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Gujarat Pipavav Port Ltd Research Report - 21st Jan 2016

Infrastructure | Published on Oct 31st 2015

IT

Gujarat Pipavav Port Ltd (GPPL) reported a poor set of numbers for 2QFY2016, with its top-line declining by 10.6% yoy/18.8% qoq to Rs140cr. The top-line degrowth on yoy basis was owing to (1) 24% decrease in Container volumes (to 145,000 TEUs), and (2) 39% decrease in Bulk business (to 628,000MT). EBITDA for the quarter stood at Rs68cr, down 18.3% yoy/22.0% qoq. Reported EBITDA margins came in at 48.2% as against 52.8% in corresponding year ago quarter and 50.2% in the sequential quarter. Fall in EBITDA margin was due to revenue de-growth coupled with yoy increase in employee expenses. PAT for the quarter amounted to Rs53cr, down 42.4% yoy and 33.9% qoq. On adjusting for reversal of asset impairment provision and deferred tax charges, the Adj. PAT stood at `61cr. Adj. PAT margins came in at 43.4% (vs 58.7% in the corresponding year-ago quarter and 46.5% in the previous quarter). Outlook and Valuation: At the current market price of Rs161, GPPL is trading at FY2016E and FY2017E P/E multiple of 25.2x and 27.4x, respectively. We have valued the Ports business using free cash flow to equity holders (FCFE) to arrive at FY2017E based business value of Rs154. We have assigned 10x P/E multiple to our FY2017E earnings estimate of Pipavav Rail Corporation Ltd (PRCL) to arrive at business value of Rs7 (adj. for 38.8% stake). On using the sum-of-the-parts (SOTP) based valuation methodology we arrive at a FY2017E based price target of Rs162. Given the limited upside potential in the stock from the current levels, we maintain our Neutral rating on the stock.

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CMP 161
Target Price
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)6,676.31
MCAP NSE (Rs in Cr)6,652.13
P/E (x)29.96
EPS (Rs.)4.61
BV (Rs.)40.90
Div Yield (%)1.38
FV (Rs.)10.00
P/BV (x)3.38
EV/Sales (x)9.70
EV/EBITDA (x)17.04

Shareholding Pattern (%)

Promoter43.0
Foreign40.0
Institution11.0
Public & Others4.0
Corporate2.0
Grand Total100.0

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