company has added 6 new business accounts due to the synergies
with the JV partner. We expect the core express division business to continue to
grow at a robust pace in the coming quarters.
Shipping segment revenues fell 20% QoQ to Rs. 5 crore and continued to incur
losses and this time it was ~3.7 crore/ Rs.2.5 crore loss in the previous quarter.
Company has made contractual agreement to sell one of it’s lose making vessels
during the quarter. Post that transaction, It would be left with only one vessel
for which it had signed a MoU with International Shipping Logistics FZE (ISL)
which is a subsidiary of Tata Steel and has launched a new coastal service line
across Kandla- Mundra-Cochin Ports. Management expects the shipping
segment to post a loss of Rs.5 crore in the next quarter and thereafter would
breakeven.
Kausar, the cold chain segment of the company continued to show decline in
revenues. During the quarter, it reported revenues of Rs. 10.8 crore, a decline of
7% QoQ. Margins too have fallen in this segment. Overall there has been
slowdown in the refrigerating business. However, company has seen better
performance starting from April and this business is expected to grow by 15-
17% in FY15.
E-Commerce business continues to be the focus for the company which also
fetches 12-15% kind of margins. In the current quarter, this segment clocked
revenues of Rs.16 crore a growth of 14.3% QoQ. Company has signed some
retailers during the quarter that would drive growth in the coming quarters.
Company currently is delivering ~ 12000 packages per day and aims to take this
number to 20000 packages per day by June 2014.
Other Highlights
Total debt stands at Rs.480 crore / Rs.488 crore in the previous quarter.
Company has guided for 15-20% revenue growth for FY15E wherein express
division is expected to grow by 15-20% and ecommerce by 100%.
It has planned for a capex of Rs.20-25 crore for FY15E.
CMP Rs. 84
Target Price Rs.96
Sector Logistics
Stock Details
BSE Code 532345
NSE Code GATI
Bloomberg Code GTIC IN
Market Cap (Rs cr) 730
Free Float (%) 61.89
52- wk HI/Lo (Rs) 94/23
Avg. volume BSE
(Quarterly)
749107
Face Value (Rs) 2.0
Dividend (FY 14) 35%
Shares o/s (Crs) 8.7
Relative Performance 1Mth 3Mth 1Yr
Gati -4.83% 26.4% 183.7%
Sensex 4.6% 6.7% 18.8%
Shareholding Pattern 31
st
Mar 14
Promoters Holding 38.11%
Institutional (Incl. FII) 0.90%
Corporate Bodies 11.91%
Public & others 49.08%
Kavita Vempalli – Research Analyst (022 3926-8173)
kavita.vempalli@nirmalbang.com
Consolidated
(June Ending)
Sales Growth (%) EBITDA Margin (%) Adj PAT
Margin
(%)
Adj EPS
(Rs)
PE (x) EV/EBITDA
FY13 1273.4 7.1% 84.0 6.6% 9.6 0.8% 1.1 76.1 12.9
9MFY14 1116.6 16.9% 84.1 7.5% 23.4 2.1% 2.7 23.3 10.8
FY15E 1686.2 13.1% 131.6 7.8% 41.1 2.4% 4.7 17.8 9.3
FY16E 1989.1 18.0% 163.7 8.2% 60.1 3.0% 6.9 12.2 7.3
3. Page | 3
IInniittiiaattiinnggCCoovveerraaggee
ttiiaattiinnggCCoovveerraaggee
ttiinnggCCoovveerraaggee
ggCCoovveerraaggee
CCoovveerraaggee
vveerraaggee
rraaggee
ggee
Gati Ltd
QQ33aannddFFYY1144RReessuullttUUppddaattee––1155MMaayy22001133
Financial Performance
Consolidated (Rs. In Crs) FY13 9MFY14 FY15E FY16E Financial Health (Rs. In Crs) FY13 FY14 FY15E FY16E
Income from operations 1273.4 1116.6 1686.2 1989.1 Share Capital 17.3 17.5 17.5 17.5
% change 7.1% 16.9% 13.1% 18.0% Reserves & Surplus 769.7 755.5 810.5 881.4
EBITDA 84.0 84.1 131.6 163.7 MI & Share warrants 115.4 117.3 130.3 148.3
% change in EBIDTA 4.9% 33.5% 17.4% 24.3% Long Term borrowings 237.8 267.2 229.5 224.7
Other non current Liabilities 23.3 25.3 25.6 26.0
Depreciation 24.75 22.07 26.39 27.19 Short Term borrowings 138.1 130.4 138.0 113.0
Interest 43.7 32.5 36.5 35.0 Current Maturities 101.1 82.4 82.0 82.0
Other Income 16.1 10.6 12.0 15.0 Short Term Provisions 47.2 65.4 66.7 68.0
Exceptional Item (8.4) 0.0 0.0 0.0 Trade Payables 66.3 73.2 80.8 91.1
PBT 23.2 40.1 80.7 116.5 Other Current Liabilites 44.2 44.7 48.0 50.0
Tax 6.0 11.8 26.6 38.4 Equity & Liabilities 1459.3 1496.3 1546.9 1619.9
PAT 17.3 28.3 54.1 78.0 Assets
Minority Interest 7.6 4.9 13.0 17.9 Fixed Assets 411.4 418.1 416.7 409.5
PAT after minority interest 9.6 23.4 41.1 60.1 Goodwill 446.9 446.9 446.9 446.9
EPS (Rs.) 1.1 2.7 4.7 6.9
Non Current Investments & other
assets 20.3 56.5 56.5 61.8
Long Term Loans & Advances 148.9 133.8 138.8 146.8
Qtly Consol (Rs. In Crs) Q4FY13 Q1FY14 Q2FY14 Q3FY14 Trade Receivables 220.3 241.4 271.7 320.5
Income from operations 322.2 363.3 370.0 383.3 Cash & Equivalents 46.6 30.8 33.4 39.6
EBITDA 18.8 25.1 30.2 28.9 Short Term Loans & Advances 252.1 237.9 252.9 262.9
EBIDTA % 5.8% 6.9% 8.1% 7.5% Other Current Assets 11.8 11.9 12.0 14.0
Dep 6.7 7.9 7.5 6.7 Total Assets 1558.2 1577.4 1628.9 1701.9
Op Income 12.1 17.1 22.7 22.2 Cash Flow (Rs. In Crs) FY13 FY14 FY15E FY16E
Interest 10.5 10.7 11.2 10.6 Operating
Other Inc. 6.5 3.6 3.7 3.3 OP before WC 84.0 84.1 131.6 163.7
Exceptional item (Expense) (1.1) 0.0 0.0 0.0 Change in WC (102.9) 5.0 (10.0) (25.8)
PBT 7.0 10.0 15.3 14.9 (-) Tax (6.0) (11.8) (26.6) (38.4)
Tax (0.2) 4.3 6.5 1.0 CF from Operation -24.9 77.3 95.0 99.4
PAT 7.2 5.8 8.7 13.8 Investment
Minority Interest (0.5) (1.2) (2.1) (1.7) Capex (43.6) (28.8) (25.0) (20.0)
PAT after MI 6.7 4.6 6.7 12.1 Other Income 16.1 10.6 12.0 15.0
Total Investment (27.5) (52.8) (13.0) (10.2)
Performance Ratios FY13 FY14 FY15E FY16E Financing
Adj PAT growth (%) (76.8%) 224.3% 31.7% 46.1% Dividend Paid (6.0) (7.1) (12.4) (18.2)
EBITDA margin (%) 6.6% 7.5% 7.8% 8.2% Change in Borrowings 15.3 3.0 (30.5) (29.8)
PAT margin (%) 0.8% 2.1% 2.4% 3.0% Interest Paid (43.7) (32.5) (36.5) (35.0)
ROCE (%) 4.4% 4.9% 7.9% 10.1% Others (6.7) (3.8) (0.0) 0.0
ROE (%) 1.2% 3.0% 5.0% 6.7% Total Financing (41.1) (40.4) (79.4) (82.9)
Price Earnings (x) 76.1 23.3 17.8 12.2 Net Chg. in Cash (93.5) (15.8) 2.6 6.2
Price / Book Value (x) 0.9 0.9 0.9 0.8 Cash at beginning 140.1 46.6 30.8 33.4
EV / Sales 0.8 0.8 0.7 0.6 Cash at end 46.6 30.8 33.4 39.6
EV / EBITDA 12.9 10.8 9.3 7.3 Per Share Data FY13 FY14 FY15E FY16E
Reported EPS 1.1 2.7 4.7 6.9
BV per share 90.2 88.6 94.9 103.0
Dividend per share 0.6 0.7 0.7 0.7
Source: Nirmal Bang Research
4. Page | 4
IInniittiiaattiinnggCCoovveerraaggee
ttiiaattiinnggCCoovveerraaggee
ttiinnggCCoovveerraaggee
ggCCoovveerraaggee
CCoovveerraaggee
vveerraaggee
rraaggee
ggee
Gati Ltd
QQ33aannddFFYY1144RReessuullttUUppddaattee––1155MMaayy22001133
Disclaimer:
This Document has been prepared by Nirmal Bang Research (A Division of Nirmal Bang Securities Pvt Ltd). The information, analysis and
estimates contained herein are based on Nirmal Bang Research assessment and have been obtained from sources believed to be reliable. This
document is meant for the use of the intended recipient only. This document, at best, represents Nirmal Bang Research opinion and is meant for
general information only. Nirmal Bang Research, its directors, officers or employees shall not in any way be responsible for the contents stated
herein. Nirmal Bang Research expressly disclaims any and all liabilities that may arise from information, errors or omissions in this connection. This
document is not to be considered as an offer to sell or a solicitation to buy any securities. Nirmal Bang Research, its affiliates and their employees
may from time to time hold positions in securities referred to herein. Nirmal Bang Research or its affiliates may from time to time solicit from or
perform investment banking or other services for any company mentioned in this document.
Nirmal Bang Research (Division of Nirmal Bang Securities Pvt Ltd)
B-2, 301/302, Marathon Innova,
Opp. Peninsula Corporate Park
Off. Ganpatrao Kadam Marg
Lower Parel (W), Mumbai-400013
Board No. : 91 22 3926 8000/8001
Fax. : 022 3926 8010
